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The Chicago Mercantile Exchange has blamed a problem with one of its data centres as the reason for the shutdown - Christopher Dilts/Bloomberg The world’s largest financial exchange has been forced to halt trading after a fault at one of its data centres, leaving investors “flying blind” and threatening wild price swings when trading resumes.
The Chicago Mercantile Exchange (CME) confirmed trading had been suspended at 2.44am on Friday morning, blaming a problem with one of its data centres.
“Due to a cooling issue at CyrusOne data centres, our markets are currently halted,” CME said. “Support is working to resolve the issue in the near term and will advise clients of pre-open details as soon as they are available.”
CME is the world’s largest derivatives exchange – offering trading on financial products including currencies, government bonds, energy, metals, futures, options and cryptocurrencies.
Derivatives are used by traders to speculate on market moves but are also crucial in helping businesses to guard against risk in their business. For example, airlines often use derivative contracts to fix the price of their fuel well in advance to guard against swings in oil prices.
The financial instruments are also used for trading on stock market prices when the main indexes are closed.
Michael Brown, an analyst at Pepperstone, said: “The length of time that the current outage has lasted for is highly unusual, especially with there apparently being no sign of imminent resolution or market re-opening.
“This, of course, leaves market participants ‘flying blind’ to quite a large degree, and also raises the possibility of potentially violent market moves.”
As of 9am UK time on Nov 28, the exchange had not reopened. Futures trading for the S&P 500 and Dow Jones were paused because of the outage at CME.
US markets are largely closing early due to Thanksgiving, with trading volumes expected to be low. However, this could exacerbate volatility.
Kathleen Brooks, an analyst at XTB, said: “This closure ultimately means that liquidity will be even thinner than usual on the Friday of Thanksgiving. If there is any sensitive market news flow or events, then moves could be exacerbated by liquidity issues, and there could be more volatility as a result.”
UK equities were trading as normal on the London Stock Exchange. The UK exchange previously endured a two-hour outage in 2019. The stoppage was blamed on a “technical software configuration issue following an upgrade of functionality”.
It was not clear what data centre was experiencing the fault. CyrusOne, which is headquartered in Dallas, operates dozens of data centres across the US, Europe, the UK as well as Japan.
CyrusOne was contacted for comment.
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