Globex glitch grounds CME's Eagle platform

The maiden flight of the Chicago Mercantile Exchange's (CME) Eagle (electronic arbitrage Globex liquidity enhancer) platform has been delayed until October due to problems with Globex, the CME's electronic trading platform, which supports Eagle.

Eagle – originally due to go live on July 14 – will permit calendar spread trading on eurodollar futures contracts, a procedure currently possible only in open outcry floor trading. But the introduction of the platform has been rescheduled because Globex has experienced connectivity problems and issued erroneous reports on several occasions.

For example, on June 14, the ‘I-Link’ servers connecting proprietary trading firms and independent software vendors to Globex went into 'backup mode', said Ellen Resnick, director of corporate relations at the CME. Some customers received erroneous rejection messages for trades that had previously been listed as accepted.

On June 28 at 9:30am CDT, a database supporting Globex connections via the Fix 2.3 protocol and the order-routing API, OrAPI, went down. Users lost connectivity until about 10:40am, when service was restored.

Resnick said measures to correct such problems were taken, and additional resources will be committed to ensure the integrity of the platform. She declined to detail those measures because CME is in a quiet period in preparation for its initial public offering.

CME's board elected to defer the implementation of Eagle until these problems could be resolved. Globex has experienced record volume recently, breaking the one million contracts per day mark three times between June 10 and July 10. CME officials said the trading surges caused the problems.

Eagle has undergone an extensive test period between June 18 and last week involving I-Link access, but that has not affected Globex connectivity.

"These issues were not related to Eagle," Resnick said. "They were volume stresses. Rather than introduce a new application, which we were fully prepared to do this month, we wanted to devote our resources to reliability."

This is not the first time Globex has failed the CME in a high-volume situation. In September 1998, the Globex2 version failed when it faced heavier-than-anticipated retrieval demand for historical information that conflicted with the order execution flow. It was down for more than a week, and trading had to be switched back to the original Globex platform, installed in 1992.

The eurodollar contract, currently traded in the pits only, is one of the exchange's most popular, along with the e-mini contract – one-fifth to half-sized, exclusively electronic contracts – that is driving much of Globex's recent success. Resnick said e-minis represented about 70% of contracts on the million-contract days. The CME is not allowed to predict volumes, but Resnick said in January 2002 the CME recorded an average of 860,000 Eurodollar contracts traded per day.