Chicago Mercantile Exchange

CME or, simply, "The Merc"

largest futures exchange in the USA & a history of innovation

Serious Information

Trivia

.The Chicago Butter and Egg Board was founded in 1898 and evolved into Chicago Mercantile Exchange (CME) in 1919. At that time, futures contracts were offered only on agricultural products, such as butter and eggs. Since that time, CME has pioneered a number of innovative products, services and systems.

The Chicago Mercantile Exchange is the largest futures exchange in the USA. The exchange demutualized in November 2000, and went public in December 2002, becoming the first US exchange to do so.

The exchange has a long history of innovation such as:

In 1961 A frozen pork belly futures contract — the first futures contract based on frozen, stored meats. Pork bellies were used in bacon production.

Exchange-traded forex futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts. Forex futures volume has grown rapidly in recent years, but only accounts for about 7% of the total foreign exchange market volume.

(A futures contract is a standardized contract, traded on the futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a pre-set price. The future date is called delivery date or final settlement date. The pre set price is called a futures price. The price of an underlying asset on the delivery date is called the settlement price. )

In 1981 CME® Eurodollar futures, the first contracts to be settled in cash, rather than physically delivered. They became the world's most actively traded futures contract in 2002.

1984: The first international link between futures exchanges — a mutual offset trading link between CME and the Singapore Exchange Derivatives Trading Ltd. (SGX).

1992: CME Globex®, the first global electronic futures trading platform. The platform originally provided after-hours trading. Today, it offers trading approximately 23 hours a day, five days a week.

2000: The first demutualization of a U.S. financial exchange, achieved by converting its membership interests into shares of common stock that can trade separately from exchange trading privileges.

2002: CME Holdings stock is listed on the New York Stock Exchange, making CME the first publicly traded U.S. financial exchange.

To recognize and encourage continued innovation in both financial services and the futures industry, CME launched the Center for Innovation in 2003.

CME has four major product areas: short term interest rates, stock market indexes, foreign exchange, and commodities.

CME has the largest options and futures contracts open interest of any futures exchange in the world, which indicates a very high liquidity. This is vital to the success of any stock or futures exchange.

Trading is conducted in two methods; an open outcry format and the CME Globex® electronic trading platform.
Open Outcry
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.

CME Globex®
Today the CME Globex trading system operates in the heart of CME. It was introduced in 92 as the first global electronic trading platform for futures contracts. This fully electronic trading system allows market participants to trade from booths at an exchange or while sitting in a home or office thousands of miles away. On 19 October 2004, a one billionth (1,000,000,000) transaction was recorded.

http://www.cme.com/ Chicago Mercantile Exchange website

address:

20 South Wacker Drive
Chicago, Illinois 60606
USA
Phone: (312) 930-1000
info@cme.com

2005
Number of contracts traded (round turn trades)
1.090 billion contracts (+35.4% from 2004) valued at $638 trillion

CME® Globex® volume
772 million contracts (+64.3% from 2004)

Annual high for open interest (number of contracts outstanding at the close of trading; a measure of liquidity)
69.4 million positions on Dec. 30, 2005

Trivia

(pronounced "seacargo" )

Chicago is the largest city in Illinois (Midwestern USA state). It is the third most populous city in the USA. Known as "Second City," "Windy City," "City of Big Shoulders," and "Chi-town" (as well as other nicknames, and a variety of colloquial nicknames reflecting the city's character), Chicago is located along the south western shore of Lake Michigan. When combined with its suburbs and nine surrounding counties in Illinois, Wisconsin, and Indiana, the greater metropolitan area known as Chicagoland encompasses a population of almost 10 million people.

A resident of Chicago is referred to as a Chicagoan

The indigenous Potawatomi tribe called the marshes on which Chicago was later built "Checagou," which translates to "wild onion" or "garlic". This name was transferred by European explorers to the Chicago River, and then by settlers to the name. Before Chicago's founding, the name of the river was spelled several ways, such as "Chetagu" or "Shikago".

sport sides: Chicago Cubs & Chicago White Sox (baseball), Chicago Bulls (basketball), Chicago Fire (soccer) Chicago Bears (gridiron)

The options market began in the Chicago area, with grain dealing. Farmers were worried about the price of the grain changing during the time that they were actually growing the crop. As a result they started purchasing options. These fix the price and are in effect a promise to deliver the grain to the purchaser at that price in the future. They used this as a way of hedging their bets and protecting themselves against movements in the markets. Then people started trading these options as if they were marketable objects and the options markets were created.

Chicago Stock Exchange is the USA's biggest stock exchange outside of New York

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