Chicago Mercantile Exchange

The Chicago Mercantile Exchange (CME) is a global derivatives marketplace based in Chicago, USA. The exchange focuses on commodities, particularly within the agriculture sector. Traders can speculate and invest in agricultural products and many other markets. Read this article to learn more about the Chicago Mercantile Exchange, including its history, the products available and opening hours. We have also provided a guide to help you get started and a list of the top brokers for trading on the Chicago Mercantile Exchange below.

What Is The Chicago Mercantile Exchange

The Chicago Mercantile Exchange (CME), also known as the Chicago Merc, is by definition a global commodities exchange that trades derivatives such as futures and options. The exchange is owned by the Chicago Mercantile Exchange Group Inc., a holding company that owns several exchanges, and it has a daily trading volume of around $19 million, a market cap of $71.4 billion and revenue of over $4 billion according to the 2020 annual report.Chicago Mercantile Exchange Review 2021

There are many markets available on the exchange, including a variety of agricultural products like corn futures, water futures, hog futures and milk futures. The CME Group Inc. is listed on Nasdaq and today’s share price can be found on websites like Bloomberg and TradingView.

Brief History Of Chicago Mercantile Exchange

Established in 1898, the exchange was first named the Chicago Butter and Egg Board. It was known as this until it changed its name to the Chicago Mercantile Exchange (CME) in 1919.

The CME launched its first futures contract in 1961 on frozen pork bellies. Following this, in 1969, it added financial futures and currency contracts followed by the first interest rate, bond and futures contracts in 1972. In 2000, the exchange became the first financial exchange to “demutualise” and become a publicly traded, shareholder-owned corporation.

Mergers & Acquisitions

Chicago Board Of Trade

In 2006, it was announced that the Chicago Mercantile Exchange and Chicago Board of Trade would merge and create the CME Group, becoming one of the largest financial exchanges in the world as a result. The agreement was modified several times until the shareholders of both sides passed it off. The merger officially closed on July 12 2007.

NYMEX

On March 17th 2008, it was announced that the New York Mercantile Exchange (NYMEX) had accepted an offer from the CME Group to purchase NYMEX for $8.9 billion. The acquisition was completed on August 22nd 2008, further increasing the value of the Chicago Mercantile Exchange Group.

Kansas City Board Of Trade

In 2012, the Chicago Mercantile Exchange Group expanded again, purchasing the Kansas City Board of Trade. The KCBOT was the dominant player in hard red winter wheat. The CME Group paid $126 million in cash to acquire the Kansas City Board of Trade.

Chicago Mercantile Exchange Offices & Locations

The address of the Chicago Mercantile Exchange Center, the main building for the CME Group, is in Chicago, Illinois. Alongside this, the CME Group have offices and locations in a variety of countries and continents.

The Chicago Mercantile Exchange Group have a New York (NYC) office, as well as offices in London, Singapore and Hong Kong. The CME group then have global locations in 22 cities around the world, including Bangalore (India), Tokyo (Japan), Belfast (UK), Paris (France), Calgary (Canada) and Sao Paulo (Brazil).

CME Products

The Chicago Mercantile Exchange is a derivatives exchange offering futures and options to traders. While you will not find stock or share prices on the platform, there are a host of financial products available:

Agricultural Commodity

In the early days of the Chicago Mercantile Exchange, these were the sole focus of the marketplace. Today, traders can purchase agricultural commodity contracts that speculate on many products, including dairy (milk, cheese and butter), lumber (wood), soybean, live and feeder cattle, beef and grain prices. Orange juice futures cannot be traded on the exchange. The daily livestock report provides a one-page summary of news, prices and activity on CME’s livestock markets.

Cryptocurrency

Since December 2017, Bitcoin futures have traded on the Chicago Mercantile Exchange. On Feb. 8th, 2021, Ether (ETH), the cryptocurrency of the Ethereum blockchain network, futures launched on the exchange. Both are available as futures only positions.

There has been recent speculation that the Chicago Mercantile Exchange would launch Dogecoin futures, though the CME Group came out to say they have no plans to do so.

