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Software forces temporary shutdown of Chicago options exchange

A software glitch is being blamed as the

A software glitch is being blamed as the Chicago Board of Options Exchanges finally managed to open Thursday, hours after its scheduled opening. Credit: Getty Images, 2012

The Chicago Board Options Exchange opened for trading 31/2 hours late Thursday after a software malfunction shut the market while top executives were at an industry event in Las Vegas.

The market, which accounts for about 25 percent of U.S. options trading, opened at 12:50 p.m. Eastern time after being closed from the start of the trading day. The shutdown forced traders to scramble for alternatives.

The outage followed a brief scare in financial markets Tuesday afternoon when hackers sent a false Associated Press tweet reporting explosions at the White House. Stocks plunged for two minutes as computerized trading systems unloaded shares.

Regulators are increasingly looking into the safety of computerized trading systems.

Initially, there was speculation that CBOE computers had been hacked, but exchange officials believe hackers were not involved.

Ed Provost, chief business development officer, said at a conference in Las Vegas that a software malfunction caused the outage.

The CBOE is the largest U.S. options exchange. It is the only place to trade two popular options -- one a bet on the future price of the Standard & Poor's 500 stock index, the other a kind of insurance against wild stock-price swings.

Options give the holder the right, but not the obligation, to buy and sell stocks or other financial assets in the future.

The exchange normally opens at 9:30 a.m. When it opened at 12:50 p.m., the only trading was in options on the S&P 500, according to a CBOE Twitter feed. Trading of other options resumed 10 minutes later, the CBOE tweet said.

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