A glitch at the world’s largest stock exchange operator, CME Group, halted trading on its foreign exchange platform and in futures contracts covering foreign currencies, commodities, Treasuries and stocks, freezing some benchmark indices as brokers pulled products from the market.
Market participants said the outage, which began at the start of Asian trading and was still ongoing until 11:20 a.m. GMT (8:20 a.m. EST), was one of the longest in recent years.
CME said in a statement that the issue was a cooling failure in CyrusOne’s data centres, adding that it was working to resolve the issue in the “short term”.
The Brokertec US Actives and Brokertec EU platforms – both focused on fixed income – are open, but trading in other markets has been halted, the Chicago Mercantile Exchange said in its latest statement at around 11:00 GMT (8:00 GMT).
Some European brokers said they were unable to offer trading on some products in some futures contracts.
CyrusOne said the issue occurred at its CHI1 data center in the Chicago area and affected service to customers including CME. “Our engineering teams, along with specialist mechanical contractors, are working on site to restore full cooling capacity,” a CyrusOne spokesperson said. “We have successfully restarted several chillers with limited capacity and deployed temporary cooling equipment to supplement our permanent systems.”
Difficulties in trading without real-time CME prices
CME is the largest exchange operator by market capitalization and claims to offer a wide range of standard products, covering interest rates, stocks, metals, energy, cryptocurrencies and agribusiness. The company posted the first notification about the outage on its website at 2:40 a.m. GMT (11:40 p.m. Brasilia time on Thursday).
Futures prices for West Texas Intermediate (WTI) oil, 10-year U.S. Treasuries, the S&P 500, the Nasdaq 100, the Nikkei, palm oil and gold were among those that were not updated as of 7:20 a.m. GMT (4:20 a.m. EDT), according to LSEG data.
Prices were also not updated on the EBS exchange platform, which traded an average of almost 60 billion euros per day in October, in major pairs such as the euro and the dollar, and the dollar and the yen.
While spot forex traders have been able to find other platforms to execute trades more easily, the outage has left brokers blind and many reluctant to trade contracts without real-time pricing. “Frankly, it’s a huge headache,” said Christopher Forbes, head of Asia and Middle East at CMC Markets, adding that he had not seen such widespread stock market turmoil in 20 years.
The CMA has suspended trading in several commodity contracts, and in other products, changed its data source or was using its own data and internal calculations to price clients and even other brokers. “We take a lot of unnecessary risks to maintain prices,” Forbes said. “I don’t think the market will like this, I think there will be some volatility at the open.”
Trading volume declined after Thanksgiving
Futures are a mainstay of financial markets and are used by brokers, speculators and companies that want to hedge or hold positions in a wide range of underlying assets. Average daily derivatives volume reached 26.3 million contracts in October, the Chicago Mercantile Exchange reported earlier this month.
“We haven’t heard about this, but it’s certainly not common for the platform we’re all trading on to simply stop working,” said Michael Brown, chief markets researcher at Pepperstone, referring to the market in general and not his company’s business. “If that happens, today is the best day because there probably won’t be much activity in the market anyway,” he said. Trading volumes decreased this week due to the Thanksgiving holiday.
Broker Saxo Bank, in a message to clients on its trading platform, said it was unable to offer contracts for differences (CFDs), a form of derivatives to retail investors, for futures and indices. XTB, another brokerage, said on its website that trading had been suspended for a number of US indices, Treasuries and commodity futures.