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CME Error Prompts More Than 90 Minute Halt for Some Contracts

CME Group's Chicago Board of Trade
The 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

April 8 (Bloomberg) -- CME Group Inc., the world’s largest futures market, said “technical issues” prompted trading halts that lasted more than 90 minutes for some contracts.

The error at CME Group’s Global electronic market prevented futures and options transactions in products including corn, wheat, cattle and hogs. The Chicago-based company’s largest revenue-producing contracts such as interest-rate and stock-index futures weren’t affected.

Chris Grams, the associate director of corporate communications at CME Group, said livestock markets have resumed electronic trading and grain markets are set to reopen at the normal time today: 7 p.m. in Chicago. “The technical issues have been resolved,” Grams said by phone, without providing details about the cause of the outage.

American markets have experienced a series of computer errors in the past year. The most widespread halted thousands of Nasdaq-listed stocks on Aug. 22, spurring U.S. Securities and Exchange Commission Chairman Mary Jo White to demand infrastructure and procedural improvements at exchanges. Also, Standard & Poor’s said the malfunctions could threaten credit ratings for exchange operators.

The CME Group malfunction comes at a time of rising scrutiny of U.S. market structure following the March 31 publication of Michael Lewis’s book “Flash Boys.”

Grain futures and options contracts will be settled today using the “open outcry methodology,” Laurie Bischel, a spokeswoman for CME Group, wrote in an e-mail.

‘Old School’

“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 phone 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 phone 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.”

To contact the reporters on this story: Matthew Leising in New York at mleising@bloomberg.net; Jeff Wilson in Chicago at jwilson29@bloomberg.net; Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

To contact the editors responsible for this story: Nick Baker at nbaker7@bloomberg.net; Millie Munshi at mmunshi@bloomberg.net

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