Exchanges are markets with standardized rules, which enable buyers and sellers to meet at a common junction to deal in their commodities. Futures contracts are those deals where the price is decided for deliveries to be made at a specified time and place in the future. Many of these exchanges contain ‘Pits’ or ‘Rings’, where open out-cry between buyers and sellers take place to finalize their deals. These contracts now take place all over the world with exchanges now existing in the developed as well as developing countries. Some of the exchanges with brief descriptions are listed below:
The Chicago Board of Trade [CBOT]: This exchange, which is the world’s oldest futures and options exchange was established in 1848. The Chicago Butter and Egg Board which was formed in 1919 was re-organized by the CBOT to allow member traders to deal in futures trading and was renamed the Chicago Mercantile Exchange [CME]. By the open out-cry and e-trading method, more than 3600 members deal in more than 50 different futures contracts. In the 2003, 454 million contracts were entered into. In July 2007, the CBOT and CME merged together to form the CME Group.
The New York Board of Trade [NYBOT]: This exchange was founded in 1870 as the New York Cotton Exchange [NYCE] and is a physical commodity futures exchange. It was originally founded as a private company by Tom Green and Alfredo Williams, before its merger. It took over the New York Cotton Exchange and the Coffee, Sugar and Cocoa Exchange [CSCE], which now function as divisions of the NYBOT. In January 2007, NYBOT became a Unit of Intercontinental Exchange [ICE]. It is regulated by the Commodity Futures Trading Commission [CFTC] and only records the transactions on the floor and does not participate in the actual trade. The major deals done here are in Cocoa, Coffee, Cotton, Ethanol, Pulp, Sugar and Orange Juice.
The Minneeapolis Grain Exchange [MGEX]: This exchange was formed as a cash market for grains in the year 1881 and launched its 1st futures contract in red spring wheat, after 2 years. Trading 1 million bushels per day, it is the world’s biggest cash market for grains. The major futures transacted here are hard red spring wheat, cottonseed, durum wheat, and white wheat. Trading takes place in MGEX from Monday through Friday from 9:30 a.m. to 1:20 p.m.
There are also major exchanges ouside the United States, such as:
The London Metal Exchange [LME]: Founded in 1877, this is the world’s biggest market in options and futures contracts dealing in base and other metals such as copper, alluminium, alluminium alloys, nickel and now even in plastics. It offers cash trading, hedging and worldwide reference pricing and also physical delivery to settle contracts. Around 100 companies are involved in the LME and 12 companies have exclusive rights to trade in the ‘Ring’.
Honk Kong Exchanges and Clearing Limited [HKEx]: Founded in the year 2000, it is the fifth largest in the world with a market capitalization of over 2.124 trillion dollars. It is the holding company for The Stock Exchange of Honk Kong Limited [SEHK], Hong Kong Securities Clearing Company Limited and the Hong Kong Futures Exchange Limited [HKFE].
Central Japan Commodity Exchange [C-Com]: This futures exchange was established on October 1, 1996 in Nagoya, Japan, after the merger with Toyohashi Dry Cocoon Exchange, the Nagoya Grain and Sugar Exchange and the Nagoya Textile Exchange. On January 1, 2007 the Osaka Mercantile Exchange became C-Com. The major commodities which are traded here are gasoline, eggs, ferrous scrap, kerosene, aluminium, nickel and rubber.
The Risk Management Exchange [RMX]: It was founded in 1998 by the German Farmers Union and a group of financers and was Germany’s first fully electronic commodity exchange. The major commodities traded here are barley, piglets, hogs, wheat and potatoes.
The complete list of futures exchanges with all details is available on the Internet. This can be useful information for people, who want to enter the futures market. The volume of trading at these exchanges has increased dramitically in the last few years, especially in China, Mexico and India. In the U.S., the Chicago Board Options Exchange and the Chicago Mercantile Exchange also saw a large rise in index volumes.