CME resumes trading after outage disrupts global markets

Open Editor’s Digest for free

Rula Khalaf, editor of the Financial Times, picks her favorite stories in this weekly newsletter.

trading in futures and options resumed at the Chicago Mercantile Exchange on Friday after a data center error disrupted global markets for more than 10 hours.

The outage at CME Group, the world’s largest derivatives exchange, began late Thursday in the United States and came as markets on Wall Street prepared to reopen after the Thanksgiving holiday. By early Friday afternoon, the company said all of its markets had reopened.

Investors rely on CME futures to hedge their positions in markets ranging from Treasuries to S&P 500 stocks, as well as pricing Wall Street indexes when the market opens.

The Chicago Mercantile Exchange blamed the trading halt on a “cooling issue” at a data center located 35 miles from the Chicago Mercantile Exchange’s headquarters and operated by private equity firm CyrusOne.

Trading resumed on the main Globex platform at 7.30am US central time. The BrokerTec EU, BrokerTec US Actives and EBS currency markets reopened earlier on Friday.

S&P 500 futures rose 0.1 percent after trading resumed, and the S&P 500 rose by the same amount at Wall Street’s open.

The turmoil hit all derivatives markets on the Chicago Mercantile Exchange, which handled an average of 28.3 million contracts per day in the third quarter on futures contracts linked to interest rates, Treasuries, energy and stocks.

It was much longer than the 2019 blackout that disrupted global trading for three hours and underscored the Chicago Mercantile Exchange’s dominance of global derivatives markets.

“Today’s turmoil shows how concentrated futures markets actually are – there are not a lot of alternative venues for key products,” said Thomas Texier, head of clearing at Marks.

Even before the power outage, global markets were bracing for a quiet day after the Thanksgiving holiday, with no major economic data scheduled and US stock markets closing early.

“It’s the best day of the year for this to happen — it’s very quiet,” said the CEO of a large hedge fund. “But a very long outage of the main market facilities and not a lot of communication with them [investors]. Someone must have left early for Thanksgiving dinner.”

Friday’s outage came on the last trading day of the month, when many options contracts expire and traders typically convert their positions into new contracts.

Investors said earlier on Friday that the power outage made banks reluctant to trade other markets such as bonds, swaps and currencies on Friday morning, leading to higher transaction costs.

The Chicago Mercantile Exchange sold the 450,000-square-foot data center in the suburbs outside Chicago to CyrusOne in 2016, in a $130 million sale-leaseback deal.

Unlike new mega-data center projects in which major tech groups are investing hundreds of billions of dollars in artificial intelligence, the 109-megawatt facility is a more traditional data center that relies on air conditioning to keep rows of giant servers at a stable temperature.

CyrusOne is headquartered in Dallas, Texas, and operates more than 55 data centers across the United States, Europe and Asia. The company is owned by US private equity groups KKR and Global Infrastructure Partners.

CyrusOne said one facility “experienced a refrigeration plant failure affecting multiple refrigeration units” on Thursday. She added that the company’s engineers have restarted some units and “deployed temporary cooling equipment to supplement our permanent systems.”

Additional reporting by Costas Morselas, Tim Bradshaw and Ian Smith