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CME Group Inc. (Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, The Commodity Exchange) is an American global markets company. It is the world's largest financial derivatives exchange, and trades in asset classes that include agricultural products, currencies, energy, interest rates, metals, stock indexes and cryptocurrencies futures. The company offers futures contracts and options on futures using its CME Globex trading platforms, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates a central counterparty clearing provider, CME Clearing. With a range of pre- and post-trade products and services underpinning the entire lifecycle of a trade, CME Group also offers optimization and reconciliation services through TriOptima, and trade processing services through Traiana. The company has been described by ''
The Economist ''The Economist'' is a British weekly newspaper printed in Paper size#Demitab, demitab format and Electronic publishing, published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in Lo ...
'' as, "The biggest financial exchange you have never heard of". In 2019, CME Group was named the world's fastest growing and most valuable exchange brand for the sixth consecutive year by Brand Finance, while it had the fifth greatest brand strength.


Trading platforms

Trading is conducted in two methods: an open outcry format and the CME Globex Trading System which is an
electronic trading platform In finance, an electronic trading platform also known as an online trading platform, is a computer software program that can be used to place orders for financial products over a network with a financial intermediary. Various financial products ...
.


Open outcry

Operating during regular trading hours (RTH), the open outcry method consists of floor traders standing in a trading pit to call out orders, prices, and quantities of a particular commodity or its derivatives. Different colored jackets are worn by the traders to indicate what firm they are a part of. In addition, complex hand signals (called Arb) are used. These hand signals were first used in the 1970s. Today, however, headsets are also used by the brokers to communicate with the traders. The pits are areas of the floor that are lowered to facilitate communication, somewhat like a miniature
amphitheater An amphitheatre (British English British English (BrE, en-GB, or BE) is, according to Oxford Dictionaries, " English as used in Great Britain, as distinct from that used elsewhere". More narrowly, it can refer specifically to the Engli ...

amphitheater
. The pits can be raised and lowered depending on trading volume. To an onlooker, the open outcry system can look chaotic and confusing, but in reality the system is a tried and true method of accurate and efficient trading. An illustrated project to record the hand signal language used in CME's trading pits has been compiled. CME Group announced on August 10, 2020 that it will reopen its trading pit for the Eurodollar options. The company will be reconfiguring the pit to meet social distance standards over the next few weeks and implement additional security measures. While the coronavirus problem remains dynamic, the company will continue to track the situation and convey any adjustments when appropriate. The other open outcry exchange pits must stay locked until Phase 5 of their reopening efforts is completed by the City of Chicago and Illinois State.


Electronic trading

Operating virtually around the clock, today the CME Globex trading system is at the heart of CME Group. Proposed in 1987, it was introduced in 1992 as the first global
electronic trading platform In finance, an electronic trading platform also known as an online trading platform, is a computer software program that can be used to place orders for financial products over a network with a financial intermediary. Various financial products ...
for futures contracts. This fully electronic trading system allows market participants to trade from booths at the exchange or while sitting in a home or office thousands of miles away. On October 19, 2004, the one billionth (1,000,000,000) transaction was recorded. Today, CME Globex operates 24 hours a day, six days a week. More than 90 percent of total volume at the exchange occurs electronically on CME Globex.


Global footprint

In 2019, CME Group's non-U.S. average daily volume reached a record 4.9 million contracts, up 10% compared with 2018, including 7% growth in Europe, 20% growth in Asia and 47% growth in Latin America. In addition to maintaining offices across the Americas, Europe and Asia, the company also partners with other global exchanges including Bursa Malaysia Berhad, The Dubai Mercantile Exchange and Singapore Exchange Limited.


Awards and honors

CME Group has received numerous industry awards. The company was named Exchange of the Year, Clearing House of the Year and Exchange Innovation of the Year in the 2019 Risk Awards. CME Group won in four categories at the FOW International Awards including Global Exchange of the Year, Americas Exchange of the Year, Best New Interest Rates Contract and Proprietary Traders' Exchange of the Year. In 2019, CME Group was named to the Forbes list of America's Best Mid-Size Employers. CME Group was also named to Computerworld's 2019 Best Places to work in IT list. In 2019, the company earned a perfect score of 100 on the Human Rights Campaign's Corporate Equality Index.


CME Span

The company pioneered the CME SPAN software that is used around the world as the official performance bond (margin) mechanism of 50 registered exchanges, clearing organizations, service bureaus, and regulatory agencies throughout the world. In 2019, CME Group announced that it would launch the next generation of CME Span Margin Methodology (CME Span 2) in the first half of 2020, pending regulatory approval.


