Futures Exchanges

A futures exchange is a financial exchange where futures contracts are traded. Futures exchanges are usually commodity exchanges. This is because all derivatives, including financial derivatives, are often traded at commodity exchanges. The reason for this has to do with the history of the development of these exchanges.

In the 19th century, the first exchanges were opened in Chicago to trade forward contracts on commodities. Exchange traded forward contracts are called futures contracts. Thus, futures trading was synonymous with commodity trading and it has been the case for around a hundred years.

In the 1970s, these commodity exchanges started offering future contracts on other products, such as stocks, options contracts and interest rates. Products such as these are called financial futures. Trading in this new class of futures contracts quickly outgrown the traditional commodities markets. In recognition of this development, commodity exchanges are now generally known as futures exchanges.

Major Global Exchanges

Today, global exchanges can be found all over the world in both developed and developing countries. The following table lists some of the largest futures exchanges in the world and the principle commodities that are traded at each of these exchanges.

ExchangeHeadquarterPrinciple Commodities
Chicago Board of Trade (CBOT)Chicago, USAGrains, Energy
Chicago Mercantile Exchange (CME)Chicago, USALivestock
New York Mercantile Exchange (NYMEX)New York, USASofts, Base Metals, Energy, Precious Metals
London Metal Exchange (LME)London, UKBase Metals
NYSE Euronext (Euronext)Paris, FranceGrains, Softs
Tokyo Commodity Exchange (TOCOM)Tokyo, JapanSofts, Base Metals, Energy, Precious Metals
Tokyo Grain Exchange (TGE)Tokyo, JapanGrains, Softs

Margin Requirements

To ensure the smooth running of the futures market, participants in a futures contract are required to post a performance bond of sorts as a form of guarantee. This is known as the margin. The amount of margin required can vary depending on the perceived volatility of the underlying asset.

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