Running head: CHICAGO MERCANTILE EXCHANGE

Chicago Mercantile Exchange

Jeoffery Walton
International College of the Cayman Islands (ICCI)
BE/SO-425: Seminar on Business and Society

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On the 19th of May 2016, I had the opportunity to visit the Chicago Mercantile Exchange
(CME). This experience provided me with a first-hand understanding of how the trading process
is conducted. It has also been my dream to have the opportunity to observe how the stock
markets function in a live environment. Unfortunately, however, I did not have the opportunity
to experience the trading from the live floor (bullpen), as we had to observe the action from the
observation deck above. Observing from the observation deck, I could hear and feel the passion
of the individual traders on the floor. However, I was saddened to hear that the traditional way
of trading is slowly being phased out by online trading.
According to Lennon, K., (2016) in the past most of the products produced in the
Midwest was brought to Chicago and traded. As a result, the trading officially began in Chicago
in 1848. Before the centers for trading were opened, some farmers would show up late and
could not sell their products for a fair price, so they would dump their grain into the river.
Eventually, this practice started to impact the environment. Over the years, the style of trading in
Chicago and New York has changed from trading on the floor. Today, the only options for
trading from the floor are on derivatives marketplace (Lennon, K. personal communication, May
19, 2016).
Lennon further explained that it is important to note that CME does not get involved in
trading, as their business primarily focuses on real estate and managing the risks involved in
trading. Basically, they provide the build for trading and help facilitate the trading for the
traders. Also, the type of trading that takes place at the CME does not include individual stocks,
such as that of Apple or Google. If you want to trade on individual stocks you would have to
trade on the New York Stock Exchange. Their center mainly focuses on futures and options
based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities,

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metals, weather and real estate. It is the job of CME to bring buyers and sellers together through
electronic trading and trading facilities based in New York and in Chicago. Another huge
business function for the CME is counterparty clearing services, which facilitates clearing and
settlement services for exchanged-traded contracts for their customers. They also provide
services for derivatives transactions using the CMEs electronic system known as ClearPort
(Lennon, K. personal communication, May 19, 2016).
The authors Lawrence, A.T., and Weber, J. (2014), state that the emergence of the
Internet has allowed technology to be the most visible and widely used modern innovation.
Through the use of computers, the Internet provides a platform for the sharing and linking of
information for individuals and businesses, such as trading. Using the Internet, persons and
businesses are able to interconnect and process data within seconds. This explains the reasons
why traditional trading is quickly being phased out (Lawrence, A.T., and Weber, J. 2014).
As the Cayman Islands have built part of its economy on financial services, trading has
become part of business for most class A and B banks. Much like the U.S., using the Internet,
trading has the potential to increase in the Cayman Islands. This is a prime example of how
technology is replacing human labor, and it serves to remind us that soon machines will replace
most jobs. However, by using technology, trading is becoming more profitable for the traders,
and it provides an electronic trail of information to help manage any disputes that may occur
from time to time.
In conclusion, I have gathered knowledge relating to the trading process and a newfound
appreciation for the advancement of technology and its role in facilitating a new era of business,
particularly online trading. This aids the individual whom may want to work independently.

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References

Lawrence, A.T., & Weber, J. (2014). Business and Society: Stakeholders, ethics, public
policy (14th ed.). New York, NY: McGraw-Hill.