cbot

Chicago Board Of Trade (CBOT)

The Chicago Board of Trade (CBOT), established in 1848, is the world’s oldest derivatives (futures and futures-options) exchange. More than 3,600 CBOT members trade 50 different futures and options products at the CBOT, resulting in 2002 annual trading volume of more than 343 million contracts.

Chicago Board Of Trade (CBOT) - History


Early, in its history, the CBOT listed for trading only agricultural instruments—such as wheat, corn and oats. In 1975, the CBOT expanded its offering to include financial contracts, initially, the U.S. Treasury Bond futures contract which is now one of the world’s most actively traded. The CBOT listings expanded again in 1982, when options on futures contracts were introduced, and on October 6, 1997, the CBOT made history again when it launched one of its most successful contracts—futures and futures-options on the Dow Jones Industrial Average.

For more than 150 years, the primary method of trading at the CBOT had been open auction, during which traders meet face-to-face in trading pits to buy and sell futures contracts. Then, on October 20, 1994 the CBOT successfully launched its first electronic trading system.

The Chicago Board of Trade principal role is to provide contract markets for its members and customers and to oversee the integrity and cultivation of those markets. Its markets provide prices that result from trading in open auction or electronic platforms. The marketplace assimilates new information throughout the trading day, and through trading it translates this information into benchmark prices agreed upon by buyers and sellers.

The CBOT’s markets also provide opportunities for risk management for users who include farmers, corporations, small business owners, and others. Risk management, in the form of hedging, is the practice of offsetting the price risk inherent in any cash market position by taking an equal but opposite position in the futures market. Hedgers use CBOT futures markets to protect their businesses from adverse price changes that could have a negative impact on their bottom line.

The Chicago Board of Trade presently is a self-governing, self-regulated Delaware not-for-profit, non-stock corporation that serves individuals and member firms. There are several types of memberships within the CBOT, which allow access to all or some of the markets listed at the exchange. Of the Chicago Board of Trade’s 3,600 members, 1,400 are full members who have trading access to all of the exchange’s contracts.

The governing body of the exchange consists of the President and CEO and Chairman and 14 directors.


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