A data center failure at CME Group, the world’s largest stock exchange operator, paralyzed trading in futures contracts for currencies, commodities, Treasuries and US stocks. The outage is already longer than a similar multi-hour outage due to a technical error in 2019, and highlights the reach of CME Group and its electronic trading platform, Globex.
The problem caused widespread frustration, as investors faced the prospect of losing an entire trading session, which would be shorter on Friday, after the Thanksgiving holiday, which was celebrated the day before.
“It’s like flying aimlessly,” said Thomas Heylen, head of equity sales at TP ICAP Europe in Paris. — When you trade spot stocks like we do, US futures give you an indication of which way the market is headed before the open. I can only imagine how complicated it must be for derivatives desks.
Millions of contracts tied to the S&P 500, Dow Jones Industrial Average and Nasdaq 100 are traded every business day, 24 hours a day on the CME, one of the world’s largest financial derivatives exchanges. A spokesperson for the group confirmed that the outage was due to cooling issues at data centers operated by CyrusOne, a Dallas-based company, but did not provide an estimate of when trading would resume.
According to Reuters, CME first published a post about the outages at 9:40 PM (ET) on its website. CyrusOne has not yet responded to Bloomberg’s questions.
The outage halted trading in US Treasury bond futures, while the European and UK bond markets, which are traded on another exchange, were not affected. The EBS platform used in the foreign exchange market has been affected, hindering price discovery in the market.
For some traders, the timing of Friday’s outage may cause particular inconvenience if it lasts longer, due to the need to move positions from one monthly contract to another, as December begins on Monday.
Gold moved erratically in early trading in London, as the spread between bids and bids was about 20 times wider than usual. US crude oil and palm oil on Bursa Malaysia were also affected.
In commodity markets, Friday is the expiry day for gasoline and diesel futures contracts that can be settled by actual fuel delivery, adding another potential complication.
Positioned traders are definitely very angry,” said Jnanasekar Thiagarajan, head of trading strategies and hedging at Kaleswari Intercontinental.
Others reported that volumes moved to alternative and operational platforms as liquidity and price transparency evaporated.
– Traders will turn to alternative liquidity instruments where they can, said Nick Twidale, senior analyst at AT Global Markets in Sydney. – We have lost one of the main sources of liquidity in the market. This increases the risk of aggravated movements in the event of a major event.
Most US markets were closed on Thursday for the Thanksgiving holiday and are expected to reopen later for a short trading day. Fortunately for traders, there is little news expected on Friday: no economic data will be released in the US, and no speeches are expected from members of the Federal Reserve, the US central bank, before the quiet period leading up to the expected decision in December.
November was a volatile month for stocks, with the S&P 500 falling as much as 4.7% on concerns about the pace of Fed rate cuts and AI stock valuations. The index recovered those losses, and volatility remained lower throughout the week, returning to October lows. The benchmark US stock index is close to erasing its monthly decline, with one more session remaining before the final month of the year.
Exchanges operated by the Chicago Mercantile Exchange include the Chicago Board of Trade, the New York Mercantile Exchange, and the Commodity Exchange. The Chicago Mercantile Exchange also has stakes in other exchanges, including the Gulf Mercantile Exchange, which said in a market statement that it had also seen its trading halted due to the refrigeration issue.