By Jacob Bunge, Bradley Hope and Leslie Josephs
CHICAGO--CME Group Inc. on Tuesday halted electronic trading in
some of its most popular agricultural and energy contracts due to
"technical issues," according to a notice from the exchange.
Futures and options trading in corn, wheat, live cattle and
other contracts were halted, according to the exchange. CME said in
the notice that it would cancel some orders while others would
stand.
In a second message, the exchange said its ethanol futures and
options markets were also halted.
"We are working toward a resolution and we'll share more
information when the issue's resolved," said Chris Grams, a
spokesman for CME. He said CME hadn't yet identified the cause of
the problem and couldn't say when it would be fixed.
All of the grain futures and options would be settled through
the manual, open outcry system that has largely been supplanted by
electronic screen trading. About 10% of contracts traded on CME's
markets last month were transacted through open-outcry trading, the
company said last week.
The technical issues at CME, which operates benchmark markets
that help traders and companies worldwide price grain and other
commodities, are the latest in a spate of system problems that have
snarled trading in U.S. stocks and derivatives markets in recent
years.
"It's kind of a pain," said Michael McDougall, a senior vice
president at brokerage Newedge and the head of its Brazil desk. "We
had a frustrated client on the line, saying 'What do I do now?' I
thought they might allow some trading to clean up some positions,
but it looks like they haven't fixed the problem. It's somewhat
disconcerting."
Amid the temporary change to open outcry, some traders worried
the move would strain the system.
Sterling Smith, a futures specialist at Citigroup in Chicago,
said, "It's like if you were flying a 747 and you threw it in
reverse. All the volume comes through the box (electronically), the
alternative is the pit. The pit is not really equipped to handle
this sudden explosion. For people who actually have to get
something done, it could cause some aggravations," he said,
referring to producers and dealers of commodities who need to hedge
their supplies.
In an afternoon alert, CME said some markets, such as livestock
and dairy, would reopen at 2:30 p.m. Central Time.
Alexandra Wexler contributed to this article.
Write to Jacob Bunge at jacob.bunge@wsj.com, Bradley Hope at
bradley.hope@wsj.com and Leslie Josephs at
leslie.josephs@wsj.com
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