Huge gold trade trips circuit breaker, prompts 20 second halt: Nanex says; CME calls it a ‘pause’
A large sell order among gold-futures contracts caused a circuit breaker to trip and shut down electronic trading on Globex for 20 seconds early Thursday, according to high-frequency trading scourge Nanex Research. That was the longest halt Nanex has on record for a widely traded futures contract.
Specifically at 2:54:05 a.m. Eastern time, about 2,000 December gold futures contracts GCZ3 -2.52% traded in a second, taking prices down from $1,354.80 to $1,344.50 and a trip in the circuit breaker shut down trading for 20 seconds.
Nanex said on its website that a closer look at the data reveals that the action was mostly likely caused by one large order to sell at the market.
The large order came “completely out of the blue,” said Eric Hunsader, a spokesman for Nanex. “There was very little other activity around that time.”
The halt was the “longest I’ve ever seen for major commodity futures,” he said, adding that 5 seconds is the norm.
CME Globex is the trading platform offered by CME Group CME +0.19% .
CME Group called the 20-second episode a “Stop Logic Event.”
“That 20 seconds is the overnight interval for a single iteration ‘Stop Logic Event’” – a “20-second pause is the standard Stop Logic period for overnight, electronic trading in our metals complex,” said Chris Grams, a spokesman for CME.
“Stop logic introduces a momentary pause in trading, lasting between 5-20 seconds, to prevent excessive price movements from cascading stop price orders. Stop logic offers market participants the opportunity to provide additional liquidity and permits the market to regain its equilibrium,” according to the CME.
Gold fell 33.80 to $1,330 an ounce in recent trading.
– Myra Saefong
Follow Myra @MktwSaefong
Follow The Tell on Twitter @thetellblog
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