QUOTES-US futures, options resume after CME outage underscores resilience concerns

NEW YORK, Nov 28 (Reuters) - Exchange operator CME Group CME.O said on Friday that some markets had reopened after global futures were thrown into chaos when the world's largest exchange operator suffered one of its longest outages in years.

The halt caused by a data centre cooling issue stopped trading across stocks, bonds, commodities and currencies. Trading had restarted by 1335 GMT after having been knocked out for over 11 hours, according to LSEG data.

QUOTES:

CHRISTOPHER KRAMER, PORTFOLIO MANAGER AND SENIOR TRADER, INVESTMENT GRADE CREDIT TEAM, NEUBERGER BERMAN, CHICAGO:

"It impacted a lot of the futures markets globally, it certainly had more of an impact on some of the key industrial metals, some of the commodity-linked futures markets, and then the equity futures side of things too, but it does look like it’s not necessarily impacting overall market activity this morning and or directional impacts.

"It certainly is a discussion for the next three to five years as we do embark on a lot of the data centre-specific issuance that’s going to be coming to markets, but also just the reliance on technology is the big theme.

"These exchanges have been backed by data centres for a long period of time now, with perfectly reliable consistency, I think this was a little bit of a unique situation from what it sounds like. I wouldn’t necessarily stress or take too much away from that. Obviously it continues to reinforce the need for secure and stable continuation of the markets as it pertains to data centres."

TED PARKHILL, CEO, INCLINE INVESTMENT MANAGEMENT, BOCA RATON, FLORIDA:

"We are a systematic trader, and as a quant firm, we follow daily signals. But going into the holiday, we placed all our trades on Wednesday. In a holiday period like today, we often don't have trades to place and were fortunate we didn't have to get into the market this morning. That's even more lucky because we usually do prefer to trade at the open, when volumes are best and we can get good pricing.

"But while the CME may have gotten lucky too because it was a holiday, and the impact probably will be minimal, I think there will be more systemic questions raised next week.

"I'm required to have a disaster recovery plan, to have redundancies and prove that I'm not a source of risk. Where is the CME's redundancy plan? Why couldn't they just flick a switch and move to a backup power or data center?"

FAWAD RAZAQZADA, MARKET ANALYST, CITY INDEX AND FOREX.COM:

"The market impact is quite significant because without the CME, spreads on spot gold prices, for example, would typically widen with spot liquidity providers not having much confidence in pricing without the future.

"This could bring all sorts of issues with it for traders, which makes it less than an ideal situation to trade. Traders speculating on the underlying gold and other futures markets can't exit their positions during the outage either. So, from a risk management point of view, it is a massive issue."

MIKHAIL ZHEREV, PORTFOLIO MANAGER, AMATI, LONDON:

"This isn’t just a trading issue, it's a reminder that data centres have become essential infrastructure and they are not 100% reliable, they have capacity issues.

"We’re pragmatic optimists on AI, we’ve invested in the AI supply chain.

"My anticipation is that life goes on but everybody will have yet another look at their data centre arrangements and invest more in ensuring reliable supply because the importance of data center uptime is higher and higher."

KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO:

“Currency markets are taking this morning’s CME outage in their stride - functionality seems to be returning, and the EBS platform that handles FX trades is now running normally. Liquidity remains thin given that most participants executed month-end trades ahead of yesterday’s Thanksgiving holiday, and most major pairs are seeing choppy, but range-bound trading action with technical levels holding firm. Markets could hit some turbulence later this morning if benchmark prices remain muddled, but it looks as if that’s a relatively unlikely scenario.”

JOE SALUZZI, CO-MANAGER OF TRADING, THEMIS TRADING, CHATHAM, NEW JERSEY:

"This is such a strange day, in that it's always very, very light volume. If there was to be a glitch day, today's probably a good day to have it."

ALEX MORRIS, CHIEF INVESTMENT OFFICER, F/M INVESTMENTS, WASHINGTON:

"Of all the 252 trading days of the year this could have happened, this probably was the luckiest for the CME. The rolls from one contract to another all happened earlier in the week and the trading volumes today, because it's a half-day for markets, everything was sleepy anyway."

"It's hard to compete" with the liquidity and market dominance of CME-traded futures contracts, he said. Still, "a lot of people at the CME are being called in and hauled in" on what might have been a slow day or a day off for them to do more testing of the systems.