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CME Group — The World’s Leading Derivatives Exchange

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If you’ve been trading futures and options for a while, chances are you know all about CME Group. One of the world’s largest and most popular derivatives exchanges, with a market cap of over $60 billion and millions of contracts traded daily.

What does CME Group do?

For those unfamiliar, CME (Chicago Mercantile Exchange) Group, Inc. is the world’s leading financial derivatives marketplace.. Operates as a securities and commodities exchange, offering futures and options contract trading.

The global derivatives market is A multi-trillion dollar market, facilitates the exchange of financial instruments that extract value from the underlying asset. on average, CME Group 3 Billion Contracts Worth Nearly $1,000 Trillion per year.

Traders and investors have access to a wide range of futures and options contracts on global benchmark products across asset classes. CME GroupThese include stock indices, agricultural commodities, real estate, metals, energy, interest rates, foreign exchange and even weather.

Through the CME Globex electronic trading platform, CME Group connects buyers and sellers around the world. Derivatives market players often use historical and live data from CME Group to measure performance across global markets.

The company also offers clearing, settlement, cleared swap products, risk mitigation and trade processing services.

Is it still the largest derivatives exchange?

not anymore.For the past three years, its title has been National Stock Exchange of India (NSE)The size of a derivatives exchange is measured by the number of contracts traded in a given year.

As of 2022, CME Group ranks 3rd among the world’s largest derivatives exchanges.

CME Group
World’s Largest Derivatives Exchanges in 2020 and 2021 | Source: statista.com

History of CME Group

CME Group’s history began in 1848 with the establishment of the CBOT (Chicago Exchange) futures exchange in Chicago. Then followed the launch of the Chicago Butter and Egg Board. Chicago Mercantile Exchange (CME) Clearing House (1898).

Over the years, CBOT and CME have continuously evolved and launched new futures products, including the pioneering electronic futures contract in 1987.

In 2002, CME listed on the New York Stock Exchange (NYSE), becoming the first public exchange in the United States. A year later, CBOT signed an agreement with his CME to clear the commodities using CME’s clearing services.

Several more agreements followed over the next few years, including a decision to combine CBOT and CME into one company. It was formalized in 2007 and led to the formation of CME Group Inc.

Chicago Mercantile Exchange
sauce: cmegroup.com

Over the past two decades, CME Group has continued its global expansion, including the acquisition of the New York Mercantile Exchange (NYMEX) in 2008. BM&FOVESPA The Brazilian Commodity Futures Exchange (Bolsa de Mercadorias e Futuros), also known as (Bolsa de Valores de São Paulo) and B3, is the largest derivatives exchange in Latin America.

CME Group We also continued to expand our product range by adding new asset classes.For example, in September 2022, the company will ether options It trades to complement the Ether futures market, which has already seen an average daily volume increase of more than 43% year-over-year.

CME regulation

CME Group is regulated by the Commodity Futures Trading Commission (CFTC). The CFTC is the public agency responsible for overseeing all commodities and derivatives trading in the United States.

Among its many responsibilities, the CFTC conducts risk oversight of derivatives trading, regulates trading in crypto-assets, investigates market manipulation, and maintains oversight of market participants.

What assets does CME Group offer?

CME Group is the world’s most diversified derivatives marketplace, comprising four major exchanges: CME, CBOT, NYMEX and COMEX (commodities exchange). Each offers its own set of global benchmarks across major asset classes, creating robust markets for all types of traders and investors.

To further expand its presence and promote global growth and commerce, CME Group We partner with many exchanges such as B3, Dubai Mercantile Exchange, Minneapolis Grain Exchange, Singapore Exchange Limited, Bursa Malaysia Derivatives Berhad.

We also maintain strategic relationships and licensing agreements with Google, Nasdaq, FTSE Russell Indexes, Nikkei Inc. and S&P Dow Jones Indices.

