(Bloomberg) — The Chicago Mercantile Exchange Group proudly describes itself as the place “where the world comes to manage risk.” Except on Friday, the world was shut out.
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Trading of futures and options was halted due to a fault at a data center, spilling over into multiple markets and affecting contracts covering trillions of dollars. It hit S&P 500 futures as well as everything from Treasuries and US crude oil to gasoline and palm oil. EBS, a platform used in foreign exchanges, was restored at 12 p.m. London time after being down for several hours.
In Singapore, one oil trader said when the initial alert was issued around 10:30 a.m. local time on Friday, they thought it was a hoax because the trades and quotes were still streaming in. But a few minutes later, the screen suddenly froze and they were booted out of the Nymex platform.
With the go-to service out, screens that would usually be a flickering wall of numbers ground to a halt, and traders had to seek out other options to keep trading and operating.
“It’s pretty annoying. We wanted to price some equity index options,” said Gerald Gan, deputy chief investment officer at Singapore-based Reed Capital Partners. “My provider is scouring for alternatives, but I doubt the liquidity would be as ample as CME.”
Such reactions reflect how CME — which started in the late 1800s as the Chicago Butter and Egg Board — has grown to become an integral part of the global market machinery and a crucial part of traders’ daily work. On average in October, derivatives trading volumes amounted to more than 26 million contracts every day, according to data from the group.
On Nov. 20, open interest in CME’s US Treasury futures and options set an all-time high of 35.1 million contracts. About $1 trillion of notional value is traded daily in the E-mini S&P 500 and Nasdaq 100 futures alone.
Exchange outages have occurred frequently in recent years, with technology issues affecting pricing across platforms globally.
In June 2024, a glitch during a software update in June 2024 led the New York Stock Exchange to erroneously halt trading on about 40 stocks and display odd trades showing a 99% drop in prices. Earlier in the year, tech issues disrupted premarket Nasdaq trading for almost three hours.
In Europe, London Stock Exchange Group Plc suffered three outages in a few months at the end of 2023, including one that halted trading for thousands of shares.
