Chicago Mercantile Stock Exchange

ChicagoMercantile Stock Exchange

ChicagoMercantile Stock Exchange also referred to as the Merc, is a financeand products exchange that is based in Chicago in the United States.Founded in 1898, it was in the past known as the Chicago Butter andEgg Board. Previously, it was a non-profit making exchange foragricultural goods and services. Currently, the CME mainly conductselectronic trading through which it offers futures and options. Someof the options and futures traded at the CME include interest rates,currencies, goods and optional investment tools such as climate andreal estate products.

Severalactivities take place at the CME. All these activities revolve aroundthe buying and selling of commodity options and features, mainly ofagricultural commodities (Newman, 2014). These commodities includelive cattle, feeder cattle, different classes and types of milk, porkproducts, and softwood pulp among others. All these transactions aredone through electronic trading or the open outcry format. Electronictrading allows participants to trade from any local provided theyhave the necessary gadgets and network connections. The traders use aservice called Globex to connect and trade at the CME.

As mentioned in the introduction, CME started in 1898. Later in 1919,the company was renamed from the Chicago Butter and Egg Board to theChicago Mercantile Exchange. On the day it started trading afterrebranding three contracts were traded at the CME. In 2000, thecompany changed from its non-profit foundation to become the firstfinancial exchange in the United States to change to a shareholdercompany. Through an IPO conducted in 2002, the CME became publiclytraded. A merger between CME and its rival the Chicago Board of Tradethat was announced in 2006 was implemented in 2007 to form the CMEGroup. In 2008, the group acquired the New York Mercantile Exchangeat a cost of $8.9 billion dollars. Public participation in themarkets was allowed after the First World War.

Reference

Newman,K. (2014). Secretfinancial life of food: From commodities markets to supermarkets.