Many people are very interested in activitiesvarious stock and commodities exchanges. Most of the townsfolk thus developed a very persistent stereotype that on such trading floors there must necessarily be a large number of people who at the same time constantly shout something and talk about something continuously on the phone. Yes, indeed, a few years ago this was the work of the exchanges, but these days their activities have somewhat changed. In this article, we will consider the functioning of an international retail outlet called the Chicago Mercantile Exchange CME.
Many are more familiar with stock exchanges, wheretrading stocks and securities. But if you study how the Chicago Mercantile Exchange works, you should immediately indicate that it is traded with various natural resources, agricultural products and futures. At the same time, there is another similar exchange in the United States - New York.
The Chicago Mercantile Exchange is the first inworld ranking among such similar trading platforms. Immediately note that it is impossible to fully assess the size of the capitalization or the number of companies, as a stock exchange. However, it is quite possible to assess the volume of its trades, which is really colossal. For a month at the CME, transactions amounting to more than two trillion US dollars, which is many times more than on stock exchanges, are conducted. In addition, the Chicago Stock Exchange has the widest range of its assets. This commercial international establishment was located in a building that adjoins the Willis Tower, the world's tallest building until 1998.
Let's dwell on the conglomerate underthe name of the CME Group. The Chicago Mercantile Exchange is part of it, which also includes the New York Mercantile Exchange, the world leader in oil trading. Thus, the concern itself is a huge organization that has firmly taken the first place on the planet in the sphere of asset trading, starting from currency derivatives and ending with energy carriers and agricultural goods.
In the early 19th century in the United States of Americathe Erie Canal was built. Its main task was to ensure a fast and uninterrupted transport connection between the central and eastern states of the country. This event led to a strong development of two major cities - Chicago and New York. In addition, Chicago is also a powerful railway junction, which logically made it the main connecting element between the farms of the center of the state and the megacities of the East of the United States. Also, Chicago could well be called the main warehouse of the country, because due to the frequent disruption of communication between regions, the issue of storing perishable goods was sharply raised, and therefore this city literally "overgrown" with huge storage facilities and became the main granary of the entire North American power.
Answering the question:"When was the Chicago Mercantile Exchange founded?", We will point out that this was in 1874. Initially, it specialized exclusively in the trade of agricultural products and was called the oil-egg chamber. Due to the fact that the goods were very specific (they could not always be delivered), futures began to be used from the first days of the stock exchange.
In 1895, this board was replaced by ProduceExchange Butter and Egg Board, which has more convenient and understandable conditions for conducting active trading activities. However, the beginning of the civil armed confrontation led to the formation of an independent platform called the Chicago Butter and Egg Board, which became a real prototype of the current trading platform.
Despite the fact that the Chicago Commoditythe exchange is the largest of its kind in the world, but it has not even been circumvented by bankruptcy. It happened in the 1960s. All the fault was extremely ill-considered experiments with the introduction of new products on the market. Initially, these were futures contracts, which consisted of the purchase of cheeses, apples, and ideas, but the volume of contracts for these goods was very low. After that, the auction completely removed the oil and potatoes, because the demand for their purchase was almost zero. A historical moment can be considered and approval at the legislative level of the regulatory legal act, which completely banned the trade in onions. Congressmen justified their decision by the fact that in this way the rights of producers will be protected, because there were suspicions of fraud on the stock exchange. All this combined in total led to the fact that the functioning of the exchange almost completely ceased. It was already nearing its complete closure, but in the end, it not only "survived", but also began to regain its momentum.
The Chicago Mercantile Exchange, or rather itsleadership, in every way sought the chances for the continuation of the work. And the work was rewarded. In 1966, this futures contract was placed on frozen pork, on the basis of which bacon is made. The uniqueness of this contract is that it became the first in the history of world exchange trade. But to store this product, special freezers were needed. And at the same time on the exchange there is another successful contract for cattle, which no longer required storage. All these agreements and a few other innovations contributed to the fact that the stock exchange revived. Her popularity began to grow day by day, and to become a member became more expensive: three thousand in 1964 increased to 8,500 in 1965. In 1968, the membership card had a record price of 38,000 US dollars.
