After one of its longest outages in a long time, halting trading across stocks, bonds, commodities, and currencies, the world’s largest exchange operator, CME Group, the world’s largest exchange operator, caused global futures markets to scuttle for several hours.
After being out for more than 11 hours due to an outage at a significant data center, trading in foreign exchange, stock and bond futures, and other products had resumed by 13:35 GMT on Friday, according to LSEG data.
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CME attributed the outage to a cooling failure at CyrusOne’s data centers, which claimed customer services, including CME, had been impacted by the facility’s claims to be in the Chicago area.
According to LSEG data, the disruption caused the trading of major currency pairs on CME’s EBS platform as well as benchmark futures for West Texas Intermediate crude, Nasdaq 100, Nikkei, palm oil, and gold.
“A black eye,”
Due to the United States Thanksgiving holiday, trading volumes have been thinned out, and there was a chance for volatility to increase significantly in the coming weeks as dealers closed positions for the month’s end, according to market participants.
According to Ben Laidler, head of equity strategy at Bradesco BBI, “It’s a black eye to the CME and probably a long-overdue reminder of the importance of market structure and how interconnected all of these are.”
“We compulsively assume that the timing is unfavorable in large part. Many things are rebalanced because it’s month-end.
“I should say that it could have been much worse; it’ll be a very low-volume day.” There would have been worse days like this, he said, if you had it.
Futures are a key component of financial markets and are used by dealers, speculators, and other businesses to hedge or hold positions in a variety of underlying assets. Brokers were left flying blind without these and other tools, and many were reluctant to trade contracts without any live prices for extended periods of time.
The incident raises broader concerns about reliability, according to Axel Rudolph, senior technical analyst at trading platform IG. “Beyond the immediate risk of traders being unable to close positions, and the potential costs that follow,” Rudolph said.
A few European brokerages announced earlier that they were unable to provide trading for some products and futures contracts.
The Commodity Futures Trading Commission and the Securities and Exchange Commission both confirmed they are aware of the problem and are currently monitoring it, with regulators also keeping an eye on it.
largest exchange operator
According to CME, the largest exchange operator by market value offers the broadest range of benchmark products, including rates, equities, metals, energy, cryptocurrencies, and agriculture.
According to earlier this month’s CME report, the average daily derivatives volume was 26.33 million contracts in October.
The operator had to stop electronic trading for some agricultural contracts in April 2014 due to technical issues, which at the time caused traders to return to the floor, more than a decade prior to the CME outage on Friday.
More recently, LSEG and the exchange operator in Switzerland briefly slowed down markets in 2024.
Source: Aljazeera
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