Market News & Headlines >> CME Group Urged to Develop Emergency Plan
CME Group should develop emergency procedures to be followed in case of any future outages of its Globex electronic trading platform, including temporarily suspending open-outcry trading until Globex becomes operational again, a grain industry group recommended last week.
The National Grain and Feed Association also said that if Globex comes back on line on the same day, even after regular trading hours, it may be useful to reopen both Globex and the open-outcry pits for a “relatively short ‘clean-up’ session”.CME Group sought recommendations from the NGFA after a Globex outage in several of its agricultural futures markets on April 8 that resulted in a flood of orders into its open-outcry pits near the close of trading.
"Many firms have transitioned their systems to the electronic platform and are not prepared to try to execute large order volumes through the pits, which in turn are no longer prepared to handle such volume," MJ Anderson, chairman of NGFA's risk management committee, said in a letter to CME Group executive chairman and president Terry Duffy dated May 12 and posted on its website on Friday.
The group also noted that on April 8, many market participants had already entered orders in Globex that couldn’t be cancelled and thus couldn’t be entered in the pits because those participants were not sure which orders might be filled when Globex came back online and did not want to double up on orders. Allowing open outcry trading to continue during a Globex outage would also create a least the potential for significant market moves to occur without equal access for all market participants seeking to offset risk, NGFA said.