Energy

The Chicago Mercantile Exchange offers WTI Crude Oil futures, as well as Henry Hub Natural Gas, Brent Crude and RBOB Gasoline futures.

Equity Index Products

There are many equity index products trading on the Chicago Mercantile Exchange. These indices include E-mini S&P 500 futures, S&P 500 futures, S&P 500 Consolidated futures, E-mini Nasdaq-100 futures, Nikkei/Yen futures, Micro E-mini Dow Jones Industrial Average futures and more.

Interest Rate Products

Interest rate products on the Chicago Mercantile Exchange include Eurodollar futures (including 3-month Eurodollar futures), 10-Year T-Note futures, 30 Day Federal Funds futures, 2-Year Eris Swap futures and more.

Foreign Exchange Products

The Chicago Mercantile Exchange features multiple foreign exchange (forex) products including Euro FX futures, Japanese yen futures, British pound futures, US dollar futures, Russian ruble futures, Brazilian real futures and more.

Metals Products

The Chicago Mercantile Exchange offers futures on many metal products, including gold and steel, as well as silver, platinum and palladium.

Weather Derivatives

The Chicago Mercantile Exchange is the only market in the world that trades weather derivatives. Products include, but are not limited to, futures on rainfall, snowfall, hurricanes and temperature.

Binary Options

The Chicago Mercantile Exchange is one of only three designated contract markets where binary options can be legally traded in the United States.

CME & S&P

The Chicago Mercantile Exchange introduced the first S&P 500 futures contract in 1982. They then added the E-mini option in 1997. The S&P 500 value can be found on sites like TradingView. The S&P 500 index future contract, also known as the “big contract”, has a ticker symbol of SP. The E-mini has a ticker symbol of ES. Standard & Poor’s (S&P) assigned the CME Group an AA credit rating showing their trust in them.chicago mercantile exchange 10k s&p indices

CME Trading Platforms

Open Outcry

Open outcry trading operated during regular trading hours (RTH) at the Chicago Mercantile Exchange. The open outcry method consists of traders standing on the trading floor in an area known as the pit. Here, traders wore different coloured jackets to indicate which company they work for and use hand signals to communicate with brokers (although headsets were also used).

In 2021, it was announced that the Chicago Mercantile Exchange was to open outcry trading after 167 years. Today, interested people can visit and tour the pits to see where the magic happened or just admire the architecture when a picture of the Chicago Mercantile Exchange and its logo is not good enough.

Electronic Trading

The CME Globex electronic trading platform is the foundation of the Chicago Mercantile Exchange and is now the only way to trade on the exchange. The Globex Trading System was first introduced in 1992 and allows market participants to trade from booths within the exchange or anywhere around the world in homes and offices. Non-professionals can receive free Globex level 1 futures quotes and historical data packages to help them trade.

Membership

Chicago Mercantile Exchange Group clearing house corporate or individual memberships can be bought, sold or leased. The current membership price can be found on the CME Group website. Members can trade specific products at reduced rates and lower fees if they adhere to the rulebook. Recently, seat prices on the Chicago Board of Trade rose to $500,000.

CME Regulation

The Chicago Mercantile Exchange’s regulator is the Commodity Futures Trading Commission (CFTC). The CFTC oversees all commodities and derivatives contracts in the US and is responsible for the oversight of brokers and merchants. They also regulate the trading of virtual assets like Bitcoin within the exchange.

In 2013, the CFTC filed a lawsuit against the Chicago Mercantile Exchange Group due to leaks of confidential trading information from former employees. CME agreed to settle the lawsuit by paying $4 million.

CME Structure

The Chicago Mercantile Exchange’s organisational structure is simple. The group is run by the board of directors, who oversee the management of the company’s business. The management team, including the General Counsel, are heavily involved in overseeing the company too.

