UPDATE: CME Apologizes To Clients Affected By Order Test Error

CME Group Inc. (CME) issued customers an apology Thursday and pledged corrective action after the exchange mistakenly sent test orders into live energy and metals markets this week.

In a letter reviewed by Dow Jones Newswires, top CME executives, including CEO Craig Donohue, acknowledged that proper procedures weren't followed and said the exchange had "implemented immediate corrective procedures to prevent a reoccurrence in the future."

In addition, the letter pledged to work with customers who may have lost money on the trades.

"We acknowledge that this error has negatively impacted our clearing firms and customers in these markets," the letter said.

CME's letter comes three days after the test error first occurred, and after some customers complained they had not been contacted by the exchange.

Monday's mistake, which CME has attributed to human error, sent 30,000 test orders onto Globex, CME's electronic platform. The orders were placed there for six minutes, and wound up leaving some traders with unexpected positions. In addition, the exchange mistakenly sent out tens of thousands of messages, which typically include system updates or changes to particular markets or contracts.

Gary Gensler, chairman of the Commodity Futures Trading Commission, said Thursday that agency officials met with CME representatives again Wednesday on the matter.

"They've been very cooperative," said Gensler, speaking to reporters at an industry event in New York. He said the issue arose from a system test based on last Friday's trading activity was accidentally fed into the live trading system.

Thursday's letter from the CME said that while it isn't possible to cancel the trades, CME would "work with all affected customers to neutralize the financial effect of these transactions, including making customers whole for net losses they incurred in exiting positions."

In addition to Donohue, the letter was also signed by CME Executive Chairman Terrence Duffy and President Phupinder Gill. The letter was dated Sept. 15, but wasn't sent out to customers until Thursday.

"We assure you that this is not reflective of the very high standards that we set for ourselves, and we are deeply sorry for the impacts that it had on you and your business," they said.

-By Sarah N. Lynch, Dow Jones Newswires; 202 862 6634; sarah.lynch@dowjones.com

(Jacob Bunge and Marshall Eckblad contributed to this article.)

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