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 Chicago Mercantile Exchange

Commodity, Futures
The Chicago Mercantile Exchange (CME or, simply, "The Merc") (NYSE:CME) is the largest futures exchange in the United States. The CME was founded in 1898 as the Chicago Butter and Egg Board. Originally, the exchange was a not-for-profit organization. The exchange demutualized in November 2000, and went public in December 2002, becoming the first US exchange to do so. The Chief Executive Officer of the Merc is Craig S. Donohue.

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 (number of contracts outstanding) 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 Methods

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

Open Outcry

The open outcry method consists of floor traders standing in a trading pit to call out orders, prices, and quantities of a particular commodity. Different colored jackets are worn by the traders to indicate their function on the floor (traders, runners, CME employees, etc.). In addition, complex hand signals are used. These hand signals were first used in the 1970s. The pits are areas of the floor that are lowered to facilitate communication, sort of 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.

CME Globex®

Today the CME Globex trading system operates at the heart of CME. 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 Globex was first launched, it used Reuters' technology and network. 2002 saw the launch of the second generation of Globex using a modified version of the NSC trading system, developed by Paris Bourse for the MATIF (now Euronext).



This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Chicago Mercantile Exchange".



 
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