Aside from trading in the foreign exchange and stock market, investors, nowadays, also enjoy engaging themselves in futures market where the buying and selling of commodity futures happen. In this type of market, futures and futures options contracts are delivered on specific dates in the future through the means of either open outcry or electronic basis.
When we talk of futures market, perhaps the first thing that comes into our mind is the Chicago Mercantile Exchange, dubbed as the largest and most influential futures exchange in the globe.
Blast from the Past
Trading futures started when the Chicago Board of Trade, or the CBOT, opened its door to the market in 1848. The most common product traded was agricultural. Through this market, farmers and consumers used the exchange as platform to hedge the prices of their products. Some agricultural commodities offered were grains such as corn, soybeans and wheat, and livestock including hogs and cattle.
The exchange continued to expand as silver was introduced in 1969, the first non-agricultural commodity it offered. In the mid 1970’s, CBOT began trading seven foreign currency contracts and its first debt contract, the Government National Mortgage Association Bonds.
Futures in Present
The Chicago Mercantile Exchange became just one entity after the CME and CBOT merged under one name in 2007. Since then, the company has pushed aggressive program of acquiring other futures exchanges such as the New York Mercantile Exchange (NYMEX) that owned COMEX, facilitator of the largest precious metals and energy futures in the world.
Now, the CME is comprised of mega-commodities exchange that shares costs over plenty of products after its success in merging various commodity exchanges under its name.
Based on reports coming from the company, the exchange is facilitating 3 billion contracts per year worth $1 quadrillion. And as of January 20, 2015, CME recorded a market capitalization of $28.73 billion.