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On Friday morning, pre-market trading was a bit erratic amid news of a blackout at the Chicago Mercantile Exchange (CME). Futures trading didn’t open until 8:30 am. Before the restart, this blackout disrupted global trading across Asia and Europe.

This was the largest technical blip in a while, and it impacted Globex Futures & Options markets. Representing about 90% of CME Group's trading volume, these markets include futures, options, and commodities.

Now, this didn't impact trading during the day, but it did tell us how the markets function.

Most people think the stock market is a big scoreboard, a casino. Prices blink higher or lower because someone hits buy and another person hits sell. They think stocks live in one world, options in another, futures in a third, and bonds somewhere off in the basement, drinking alone. It sounds tidy. It’s also wrong.

The real market resembles a web. A small group of large firms sits near the center of that web and connects many things. Once you see that, some weird stuff starts to make more sense. A futures outage. A random air pocket in options.

Spreads can blow out even though the news looks quiet. These things can be connected, though the dynamics depend on many factors, such as the following:

• Volume: How much is trading
• Volatility: How wild price swings are
• Hedging demands: The need to offset risk
• Sentiment: The market’s collective mood/gut feeling

It’s not a neat ripple. It’s messier than that. But the connections are real. Let me walk through it the way I would explain it to a friend who does not live in finance but has suffered a concussion, yet still has access to a refrigerator full of beer.

This All Starts with Market Makers

When you click a button to buy or sell a stock or option, your trade does not go into some magic pool and hope for a match. There is often a firm on the other side.

Not always another retail trader. Not always a long-term investor. Not always your brother-in-law who “does pretty well in the market.” A significant portion of retail order flow ends up with market makers.

Now, the exact share is hard to pin down publicly because order flow is fragmented across brokers, exchanges, dark pools, and internalizers. Not every trade hits a market maker. Sometimes you match with another natural buyer or seller. But market makers are common enough counterparties that these firms shape the experience you have when you hit “buy.”

These are names you rarely see on CNBC because they’d put the audience to sleep. I’m talking about Citadel Securities. Jane Street. Optiver. Hudson River. SIG. IMC. Oh, and the trading desks at Goldman, JPMorgan, and Morgan Stanley.

They live inside the market’s plumbing like the thing that clogs your drain, but in this case, they make everything work instead of ruining Thanksgiving. They don’t care about the story or the talking heads. They worry about things like the following:

• Risk: Their potential to lose money
• Hedging: Offsetting bets to protect
• Inventory: Positions they’re currently holding
• Speed: Milliseconds matter, it's important to be first

If the major liquidity providers pulled back significantly, the market we see would get a lot uglier. They are the people with their hands on the scales, and if they don’t keep it here in these heavily financialized markets, things get really fair really quickly. I’m talking wider spreads. Slower fills. More slippage.

The market would not vanish. There are plenty of participants, but the smooth, instant execution that retail traders take for granted would degrade fast. Think of it as sending a text to someone who definitely saw it but now takes four hours to respond.

This is the first thing I want people to understand. The modern market (especially post-2008) exists largely because these firms stand in the middle.

The Big Ones Operate Across All Markets at Once

Here is the part no one explains to the retail trader. A large diversified market maker who quotes you a price for Apple options might also be doing a few other things at the same time:

• Making markets in S&P 500 futures
• Trading Treasury futures
• Quoting crude oil futures
• Trading currency products
• Running a book of volatility trades
• Somehow, finding time to sponsor a youth soccer team in Connecticut or to buy a new beer pong table for the office with the new company logo on it

Not every firm does all of this. Many shops specialize and might be cash equities experts, bond desks, FX desks, or derivative-only operations.

The universe of liquidity providers is broad, and I don’t know where they all are, but the biggest players, the Citadels and Jane Streets, operate across many markets at once. And those firms handle a significant share of volume in certain segments.

It’s not a wall of separate markets. It’s one large room with many doors. The biggest firms sit in that room and look at every door at once. If they take a risk in one place, they hedge it somewhere else. If they get long in stock, they may hedge with index futures. If they sell a pile of call options, they may buy futures and Treasuries and tweak their exposure to volatility.

They are not playing lots of isolated games. They are playing one big game. Citadel Securities manages risk, in their own words, "in a cross-business and cross-product way." Jane Street uses options to hedge firm-wide tail risk. These are not separate silos. They’re connected pipes.

