Chicago Mercantile Exchange Group (CME) offers one of the world’s largest and most diverse platforms for futures and options exchange. Also known as ‘Chicago Merc’ or ‘The Merc’, it annually deals with 3 billion contracts on average, estimated to be worth $1 quadrillion. In 2007 CME had its primary stock listed on NASDAQ with the ticker symbol ‘CME’. The company’s current market capitalization level stands at $23.07 billion, signifying its gigantic status in the financial world (YCharts). The company is providing its member with an opportunity of risk management. CME offers these hedgers to shield themselves against undesirable outcomes in the market by diversifying the risk and in some instances even to make a profit by risk taking.
CME was setup in 1989, named as the Chicago Butter and Egg Board as it was only trading in butter and eggs back then (Investing Answers). However in 1919, people began to recognize it as the Chicago Mercantile Exchange. Expanding and thriving its line of product ever since, initially in 1961, they introduced frozen pork belly futures. Then in 1964, CME began trading live cattle futures, futures in foreign currencies were issued in 1972 and in 1982 its product line also included stock index futures. In 1984 CME established its first international connection in future exchanges with Singapore Exchange Derivatives Trading Ltd. CME Globex, which presented the primary global electronic futures market, was initiated by CME in 1992. In 2001, CME was officially recognized as the biggest futures exchange market in US. CME’s merger with the Chicago Board of Trade in 2007 led to its establishment as CME Group, with its primary stock listing on the NASDAQ and its current headquarters being located in Chicago, Illinois.
The main function of the CME Group is to act as a middleman between individuals desiring to hedge risks, or speculates the future trends in the market. For this purpose, a wide range of contracts bounded with prices of particular underlying financial commodities is listed by the CME Group. Then traders show their desirability either to buy or sell contracts by bidding or proposing a price for the contracts. These contracts are legally binding also known as derivatives because they derive their price from some financial instrument. CME Group offers a vast range of products in financials (interest rates, equity, foreign exchange) and commodities (metal, energy, agricultures, weather). CME Group is currently thriving under the leadership of Terrence A. Duffy as its Chairman and CEO along with Phupinder S. Gill as President. The recent stock price for the CME Group is estimated to be at ‘68.73+0.00 (0.00%)’ and it has a current workforce of 2,730 (WikiInvest). An interesting recent news regarding CME Group entails that some traders have accused it of having policies that favored high frequency traders while deceiving others. CME Group retaliated to this news fiercely and negated the blame of trading misleading 'real-time' price data with the financial world (MorningStar). The following table presents some financial data for the firm for 2009, 2010, 2011,2 012 and 2013 respectively (Yahoo! Finance):
The figures 7,949,822, 28,548,522, 7,851,561, 1,721,274, 43,259,660, 2,764,879 and 94 depicts recent overall combine trading volumes of its products are Agriculture, Energy Equities, Fx, Interest Rate, Metals and Real Estate respectively (CME Group). Some of the current prices of items offered for sale listed in USD include; Australian Dollar (Globex) at 0.93040, British Pound (Globex) at 1.6803, Lumber (Globex) at 325.00, Rough Rice (Globex) at15.395 and Copper High Grade (Globex) at 3.0555 (MarketWatch).
Works Cited
"CME Group Inc. Cl A." MarketWatch. N.p., n.d. Web. 23 Apr. 2014. <http://www.marketwatch.com/investing/stock/cme>.
"CME Group Inc Class A." MorningStar. N.p., n.d. Web. 23 Apr. 2014. <http://financials.morningstar.com/ratios/r.html?t=CME®ion=usa&culture=en-CA&ownerCountry=USA>.
"CME GROUP INC. (CME)." WikiInvest. N.p., n.d. Web. 23 Apr. 2014. <http://www.wikinvest.com/stock/CME_GROUP_INC._%28CME%29>.
"CME Group Inc." Yahoo! Finance. N.p., n.d. Web. 23 Apr. 2014. <http://finance.yahoo.com/q?s=CME>.
"CME Group Return on Invested Capital (TTM)." YCharts. N.p., n.d. Web. 23 Apr. 2014. <https://ycharts.com/companies/CME/return_on_invested_capital>.
"Futures & Options Trading for Risk Management - CME Group." CME GROUP. N.p., n.d. Web. 23 Apr. 2014. <http://www.cmegroup.com/>.
"InvestingAnswers Financial Dictionary." | Investing Answers. N.p., n.d. Web. 23 Apr. 2014. <http://www.investinganswers.com/financial-dictionary/commodities-precious%20%20%20%20%20%20%20%20%20%20metals/chicago-mercantile>.