The Chicago Stock Exchange in the 1970s receiveda new management that judged that the scale of the growing trade literally obliges to introduce new tools for risk insurance by currencies. As a result, in 1972, a new section of the exchange was opened under the name International Monetary Market (IMM). Exclusiveness of this step was that this section became the world's first futures trading platform for available base currencies. Bidding on it immediately went very actively and on large amounts. The assortment of assets grew rapidly, and therefore the Chicago Stock Exchange gained momentum. Later, several innovations were introduced: contracts for eurodollar rates, mini-contracts, futures for various indexes were approved. Thus, the involvement of the trading platform became the maximum.
The Chicago Mercantile Exchange launched itsthe first electronic trading systems in the 1987 already far from us. At that time, most traders were very skeptical about this venture, as they believed (and it is reasonable) that as a result of this the market will be divided into two large parts and they will lose their advantages. However, it was just an experiment.
Modified and fully thought-out tradingelectronic network appeared on the stock exchange only five years later. It was called CME Globex. Initially, it functioned only as an auxiliary addition to open trades at the moment when they were already physically closed. In 1998 the system was modernized as much as possible. As a result, a pool of screaming traders, located in the hall, and traders, filing applications directly in the system. At the same time, it was immediately agreed that absolutely all participants in the bidding were equal in their rights. However, many traders were forced to leave the trading floor, because they paid quite high membership fees, but did not receive any preferences in return.
In 2000, the heads of the exchange decidedplacement of its shares on the New York Stock Exchange. Thanks to this CME GROUP Chicago Mercantile Exchange was the first in the US, which began to publicly sell its shares. At the end of 2002, a $ 191 million stock placement was conducted. Since that moment, the conglomerate has grown many times, but the company's securities have been trading to this day. Managers attracted the profits for the development of innovative technologies, the introduction of new options, the expansion of the trade network itself. This approach has fully justified itself, because in just a few years, trades moved to electronic platforms, and traders began to work from anywhere in the world, due to which the trade turnover of the exchange itself and the profit of the concern increased.
The Chicago stock exchange today can offer its clients as assets four main types:
The Chicago Stock Exchange holds trades of three dozenoptions and fifty of futures contracts for world currencies. Thus there is a division into currencies of the states "Big ten", currencies of developing states and mini-contracts. The latter option is very convenient for its small volumes and minimal costs, and therefore widely in demand by those traders who came to trade on the exchange with "Forex". The sums of concluded deals on IMM are simply enormous and amount to $ 100 billion per day. The Russian ruble also takes part in the deals, however, the bulk falls on the dollar, euro, yen and British pound.
If we talk about agriculturalproducts, then the first place in this category belongs to the corn exchange. About a day on the trading platform recorded about 600,000 contracts. In this case, the volume of culture is within 3V bushels (or 100M cubic meters).
As for wheat, which is the number one culture in Russia, the Chicago Exchange's sales volumes lag far behind corn-three times.
If we compare a commodity exchange with a stock exchangeIt is worth noting that the former is more speculative than the second. This is due to the fact that the commodity exchange is oriented to the real provision of the vital needs of customers, and even entire countries in energy carriers, various raw materials and food. The stock can be sold, bought or resold immediately or even after many years. But a barrel with kerosene or a car with agricultural products is much more difficult to resell, because after they are received, the consumer almost immediately uses them for their intended purpose. And therefore, network traders show an increased interest in futures and options, because they can be sold exactly as various securities. However, trading options and futures - this means taking on very high risks compared to trading stocks. But at the same time, the return on money equivalent is much faster.
Become a member of the exchange in Chicago can a man,whose age is not less than 21 years. At the same time, he should have a good reputation and receive a recommendation from two existing members of the exchange. For thirty days from the time of its entry into the exchange, a new member is required to pay a membership fee to the Chicago Trade Association.
In the process of trading on the stock exchange there isa high probability that it is possible the emergence of non-standard situations, the cause of which can serve as a mistake, an attempt to commit fraud and so on. In this case, on the exchange, the conflict is resolved by a neutral body - arbitration or an arbitration court.
We hope that this article has made it possible for you to understand when the Chicago Exchange was founded, its main historical milestones and peculiarities.