Futures Are the Reference Point

This is where people often get confused. And I get confused when I explain it, so we are in this together.

Futures are agreements to buy or sell something at a set price on a set date. That’s it. It’s easy to mix them up with options. The primary difference is this:

• Options are choices
• Futures are obligations

Both sides must transact at the agreed price on the agreed date. Because those deals are locked in, futures serve as a fast, nearly 24-hour reference price that updates before stocks even open. Dealers, hedge funds, and algorithms use futures to hedge risk, price derivatives, and gauge where money is flowing across the system.

Textbook option pricing doesn’t require futures. It runs on stock price, volatility, time, and interest rates. But in practice, dealers often use futures to hedge and to read the market.

When those futures go dark, the theory still works. The practice gets harder. If you think of the system as a map, futures are one of the main landmarks. When CME futures go down, the math still “works” on paper. But a big part of the real-world compass disappears.

How One Trade Ripples Through the System

Take a simple example. You buy a call option on an ETF. On your screen, it is one click. On the dealer’s side, it might trigger something like the following:

• A stock hedge in the ETF or its components
• A small trade in S&P or Nasdaq futures
• A tweak to Treasury futures to adjust interest rate exposure
• A change in some volatility hedge elsewhere
• A brief moment of silent rage from a quant who was about to take lunch

You see a single trade. They see a network of risk that needs to stay in balance. Multiply that by millions of trades a day, across stocks, ETFs, futures, options, and currencies. Now you can see why a problem in one part of the system can show up elsewhere.

Why This Outage Matters

CME had a cooling failure at its CyrusOne data center in Chicago on the night of Nov. 27. Futures stopped trading. Not some futures. Nearly all of them. For over ten hours.

This was one of the longest outages in years. It was worse than the 2019 technical error that lasted about three hours, and more extensive than the 2014 disruption that sent traders scrambling back to the floor like it was 1987.

The cash stock market did not vanish. You could still trade stocks. You could still trade options on those stocks and ETFs. But the dealers lost one of their main tools. They temporarily lost:

• Index futures that hedge stock exposure
• Treasury futures that hedge rate risk
• Currency futures that hedge FX exposure
• Futures options they used to manage volatility

If this had extended into the trading day, participants would have gotten more cautious.

Spreads can widen, though unevenly across products. Order size can shrink in affected instruments. Quotes can update more slowly. Your fills can get worse, you might find alternate venues, or you might delay execution.

The impact is not uniform. Some traders get hit harder than others. Some find workarounds. But the general direction is toward tougher conditions when a major piece of infrastructure goes dark.

One trader in Malaysia told CNBC he had been on the phone with his broker “throughout the afternoon” as the outage dragged on. A CMC Markets executive said he had “never seen such a widespread exchange outage in 20 years.”

The timing made it tougher. U.S. markets were closed for Thanksgiving, so futures were the only signal for global price direction. Take away the signal, and you take away the confidence.

The system is still alive, but it’s not comfortable. It’s like flying a plane when part of the instrument panel goes dark. You can still fly, but you trust your moves less. And the passengers can tell something is wrong because the pilot keeps opening and closing the overhead bin for no reason.

Why I Am Telling You This

It’s important to show you how the machine really works. And if we do find ourselves in this situation again, you’re prepared. Also note that it’s important to understand:

• Some large firms sit near the center and handle a disproportionate share of volume in certain markets
• Many of them hedge across multiple markets at once
• Futures, options, stocks, and bonds can be tied to those hedges

Once you know this, you can stop thinking of the market as just a casino. You start to see it as a system of pipes, valves, and pressure.

Remember, this is a mental model, not a perfect map. The market is not a unified monolith controlled by five guys in a room. It is thousands of participants with different strategies, time horizons, and risk appetites. Some specialize. Some diversify. Some trade against each other. The “web” metaphor is useful for understanding why disruptions can ripple. There is no single control panel anywhere. It’s messier and more fragmented than that.

In the future, I hope that when something breaks, you don’t panic at the headline. Instead, you should ask:

• Who just lost a tool?
• Who lost a hedge?
• Who is going to widen spreads or step back?

That is how market pros think. We’ll get you there day by day.

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