The Chicago Mercantile Exchange is to defer implementation of its Eagle Project for electronic calendar spread trading until October following the failure of the exchange's Globex e-trading platform to cope with a recent surge in volume.
The breakdowns in the Globex platform are an embarrassment for the Chicago exchange which has been boasting of record electronic trading volumes in the run-up to its forthcoming IPO.
Volumes over Globex have risen from more than 16 million contracts in the first quarter of 2001 to nearly 43 million in the second quarter of 2002. In the last month, there have been three occurrences when more than one million CME contracts were traded on the platform in a single day.
The exchange says that during the trading surge there were "several instances of connectivity problems or erroneous reports" that affected some users of the platform. CME claims to have identified the causes of the problems and either has corrected or is in the process of addressing them.
The Eagle facility, which was scheduled to go live next week, will make it possible for the first time to trade calendar spreads electronically over Globex. Calendar spreads are a popular and complex trading strategy in Eurodollar futures that currently can be executed only through open outcry trading.
The decision to defer Eagle's implementation date will mean the exchange can devote additional resources to ensure that Globex can operate in a high volume environment, says Terry Duffy, CME chairman.
He states: "Given the recent record volumes and the resulting stresses to the system, it is imperative that we prioritise our efforts to first ensure the continuous performance and efficiency of the platform before attempting to expand its use with a new major application."