CBOT's electronic trading failure triggers shutdowns elsewhere
ChicagoBusiness
Aug. 04, 2006
(Reuters) — Electronic trading of financial, metals and agricultural futures at the Chicago Board of Trade was halted by technical problems on Friday, triggering shutdowns at exchanges in Kansas City, Minneapolis and Winnipeg.
Traders were, however, able to use the pit "open outcry" trading platform at the CBOT, Kansas City Board of Trade and Minneapolis Grain Exchange to execute orders.
Canada's Winnipeg Commodity Exchange has been fully electronic since December 2004.
Electronic trading at all the exchanges resumed around noon, after about 2-1/2 hours, but the shutdown raised some questions about the CBOT's trading platforms.
"Although the pits remain open, an outage of this duration might call into question the integrity of the exchange's electronic trading platform," said analyst Frederic Ruffy at Optionetics, a California-based options education firm.
A CBOT spokeswoman said the shutdown was due to technical issues.
"The exchange is working aggressively to resolve the issue," she said.
CBOT share prices were choppy, slipping to a session low of $125.89. They bounced back 53 cents to $127.59 around midday only to slip 50 cents to $126.56 in early afternoon trade.
The CBOT uses the LIFFE Connect System as its electronic trading platform provider, which was developed by the London International Financial Futures and Options Exchange, a unit of the pan-European exchange Euronext.
The CBOT launched daytime electronic trading of agriculture futures such as corn and wheat on Aug. 1 and has since chalked up an impressive traded volume on that platform.
Electronic trading is the mainstay of CBOT financial futures and the only platform for CBOT gold and silver.
Traders of CBOT financial instruments who usually use the electronic platform went back to the old ways of doing business in the trading pits.
"Our screens went down, so we're trading in the pit like the old days," said Todd Colvin, an interest rate broker with Man Financial. "You've got to shake the rust off. It's a different ball game."
Daytime e-trade for T-bond futures was launched in 1998 and now accounts for about 80 percent of the volume.
CBOT grain traders said they did not expect investors to have suffered financially due to the shutdown.
"I don't see how there could have been any losses because they had the pit to trade in, so there was an out or an alternative. There may have been a few exceptions but I haven't heard of any problems," a floor trader said.
Another trader said the timing of the shutdown was bad since the CBOT had launched daytime electronic trading of agricultural futures just this week.
"...it is definitely an issue and the timing is extremely bad, because they just started the side-by-side trading in the grains with the day session a couple of days ago," the trader said. "If nothing else, it will make the news. And it seems like really bad timing."
The CBOT launched daytime electronic trading of its grain and oilseed futures this week, complementing the open 'outcry' system where traders yell out buy and sell orders.
The CBOT, the No. 2 U.S. futures exchange, became a publicly traded company in October 2005. |
