Trading on two of CBOE Holding Inc.'s securities exchanges was halted for more than half an hour on Friday due to unidentified technical problems, becoming the latest black eye for U.S. exchange-operators who have suffered a series of outages and malfunctions this year.
CBOE Holdings said it stopped trading for 47 minutes on its C2 electronic Options exchange and for 33 minutes on the CBOE Stock Exchange. Trading resumed on C2 at 10:50 a.m. CDT and on the CBOE Stock Exchange at 10:35 a.m. CDT, according to CBOE's system status page on its website.
Earlier, the company suffered problems affecting the routing of orders, including the dissemination of quotes, on certain stock option classes on C2. Those issues were resolved by 9:33 a.m. CDT, according to the website.
CBOE, which operates the Chicago Board Options Exchange, the largest U.S. options market, said it was investigating the problems.
The outage came one day after U.S. stock exchanges agreed with securities regulators to implement changes in how they respond to major disruptions such as the Aug. 22 software failure at Nasdaq that shut down trading for three hours.
Friday's problem, however, was no where near the magnitude of the Nasdaq outage last month, which idled roughly a third of the U.S. stock market.
C2 offers equity options and an electronic version of options on its exclusively-listed Standard and Poor's 500 index . The electronically-traded SPX options contract, which features an afternoon settlement, differs from the standard monthly SPX options, which are traded mainly face-to-face on the CBOE and have a morning settlement.
C2 has garnered only a small percentage of total U.S. options volume since its launch in October 2010.
Because equity options are listed on 11 other venues, traders can shift their business to other markets, including C2's sister exchange, the Chicago Board Options Exchange.
So far this year, total option market share at C2 through August is 1.89 percent, according to OCC, which clears all listed options. The Chicago Board Options Exchange has 25.36 percent of total market share.
CBOE Stock Exchange market share through August this year is 0.43 percent, trading an average of 26.9 million shares per day, according to CBOE.
CBOE notified traders at 9:45 a.m. CDT that the Options Price Reporting Authority was not disseminating market data from C2. OPRA is a centralized computer system that disseminates options price quotes and completed trades from the exchanges and distributes these to market data vendors.
At 10:03 a.m., trading was halted on C2. One minute earlier, trading was halted on the CBOE Stock Exchange. Trading resumed on the stock exchange at 10:35 a.m. CDT, according to the system status website. The exchange began experiencing dissemination issues starting at 9:41 a.m, CBOE said.
On Thursday, U.S. Securities and Exchange Commission Chair Mary Jo White met privately in Washington with top executives of the major exchanges, including CBOE's executive chairman William Brodsky, and later announced reforms.
Less than a month ago, Goldman Sachs Group flooded CBOE and other U.S. equity options markets with erroneous trades because of a technical error. The trades impacted markets and cost the bank tens of millions of dollars, according to a source.
In April, a half-day outage at the Chicago Board Options Exchange exposed software problems that came about as the exchange prepared to extend trading hours for futures contracts on the CBOE Volatility Index. CBOE at the time delayed the expansion of the trading cycle and has said it plans to add hours in late September.
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