Mergers and acquisitions

On October 17, 2006, The
Chicago Mercantile Exchange The Chicago Mercantile Exchange (CME) (often called "the Chicago Merc", or "the Merc") is a global derivatives marketplace based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board, an a ...

Chicago Mercantile Exchange
announced a merger with its historic rival the
Chicago Board of Trade The Chicago Board of Trade (CBOT), established on April 3, 1848, is one of the world's oldest futures exchange, futures and options exchanges. On July 12, 2007, the CBOT merged with the Chicago Mercantile Exchange (CME) to form CME Group. CBOT and ...

Chicago Board of Trade
for $8 billion in stock, joining the two financial institutions as ''CME Group Inc''. The merger agreement was modified on December 20, 2006, May 11, 2007, June 14, 2007 and on July 6, 2007. The merger was approved by shareholders of both CME and the Chicago Board of Trade on July 9, 2007. and closed on July 12, 2007, after which the Chicago Board of Trade shares (old symbol: BOT) stopped trading and were converted into CME shares as agreed, and the overarching holding company began life as CME Group, a CME/Chicago Board of Trade Company. On January 13, 2008 electronic trading at the Chicago Board of Trade shifted to CME Globex. On March 17, 2008,
New York Mercantile Exchange The New York Mercantile Exchange (NYMEX) is a commodity futures exchange owned and operated by CME Group of Chicago. NYMEX is located at One North End Avenue in Brookfield Place (New York City), Brookfield Place in the Battery Park City sectio ...

New York Mercantile Exchange
(NYMEX) (owner of both the NYMEX exchange and the Commodity Exchange (COMEX)) accepted an offer from CME Group, to purchase NYMEX for $8.9 billion in cash and CME Group Stock. The acquisition was formally completed on August 22, 2008, and the NYMEX systems were fully integrated by September 30, 2009. Also in 2007, NYMEX in a joint venture with partners on the
Arabian Peninsula The Arabian Peninsula, (; ar, شِبْهُ الْجَزِيرَةِ الْعَرَبِيَّة, , "Arabian Peninsula" or , , "Island of the Arabs") or Arabia, is a peninsula of Western Asia, situated northeast of Africa Africa is t ...
opened the Dubai Mercantile Exchange (DME). On February 10, 2010, CME announced its purchase of 90% of Dow Jones Indexes, including the
Dow Jones Industrial Average The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity inde ...

Dow Jones Industrial Average
. CME subsequently contributed Dow Jones Indexes to the formation of S&P Dow Jones Indices in exchange for a 24.4% ownership interest. In April 2013, CME purchased the remaining 10% interest in Dow Jones Indexes for $80.0 million. As a result, CME's interest in S&P Dow Jones Indices increased from 24.4% to 27.0%. On October 17, 2012, CME Group announced it would acquire the Kansas City Board of Trade for $126 Million in cash. KCBOT was the dominant venue for the sale of hard red winter wheat. The Chicago Board of Trade was the leading trade platform for soft red winter wheat. On March 29, 2018, CME Group announced that it was buying London-based NEX Group for $5.5 billion. The acquisition was completed on November 2, 2018.


See also

*
Chicago Mercantile Exchange The Chicago Mercantile Exchange (CME) (often called "the Chicago Merc", or "the Merc") is a global derivatives marketplace based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board, an a ...

Chicago Mercantile Exchange
* Intercontinental Exchange * CME Group Titleholders, the season-ending tournament of the LPGA Tour of women's golf, sponsored by CME Group *
Chicago Board of Trade The Chicago Board of Trade (CBOT), established on April 3, 1848, is one of the world's oldest futures exchange, futures and options exchanges. On July 12, 2007, the CBOT merged with the Chicago Mercantile Exchange (CME) to form CME Group. CBOT and ...

Chicago Board of Trade
*
New York Mercantile Exchange The New York Mercantile Exchange (NYMEX) is a commodity futures exchange owned and operated by CME Group of Chicago. NYMEX is located at One North End Avenue in Brookfield Place (New York City), Brookfield Place in the Battery Park City sectio ...

New York Mercantile Exchange
* NEX Group * Electronic Broking Services


References


External links


The CME Group Collections
at
University of Illinois at Chicago The University of Illinois Chicago (UIC) is a Public university, public research university in Chicago, Illinois. Its campus is in the Near West Side, Chicago, Near West Side community area, adjacent to the Chicago Loop. The second campus esta ...

University of Illinois at Chicago
{{Authority control Financial services companies established in 2007 Financial services companies based in Illinois Derivatives (finance) Futures exchanges Companies listed on the Nasdaq Companies formerly listed on the New York Stock Exchange Companies based in Chicago Chicago Board of Trade Market data Electronic trading platforms