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What is the Chicago Board of Trade (CBOT)?
The Chicago Board of Trade (CBOT) is one of the biggest and busiest commodities exchanges in the world. It is part of the CME Group, which also operates the Chicago Mercantile Exchange, the New York Mercantile Exchange, and The Commodity Exchange.
CBOT is run as a not-for-profit and is comprised of 3600 members, with a Board of Directors. It has an annual trading volume of over 200 million contracts.
What are the Main Commodities Traded?
The Chicago Board of Trade trades about 50 different futures options contracts, financial contracts, and futures contracts for commodities. These include:
Agricultural Products: Corn futures, soybean futures, soybean oil futures, soybean meal futures, Chicago SRW Wheat futures.
Energy Products: Crude oil futures, Henry Hub natural gas futures, Brent Last Day financial futures, RBOB gasoline futures, NY Harbour ULSD futures, E-mini crude oil futures.
Metals: Gold, silver, platinum, palladium, copper, aluminum.
Interest Rate Products: 2-year, 5-year, and 10-year T-note futures, US Treasury Bond futures.
Equity Products: E-mini S&P 500 futures, E-mini Nasdaq 100 futures, E-mini Dow Jones Industrial Average Index futures, E-mini Russell 2000 Index futures, E-mini S&P MidCap 400 futures.
History
Established in 1848, the Chicago Board of Trade is one of the oldest commodity exchanges in the world. Initially trading only agricultural products such as wheat and soybeans, it has now expanded into energy, metals, and bonds.
The CBOT was first created to support Midwest grain farmers by reducing price uncertainties for agricultural products. Boom and bust cycles significantly impacted farming products, especially grains. This made the CBOT an especially welcome system.
Back then, it was an open outcry exchange, with traders physically meeting to negotiate and decide on prices for different commodities in rooms known as pits. Open outcry was on the decline by the mid-1990s as more trades started using electronic trading.
Throughout its history, the Chicago Board of Trade has also faced its share of scandals and fraud, including:
- Bucket shops that enabled gambling on the prices of commodities or stocks.
- Traders trying to “corner” markets by buying excessive amounts of most commodities to try and artificially push prices higher.
By the early 2000s, the Chicago Board of Trade converted to a for-profit entity with both electronic trading and open-outcry pits.
However, the CBOT closed down another 35 open-outcry pits for futures contracts in 2015.
