CME Group Inc. (CME:US), the world’s largest futures market, said “technical issues” prompted it to halt trading of about two dozen contracts on its Globex futures and options markets, according to a notice on its website.
The halted contracts include corn, wheat, cattle and hogs, Chicago-based CME Group said. The exchange owner posted the notice at 1:51 p.m. New York time. Its largest revenue-producing contracts include futures on interest rates, equity indexes, currencies and energy products. None of those were affected.
“We are working on a resolution and will make an announcement when the problem has been corrected,” Chris Grams, associate director of corporate communications at CME Group, said in a telephone interview today.
American markets have experienced a series of computer errors in the past year. The U.S. equity derivatives market was halted briefly on Sept. 16 because of an issue with data from Opra, while the Chicago Board Options Exchange stopped trading three days earlier on its C2 venue when it couldn’t send information to the price processor. On Aug. 22, trading in thousands of stocks listed on the Nasdaq Stock Market was frozen for three hours by a data-feed error.
The CME Group malfunction comes at a time of rising scrutiny of American market structure following publication of Michael Lewis’s book “Flash Boys.”
Breakdowns at exchanges around the world could threaten industry credit ratings, Standard & Poor’s said in September. U.S. Securities and Exchange Commission Chairman Mary Jo White ordered stock exchanges on Sept. 12 to bolster systems to prevent malfunctions.
Trading in the CME contracts today was halted before the close of grain trading at 1:15 p.m. Chicago time. Corn and wheat contracts normally don’t trade again until 7 p.m. local time, while hog and cattle futures continue to trade electronically until 4 p.m. after the floor close at 1 p.m.
Grain futures and options contracts will be settled today using the “open outcry methodology,” Laurie Bischel, a spokeswoman for CME Group, said in an e-mail.
“Any orders we needed to execute were done in the trading pits on the floor,” Dan Anderson, a grain broker and analyst for ED&F Man Capital LLC in Chicago, said in a telephone interview. “It was old-school order entry.”
The trading halt “created a big mess,” said Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago, who was trying to sell corn contracts when the system went down. He said he called down to the pit to get his orders executed. “It was a real headache. It just created a whole bunch of confusion,” he said.
“It definitely slowed things down,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a telephone interview. “A great preponderance of the business goes over electronically, and when the electronic part of business stops, there’s an initial shock. It definitely hampers trading and hurts volume.”
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To contact the editors responsible for this story: Nick Baker at firstname.lastname@example.org; Millie Munshi at email@example.com Millie Munshi, Patrick McKiernanThe halted contracts include corn, wheat, cattle and hogs, Chicago-based CME Group Inc. said. The exchange owner posted the notice about the technical issues at 1:51 p.m. New York time. Photographer: Tim Boyle/Bloomberg