Chicago Mercantile Exchange
|Products||Futures and options|
|Revenue||$3.3 billion USD (CME Group 2015 GAAP)|
The Chicago Mercantile Exchange (CME) (often called "the Chicago Merc", or "the Merc") is a global derivatives marketplace based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board, an agricultural commodities exchange. Originally, the exchange was a non-profit organization. The Merc demutualized in November 2000, went public in December 2002, and merged with the Chicago Board of Trade in July 2007 to become a designated contract market of the CME Group Inc., which operates both markets. The chairman and chief executive officer of CME Group is Terrence A. Duffy, Bryan Durkin is president. On August 18, 2008, shareholders approved a merger with the New York Mercantile Exchange (NYMEX) and COMEX. CME, CBOT, NYMEX and, COMEX are now markets owned by CME Group. After the merger, the value of the CME quadrupled in a two-year span, with a market cap of over $25 billion.
Today, CME is the largest options and futures contracts open interest (number of contracts outstanding) exchange of any futures exchange in the world. The Merc trades several types of financial instruments: interest rates, equities, currencies, and commodities.
CME also pioneered the CME SPAN software that is used around the world as the official performance bond (margin) mechanism of 50 registered exchanges, clearing organizations, service bureaus, and regulatory agencies throughout the world.
- 1 Trading platforms
- 2 Mergers and acquisitions
- 3 Investigation
- 4 Commodity futures and options
- 5 Equity Index Products
- 6 See also
- 7 References
- 8 Further reading
- 9 Notes
- 10 External links
Trading is conducted in two methods; an open outcry format and the CME Globex Trading System which is an electronic trading platform. More than 90 percent of total volume at the exchange occurs electronically on CME Globex.
Operating during regular trading hours (RTH), the open outcry method consists of floor traders standing in a trading pit to call out orders, prices, and quantities of a particular commodity or its derivatives. Different colored jackets are worn by the traders to indicate what firm they are a part of. In addition, complex hand signals (called Arb) are used. These hand signals were first used in the 1970s. Today, however, headsets are also used by the brokers to communicate with the traders. The pits are areas of the floor that are lowered to facilitate communication, somewhat like a miniature amphitheater. The pits can be raised and lowered depending on trading volume. To an onlooker, the open outcry system can look chaotic and confusing, but in reality the system is a tried and true method of accurate and efficient trading. An illustrated project to record the hand signal language used in CME's trading pits has been compiled.
Operating virtually around the clock, today the CME Globex Trading System is at the heart of CME. Proposed in 1987, it was introduced in 1992 as the first global electronic trading platform for futures contracts. This fully electronic trading system allows market participants to trade from booths at the exchange or while sitting in a home or office thousands of miles away. On 19 October 2004, the one billionth (1,000,000,000) transaction was recorded.
When CME Globex was first launched, it used Reuters' technology and network. September 1998 saw the launch of the second generation of CME Globex using a modified version of the NSC[clarification needed] trading system, developed by Paris Bourse for the MATIF (now Euronext).
Traders connect to CME Globex via Market Data Protocol (MDP) and iLink 2.0 for order routing.
Mergers and acquisitions
On October 17, 2006, the Chicago Mercantile Exchange announced the purchase of the Chicago Board of Trade for $8 billion in stock, rejoining the two financial institutions as CME Group Inc. CBOT formerly used outsourced technology platforms but has moved over to CME's Globex trading system. This will provide much of the merger's anticipated savings. The merger will also strengthen the combined group's position in the global derivatives market. The merger agreement was modified on December 20, 2006, May 11, 2007, June 14, 2007, and on July 6, 2007. The merger agreement was passed by shareholders of both CME and the Chicago Board of Trade on July 9, 2007. The merger officially closed on July 12, 2007, after which the Chicago Board of Trade shares (old symbol: BOT) stopped trading and were converted into CME shares as agreed, and the overarching holding company began life as CME Group, a CME/Chicago Board of Trade Company. On January 13, 2008, electronic trading at the Chicago Board of Trade shifted onto CME Globex.
On March 17, 2008, the New York Mercantile Exchange (NYMEX) accepted an offer from CME Group, the parent of the Chicago Mercantile Exchange, to purchase NYMEX for $8.9 billion in cash and CME Group Stock. The acquisition was formally completed on August 22, 2008, and the NYMEX systems were fully integrated by September 30, 2009.
In 1984, the CME was investigated by the U.S. Government Accountability Office. During this investigation, it was realized that the open-outcry system could be abused. The GAO noted that the exchange made attempts to cut down on malpractice, but that it is likely that illegal activity still occurs.
Commodity futures and options
Agricultural Commodity Contracts include: Grains, Soybeans, Oilseeds, Live Cattle, Lean Hogs, Feeder Cattle, Class IV Milk, Class III Milk, Nonfat Dry Milk Powder, Dry Whey, Cheese, Butter, and Random Length Lumber.
