CME system glitch halts U.S. natural-gas futures trading for about an hour

CME down again…recurring technology risk

Gold and copper futures also briefly halted

Trading in natural-gas futures on the Chicago Mercantile Exchange (CME) Group’s electronic platform, Globex, was suspended for nearly an hour.

According to Globex, a technical issue on the 25th (local time) halted natural-gas futures trading for about 50 minutes and options trading for about 35 minutes. The interruption added to market confusion as it coincided with the expiration date of the March natural-gas futures contract. Expiration is a key moment when investors roll over positions into the next month (closing expiring contracts and switching into the next contract).

Metals futures contracts traded on Globex, including gold and copper, were also temporarily halted. Nicky Shiels, head of metals strategy at MKS PAMP, said the recent glitch could undermine confidence in liquidity and price discovery at a time when extreme price volatility is already destabilizing market functioning.

Late last month, CME-owned New York Mercantile Exchange (NYMEX) also unusually halted natural-gas trading for two minutes just before the close. NYMEX is one of the two main exchanges for U.S. natural-gas futures. Bloomberg said the move distorted settlement prices and compounded traders’ confusion amid unusually high volatility driven by a cold snap.

In November last year, a Globex system outage also suspended trading for a period in stock-index, foreign-exchange, crude-oil and U.S. Treasury futures and options. At the time, CME Group said the halt was caused by a problem with the data center’s cooling system.

Separately, CME said daily natural-gas trading volume hit a record high on the 20th of last month, topping 2.5 million contracts. That was up 15% from the previous one-day peak set in November 2018.

Lim Da-yeon allopen@hankyung.com