To better understand the distribution of different asset classes on CME Group’s exchanges, it is essential to examine each exchange’s role in the overall market.

Chicago Mercantile Exchange (CME)

of Chicago Mercantile Exchange It is a designated contract market that offers a wide range of products. The first ever futures contract was for frozen pork belly, launched in 1961.

However, its distinguishing feature is that it is the only futures exchange that offers weather derivatives. Traders can bet on weather events such as rainfall, heat waves and cold weather.

The seller of a futures contract agrees to bear the risk of disaster for a period of time in exchange for a premium payment from the buyer. If no damage occurs by the end of the contract, the seller will make a profit. On the other hand, in the event of a weather disaster, the contract buyer will receive the agreed amount.

Financial products are very popular. 2020CME recorded more than 1,000 weather-related contracts per day, with futures and options notional amounts of $750 million and $480 million, respectively.

Chicago Board of Trade (CBOT)

CBOT was established to help farmers and commodity consumers better manage risk by eliminating price uncertainty in the buying and selling of agricultural commodities such as corn, wheat and livestock.

Chicago was an ideal exchange location due to its good rail infrastructure and proximity to agricultural centers.

Over time, CBOT has added commodities such as energy, gold, silver and US Treasuries to the market. Upon its merger with CME in 2007, CBOT offered a range of derivative financial products, including agricultural, interest rate and equity index products, thereby expanding CME Group’s existing offerings.

Many of the standardized terminology and market regulations used in the futures market emerged in the early days of CBOT. For example, we have established formal trading rules. Covering Margin and Delivery Procedures in 1865Three years later, the CBOT banned “corners” and became the first known attempt to regulate market activity and deter market manipulation.

Commodity Exchange (COMEX)

COMEX is the world’s most famous futures and options exchange for trading metals such as gold, silver, aluminum and copper. It was formed in 1933 by the merger of four New York-based exchanges: the National Metal Exchange, the New York Hyde Exchange, the New York Rubber Exchange, and the National Raw Silk Exchange.

In 1994, COMEX merged with the New York Mercantile Exchange (NYMEX) to become its official metals trading arm. Rather than supplying metals, the exchange acts as an intermediary for metal suppliers around the world.

It is important to note that metal futures contracts are primarily used for hedging and therefore are not often physically delivered. Most contracts are simply bought and sold on the promise and knowledge that the metal exists. This makes for a very liquid metal market.

In 2008, CME Group acquired NYMEX and then acquired its COMEX division. This expands CME Group’s range of metal products to include palladium, platinum and steel, as well as his FTSE 100 index options. Today, COMEX is Metal futures and options contracts Offered by CME Group, all traded in standardized mini and/or micro contract sizes.

New York Mercantile Exchange (NYMEX)

NYMEX is a commodity exchange headquartered in Manhattan, New York. We also have offices in other cities around the world, including Boston, Washington DC, Dubai, London and Tokyo.

After its merger with COMEX in 1994, NYMEX became the largest physical commodity exchange at the time, facilitating the trading of a wide variety of metals, energy and agricultural commodities. The exchange’s contributions to his CME Group from its 2008 acquisition included a wide selection of oil, gas, coal, metals, and agricultural contracts.

NYMEX held a small trading pit to continue the Open Outcry trading system until 2016. Already possible since 2006 Through CME’s Globex electronic trading platform.

CME Futures Trading at Earn2Trade

Before trading in the world’s leading derivatives market, it’s important to know what you’re doing. Futures and options trading can bring big profits, but can also lead to big losses if you are not prepared.

In addition, it is often difficult for individual traders and investors to raise sufficient funds to trade CME futures.

Consider becoming a professional futures trader to improve your trading capital reserves and access. Earn2Trade.

Through the Trader Career Path, The Gauntlet™, and The Gauntlet Mini™ programs, Earn2Trade enables skilled traders to buy and sell CME futures in funded accounts. This means you can keep up to 80% of your profits without having to put your own money into trading.

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