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Chicago Board of Trade
www.cbot.com
Background
The Chicago Board of Trade (CBOT® ), established in 1848, is a leading futures and futures-options exchange. Futures trading is conducted by more than 3,600 CBOT member/stockholders. Fifty different futures and options products are traded at the CBOT by open auction and electronically. Volume at the future trading exchange in 2005 surpassed 674 million contracts, the highest yearly total recorded in its history.
In its early history, the CBOT traded only agricultural commodities such as corn, wheat, oats and soybeans. Futures trading at the exchange evolved over the years to include non-storable agricultural commodities and non-agricultural products. In October 2005, the CBOT marked the 30th anniversary of the the exchange's first financial futures contract, based on Government National Mortgage Association mortgage-backed certificates. Since that introduction, futures trading has been initiated in many financial instruments, including U.S. Treasury bonds and notes, 30-Day Federal Funds, stock indexes, and swaps, to name but a few. Another market innovation, options on futures, was introduced in 1982. After future option trading, the CBOT added a new category to its diverse product mix in 2001 with the launch of 100 percent electronic Gold and Silver futures contracts. CBOT South American Soybean futures and Ethanol futures, the futures trading exchange’s newest products, were introduced in 2005 in response to shifting trends in the global agricultural economy.
For decades, the primary method of future option trading at the CBOT was open auction, which involved traders meeting face-to-face in trading pits to buy and sell futures contracts. But to better meet the needs of a growing global economy, the CBOT successfully launched its first electronic trading system in 1994. During the last decade, as the use of online futures trading has become more prevalent, the futures trading exchange has upgraded its online futures trading system several times. Most recently, on October 12, 2005, the CBOT successfully launched its newly enhanced electronic trading platform, e-cbot, powered by LIFFE CONNECT®, by introducing a major API upgrade.
Whether trading futures and options on futures through an electronic platform or open auction, the CBOT’s primary role is to provide transparent and liquid contract markets for its member/stockholders and customers to use for price discovery, risk management and investment purposes. These futures trading markets also allow speculators throughout the world to interpret economic data, news and other information and use that information to make decisions about price and enter the futures markets as investors. Speculators bridge the gap between hedgers’ bids and offers, thereby making the market more liquid and cost effective.
The governing body of the exchange consists of a President and CEO; Chairman; Vice Chairman and 14 other directors.