A data centre fault halted activity on the CME for several hours on Friday, bringing futures trading to a standstill and fanning concerns over global markets’ heavy reliance on a single exchange.
CME Group, the world’s largest derivatives exchange, succeeded in restoring operations an hour before Friday’s Wall Street stock market open, after an almost 10-hour outage that hampered investors’ ability to transact in equities, bonds, currencies and commodities.
“Today’s disruption shows how concentrated futures markets really are — there just aren’t many alternative venues for the main products,” said Thomas Texier, group head of clearing at Marex.
The outage began late on Thursday in the US and came as markets on Wall Street prepared to reopen after the Thanksgiving holiday.
Investors, who rely on CME futures to hedge their positions in markets ranging from Treasuries to stocks on the S&P 500, complained they were flying blind without futures prices.
CME blamed the halt in trading on a “cooling issue” at a data centre 35 miles from the CME’s headquarters in Chicago and operated by private equity-owned CyrusOne.
Trading on its main Globex platform, which hosts the main futures contracts linked to Wall Street equity futures and US Treasuries, restarted at 7.30am US Central Time. Its BrokerTec EU, BrokerTec US Actives and EBS currency markets reopened earlier on Friday.
The disruption had hit all of CME’s derivatives markets, which handled an average of 28.3mn contracts a day in the third quarter on futures tied to interest rates, Treasuries, energy and equities.
It was far longer than an outage in 2019 that disrupted global trading for three hours and underscored CME’s dominance of global derivatives markets.
Even before the outage, global markets had been set for a quiet day following Thanksgiving, with no major economic data scheduled and US equity markets closing early.
Traders said volumes were light after markets reopened, with S&P futures climbing 0.3 per cent and the Wall Street benchmark rising by the same amount after markets for their shortened session.
“It’s about the best day of the year for it to happen — it’s pretty quiet,” said the chief executive of a big hedge fund. “But a very long outage for a key market utility and not much communication with [investors]. Someone must have left early for their Thanksgiving dinner.”
Friday’s disruption came on the final trading day of the month, when many options contracts will expire and traders typically shift their positions into new contracts.
Investors said earlier on Friday that the blackout was making banks reluctant to trade in other markets such as bonds, swaps and currencies on Friday morning, pushing up transaction costs.
CME sold the 450,000 sq ft data centre in the suburbs outside Chicago to CyrusOne in 2016, in a $130mn sale and leaseback deal.
Unlike the giant new data centre projects that big tech groups are investing hundreds of billions of dollars in for artificial intelligence, the 109-megawatt facility is a more traditional data centre that relies on air conditioning to keep its giant ranks of servers at a stable temperature.
Based in Dallas, Texas, CyrusOne operates more than 55 data centres across the US, Europe and Asia. The company is owned by US private equity groups KKR and Global Infrastructure Partners.
CyrusOne said one of the facilities “experienced a chiller plant failure affecting multiple cooling units” on Thursday. The company’s engineers restarted some units and “deployed temporary cooling equipment to supplement our permanent systems”, it added.
Additional reporting by Costas Mourselas, Tim Bradshaw and Ian Smith
