CHICAGO MERCANTILE EXCHANGE

Patriann Monteith
International College of the Cayman Islands

GR 509
Reflection Paper Chicago Mercantile Exchange
Lecturer: Dr. David Marshall
22nd May 2016

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On 19th May 2016, we visited the Chicago Mercantile Exchange. The CME is a
combination of exchanges from Chicago and New York. The CME owns and operates future and
options exchanges in Chicago and New York. However, it only facilitates trading. In regards to
how that trading of futures began, it was stated that as the Midwest was developing, framers
brought products to sell in Chicago. However, prices tended to also fluctuates. In light of this, the
trading of futures began to rake place. The CME trades Trade financial products such as foreign
currency, interest rates, and equity indexes and agriculture products, such as corn and wheat,
pork belly.
In relation to trading floors, the city of Chicago only has one remaining trading floor
which is located in the CME group building. There is a trading floor called Nine Max in New
York that is also owned by the CME group. Nine Max is mainly futures and options and energies
and metals. Each product that is being traded has its own pit on the trading floor. The most active
product being traded is the Euro-dollar options.
Business has changed significantly in regards to open out right trading. Open outright
trading is where verbal contacts are made on the trading floor which takes place in the form of
shouting and hand gestures to make trades. This is how the exchange grew and operated for
many years. Now only options on futures are traded on the trade floor and the mass majority of
the business is now electronic trading. Due to the options are a little slower to move to the screen
in the trade room, the open outright trading still takes place.
As it relates to m MBA program, the move from using trading floors to electronic trading
is related to Management Information Systems. Due to the rapid advancement of technology, it
has become easier for many transactions, processes and procedures to take place. This is not
different when it comes to trading. If organizations do not embrace technology and responds

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quickly to the rapid change, they will be left behind and can ultimately have their business be
unsuccessful. For traders who traded on the trading floors all their lives, some have found it
difficult to electronic trading while others have embraced it. The individuals who have not
embraced technology have lost employment.
As it relates to the Cayman Islands, the Cayman Islands has a stock exchange. The
Cayman Islands Stock Exchange provides a listing facility for offshore mutual funds, specialist
deb securities, global depositary receipts, and derivative warrants. (http://www.csx.com.ky/)
Although the Cayman Islands stock exchange is not as busy as the Chicago Mercantile
Exchange, is able to provide a set of listing rules specifically tailored to meet the needs of
investment funds of all types. Since its launch in 1997 the Cayman Islands Stock Exchange has
grown rapidly to become one of the worlds premier listing venues for funds
(http://www.csx.com.ky/csxdocs/Documents/Guide%20to%20Funds.pdf)

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References
1. The Cayman Islands Stock Exchange. Retrieved from http://www.csx.com.ky/