Equity Index Products
Equity Index Products include: E-mini S&P 500 Futures, S&P 500 Futures, E-mini Nasdaq-100 Futures, Nikkei/Yen Futures, E-mini Dow (5$) Futures, E-mini Russel 2000 Index Futures, Bitcoin Futures, Yen Denominated TOPIX Futures, Micro E-mini S&P 500 Futures, Micro E-mini Nasdaq-100 Index Futures, Micro E-mini Russel 2000 Index Futures, Micro E-mini Dow Jones Industrial Average Index Futures. There are also index products that follow specific international indexes and select sectors.
Interest rate products include:
|One-Month SOFR Futures||SR1Z9|
|Three Month SOFR Futures||SR3UI|
|10-Year T-Note Futures||ZNH0|
|Ultra 10-Year US Treasury Future Notes||TNH0|
|30 Day Federal Funds Futures||ZQF0|
|2-Year Eris Swap Futures||LITZ17|
|10-Year USD MAC Swap Futures||N1UZ9|
Foreign Exchange featured products include:
|Euro Fx Futures||6EZ9|
|Japanese Yen Futures||6JZ9|
|British Pound Futures||6BZ9|
|Australian Dollar Futures||6AZ9|
|Mexican Peso Futures||6MZ9|
|New Zealand Dollar Futures||6NZ9|
|Russian Ruble Futures||6RZ9|
|Brazilian Real Futures||6LX9|
|Indian Rupee/ USD Futures||SIRV9|
|Standard Size USD/Offshore RMB (CNH) Futures||CNHZ9|
Foreign Exchange products also include futures for G10 currencies, Emerging market currencies, and Cross rates.
Metals Products include:
|Micro Gold Futures||MGC|
The Chicago Mercantile Exchange is the only market for trading in weather derivatives. It launched its first weather products in 1999. Products include, but are not limited to: futures on rainfall, snowfall, hurricanes, and temperature.
- Commodity Exchange Act
- List of futures exchanges
- List of traded commodities
- Securities market participants (United States)
- Durica, Dr. Michael (2006). Product Development for Electronic Derivative Exchanges: The case of the German ifo business climate index as underlying for exchange traded derivatives to hedge business cycle risk. Pro Business. Berlin. ISBN 3-939533-05-X.
- Lynn, Cari (2004). Leg the Spread: Adventures Inside the Trillion-Dollar Boys' Club of Commodities Trading. Random House/Broadway Books.
- Olson, Erika (2010). Zero-Sum Game: The Rise of the World's Largest Derivatives Exchange. Wiley.
- Rodengen, Jeffrey (2008). Past, Present & Futures: Chicago Mercantile Exchange. Write Stuff Syndicate.
- Tamarkin, Bob (1993). The Merc: The Emergence of a Global Financial Powerhouse. Harper Business.
- "CMEgroup.com". Investor.cmegroup.com. Retrieved 2012-09-22.
- Encyclopedia of American Industries. Gale. 2011. p. 2432.
- "CME Trading Pit Hand Signals History". tradingpithistory.com. Retrieved 16 August 2011.
- "Deflating Globex: electronic exchanges". The Economist. 21 May 1994. Archived from the original on 24 September 2018. Retrieved 24 September 2018 – via Highbeam.
- "Reuters Dumped from Trading Service". Wired. 21 February 1997.
- "CME news release October 17, 2006".
- "Merger agreement modified December 20, 2006".
- "Merger agreement modified May 11, 2007".
- "Merger agreement modified June 14, 2007".
- "Merger agreement modified July 6, 2007".
- "Merger agreement passed July 9, 2007".
- "CME Group began operations July 13, 2007".
- Saphir, Ann (2008-03-03). "Trading Places". Crain's Chicago Business. Crain Communications Inc.
- "CMEgroup.com". Cmegroup.mediaroom.com. Retrieved 2012-09-22.
- "CMEgroup.com". Investor.cmegroup.com. Retrieved 2012-09-22.
- Simmons, Craig (1989). "Chicago Futures Market: Initial Observations on Trade Practice Abuses": 3–6. Cite journal requires
- Larson, Donald (2011). Plant Sciences. Gale.
- "Bitcoin Futures Quotes - CME Group". www.cmegroup.com.
- "Equity Index Products - CME Group". www.cmegroup.com. Retrieved 2019-11-27.
- "Interest Rates Products - CME Group". www.cmegroup.com. Retrieved 2019-12-02.
- "FX Products - CME Group". www.cmegroup.com. Retrieved 2019-11-28.
- "Metals Products - CME Group". www.cmegroup.com. Retrieved 2019-12-02.
- Benth, Espen, Jurate (2012). Modeling And Pricing In Financial Markets For Weather Derivatives. Singapore: World Scientific. p. 100.CS1 maint: multiple names: authors list (link)
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