Electronic trade at CME (CME) froze on Tuesday, causing floor traders to experience a little nostalgia as they were forced to use an open outcry system to transmit orders. CME operates the Chicago Mercantile Exchange, the Chicago Board of Trade and other exchanges worldwide.
Traders realized that a glitch was occurring at around 2 p.m. Eastern time, when prices failed to update on order entries. This led to a flood of floor traders back into trading pits, using traditional hand signals and shouting to communicate orders.
Initially, some feared that the switch to open-outcry trading would strain the system and lead to more issues at CME. But without floor trading, the entire system would have shut down.
CME is the largest futures exchange operator in the world as measured by market capitalization and contracts traded. The CME's various exchanges trade around 1.1 million agricultural commodity contracts a day, meaning halted prices have the potential to disrupt markets across the globe.
Tuesday's issues affected farmers, grain companies and investors who sought to buy and sell derivative contracts. Some of their orders were canceled when submitted electronically, and there was also some difficulty for floor traders to answer and respond to all the telephone orders received.
Sterling Smith, a futures specialist at Citigroup, told the Wall Street Journal that the day was aggravating for producers and dealers of commodities who really needed to hedge supplies.