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Commodity Exchanges
Some
Commodity Exchanges
1. Chicago Board of Trade
The
Chicago Board of Trade (CBOT), established in 1848, is a leading
futures and options on futures exchange.
More than
3,600 CBOT members trade
50 different futures and options
products at the exchange through open auction and/or
electronically.
In its early history,
the CBOT traded
only agricultural commodities such as corn, wheat, oats and
soybeans.
Futures contracts at the Exchange evolved over the
years to include non-storable agricultural commodities and
non-agricultural products.
In October 2005, the CBOT
marked the 30th anniversary of the the Exchange's first
financial futures contract, based on Government National
Mortgage Association mortgage-backed certificates.
Since that
introduction, futures trading has been initiated in many
financial instruments, including U.S. Treasury bonds and notes,
30-Day Federal Funds, stock indexes, and swaps, to name but a
few.
Another market innovation, options on futures, was
introduced in 1982. The CBOT added a new category to its diverse
product mix in 2001 with the launch of 100 percent electronic
Gold and Silver futures contracts.
Additionally,
South American
Soybean futures and Ethanol futures, the Exchange’s newest
products, were introduced in 2005 in response to shifting trends
in the global agricultural economy.
For decades, the
primary method of trading at the CBOT was open auction, which
involved traders meeting face-to-face in trading pits to buy and
sell futures contracts. But to better meet the needs of a
growing global economy, the CBOT successfully launched its first
electronic trading system in 1994.
During the last
decade, as the use of electronic trading has become more
prevalent, the Exchange has upgraded its electronic trading
system several times.
Most recently, on October 12, 2005, the
CBOT successfully launched its newly enhanced electronic trading
platform, e-cbot, powered by LIFFE CONNECT®, by introducing a
major API upgrade.
Whether trading futures and options on
futures through an electronic platform or open auction, the
CBOT’s primary role is to provide transparent and liquid
contract markets for its member/stockholders and customers to
use for price discovery, risk management and investment
purposes.
These futures markets also allow speculators
throughout the world to interpret economic data, news and other
information and use that information to make decisions about
price and enter the futures markets as investors.
Speculators
bridge the gap between hedgers’ bids and offers, thereby making
the market more liquid and cost effective.
To learn
more: www.cbot.com
2. Chicago Mercantile Exchange - The
Chicago Merc
The Chicago Butter and Egg Board was
founded in 1898 and evolved into the Chicago Mercantile Exchange
(now CME) in 1919.
Initially, its members traded
futures contracts on agricultural commodities via open outcry.
This system of trading – which is still in use today –
essentially involves hundreds of auctions going on at the same
time.
In open outcry trading, traders stand in a trading
pit and call out prices and quantities that indicate their
willingness to buy or sell.
They use hand signals to convey the
same information since it can be difficult to hear if everyone
is shouting at once.
Open outcry is
an efficient means
of "price discovery," allowing buyers and sellers to arrive at
the best prices given the supply and demand for a given futures
or options on futures contract.
Its speed and efficiency have
been further enhanced by the introduction of a variety of
trading floor technologies.
The CME open outcry platform
and trading floor systems are linked to the CME® Globex®
electronic trading platform, which allows market participants to
buy and sell whether they're sitting at trading booths on our
Chicago trading floors, working at offices or homes thousands of
miles away, or making trades during and after regular trading
hours.
At CME, some traders prefer face-to-face
interaction on the CME trading floors while an increasing number
prefer to trade electronically.
To learn more:
www.cme.com
3. The London Metal Exchange
Established for over 130 years and located in the heart of The
City of London, the London Metal Exchange is the world’s premier
non-ferrous metals market.
It offers futures and
options contracts for aluminium, copper, nickel, tin, zinc and
lead plus two regional aluminium alloy contracts.
In
2005 the Exchange launched the world’s first futures contracts
for plastics; for polypropylene and linear low density
polyethylene, with the introduction of regional plastics
contracts in 2007.
In addition,
it offers LMEminis,
which are smaller-sized contracts for copper, aluminium and zinc
plus an index contract (LMEX).
The Exchange provides a
transparent forum for all trading activity and as a result helps
to ‘discover’ what the price of material will be months and
years ahead.
This helps the physical industry to plan
forward in a world subject to often severe and rapid price
movements.
Such is the liquidity at the Exchange that the prices
‘discovered’ at the LME are recognised and relied upon by
industry throughout the world.
The LME is
a highly liquid
market and in 2007 achieved volumes of 93 million lots,
equivalent to $9,500 billion annually and between $35-45 billion
on an average business day.
Despite its London location
the LME is a global market with an international membership and
with more than 95% of its business coming from overseas.
Being a principal-to-principal market, the only organisations
able to trade are its member firms, of which there are various
categories.
LME members provide the physical industry with
access to the market, to the risk management tools and to the
delivery mechanism.
Trading takes place across three
trading platforms: through open-outcry trading in the ‘Ring’,
through an inter-office telephone market and through LME Select,
the Exchange’s electronic trading platform.
To learn
more: www.lme.co.uk
4. NYSE Euronext
NYSE
Euronext, the holding company created by the combination of NYSE
Group, Inc. and Euronext N.V., was launched on April 4, 2007.
NYSE Euronext (NYSE/New York and Euronext/Paris: NYX)
operates the world ' s largest and most liquid exchange group
and offers the most diverse array of financial products and
services.
NYSE Euronext, which brings together six cash
equities exchanges in five countries and six derivatives
exchanges, is a world leader for listings, trading in cash
equities, equity and interest rate derivatives, bonds and the
distribution of market data.
The New York Stock Exchange
traces its origins to 1792, when 24 New York City stockbrokers
and merchants signed the Buttonwood Agreement.
This agreement
set in motion the NYSE’s unwavering commitment to investors and
issuers.
The historic combination of NYSE Group and
Euronext in 2007 marked a milestone for global financial
markets.
It
brought together major marketplaces across
Europe and the United States whose histories stretch back more
than four centuries. The combination was by far the largest of
its kind and the first to create a truly global marketplace
group.
NYSE Euronext is one of the leading futures and
options trading venues.
In Europe, Liffe is one of the
world’s top futures and options trading businesses for
derivatives on commodities, currencies, equities, bonds,
interest rates, indices and swaps.
In the U.S.,
NYSE
Arca Options is an innovative automated trading system for
equity options that offers superior functionality and
competitive pricing.
NYSE Liffe (subject to CFTC
approval) is going to be the new home for our US Futures
business.
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