Trading Holidays

The Chicago Mercantile Exchange observes all US recognised holidays in 2020, 2021 and beyond. Just so that you do not have to wonder “is the Chicago Mercantile Exchange open today”, we have compiled this helpful list of the various holidays:

  • Dr Martin Luther King, Jr. – 15-19th January.
  • President’s Day – 12-16th February.
  • Good Friday – 1-5th April.
  • Memorial Day – 28th May-1st June.
  • Independence Day – 2-5th July.
  • Labor Day – 3-7th September.
  • Thanksgiving – 24-26th November.
  • Christmas – 23-27th December.
  • New Year’s – 30th December-3rd January.

Chicago Mercantile Exchange timings vary on each holiday and can be checked on the CME website.

Customer Support

The Chicago Mercantile Exchange is an example of great investor relations. Should you encounter disagreements, the market regulation department offers a forum for arbitration. The CME customer service team can be contacted via the phone:

  • Telephone Number: +1 312 930 1000.

Competitors

So, how does the Chicago Mercantile Exchange compare to others like Nasdaq and NYSE?

The Chicago Mercantile Exchange targets a different market to both exchanges. The NYSE and Nasdaq deal primarily with stocks, whereas the CME deals primarily with commodities such as agriculture and energy. As a result, the CME is not in direct competition with either the NYSE or Nasdaq.chicago mercantile exchange zoominfo

How To Trade On The CME

Even if you cannot pronounce the Chicago Mercantile Exchange (it’s merKantile), we can help you start trading with this step-by-step guide.

  1. Select A Broker: The first step is to find the best brokers for Chicago Mercantile Exchange trading. Compare commission rates, platforms, educational features and assets on offer. If you want to trade on the CME on the move, check that the broker supports mobile trading. For a complete guide, see here.
  2. Open An Account: Open an account and deposit funds with your broker.
  3. Analyse The Market: Study the market to see any potential areas you want to invest in. Look for high volatility and any trends before deciding on the product you want to purchase. Alternatively, pick an established strategy to follow.
  4. Open A Position: Once you have found a suitable product, you can purchase a futures contract. Be sure to check margin requirements and expiration dates.
  5. Monitor And Close Position: Keep an eye on the price movement of your product and cash the contract in when the time is right. If you do not cash it in, the contract will automatically be sold at the expiration date.

Trading Tips

These tips could give you the edge over other traders:

  • Keep Learning: The best traders never stop learning. Education can be found anywhere, from videos on YouTube to PDFs online. There is even a documentary on the Chicago Mercantile Exchange that looks at the open outcry trading floor. This provides a unique way to learn about trading at the highest level.
  • History Can Repeat Itself: Always look at historical data before trading on the Chicago Mercantile Exchange. Financial statements from companies can give clues as to what the stock could do in the future. Alternatively, look at technical analysis of trading charts and historical data to make statistical predictions.
  • Follow The News: News announcements can have a large impact on the prices of different commodities. Make sure to stay up to date with any stories on agriculture, energy or any of the products to give yourself the best chance of being successful.

Final Word On The Chicago Mercantile Exchange

The Chicago Mercantile Exchange, and the CME Group Inc., are an integral part of the United States financial infrastructure. The exchange is a major trading hub for futures on a variety of commodities, including agriculture, WTI Crude Oil, cryptocurrencies and much more. If you want to start trading, see our list of Chicago Mercantile Exchange brokers and follow our guide and tips to start profiting from your favourite commodities.

FAQs

Does The CME Offer Dogecoin Futures?

No, the CME does not offer Dogecoin futures, though it does sell futures on both Bitcoin and Ethereum.

How Much Capital Do I Need To Start Trading On The CME?

There is no set minimum amount. The lowest value will depend on the broker you choose to trade through. See here for our list of brokers with the lowest minimum deposits.

How Active Is The Chicago Mercantile Exchange?

The CME is the largest derivatives exchange in the world by daily volume. The CME group states that it handles over 3 billion contracts per year, worth approximately $1 quadrillion.

Does The CME Still Use Open Outcry Trading?

Until 2021, the CME did use open outcry on the trading floor. However, it was recently ended, bringing to a close 167 years of open outcry trading.

Can I Purchase Stocks Through The CME?

No, you cannot purchase stocks through the CME. The group focuses on commodity derivatives such as agriculture and energy futures.

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