NEW YORK (TheStreet) -- Even in the era of electronic trading and high-frequency Flash Boys, sometimes wires get crossed.
Electronic trade at CME (CME) froze on Tuesday, causing floor traders to experience a little nostalgia as they were forced to use an open outcry system to transmit orders. CME operates the Chicago Mercantile Exchange, the Chicago Board of Trade and other exchanges worldwide.
Traders realized that a glitch was occurring at around 2 p.m. Eastern time, when prices failed to update on order entries. This led to a flood of floor traders back into trading pits, using traditional hand signals and shouting to communicate orders.
Initially, some feared that the switch to open-outcry trading would strain the system and lead to more issues at CME. But without floor trading, the entire system would have shut down. CME is the largest futures exchange operator in the world as measured by market capitalization and contracts traded. The CME's various exchanges trade around 1.1 million agricultural commodity contracts a day, meaning halted prices have the potential to disrupt markets across the globe. Tuesday's issues affected farmers, grain companies and investors who sought to buy and sell derivative contracts. Some of their orders were canceled when submitted electronically, and there was also some difficulty for floor traders to answer and respond to all the telephone orders received. Sterling Smith, a futures specialist at Citigroup, told the Wall Street Journal that the day was aggravating for producers and dealers of commodities who really needed to hedge supplies. Futures and options trading in 31 different markets from wheat to rainfall futures were halted, but CME clarified that oils and metals trading was not affected. The exchange also did not give exact reasoning behind problems that halted electronic trading. Although Chicago's floor-based trading has seen its influence decline over the past decade, CME keeps pit trading open as an option for brokers and investment managers who prefer the method. The rush of activity Tuesday was embraced by market veterans who saw it as an opportunity to show their relevance after years of watching computers take over the industry. "It was just a blast from the past," Jerome Israelov, a veteran grain floor trader who lost his voice in the shouting, told the Chicago Tribune, "It was just a fun, fun hour." CME resumed electronic trading Wednesday morning, with a spokesperson claiming that the issue had been resolved. /a>CME data by YCharts At the time of publication, the author had no position in any of the funds mentioned. Follow @macroinsights This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.Stock quotes in this article: CME