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The CBOT, or Chicago Board of Trade, is the world’s oldest exchange for trading commodity futures and options. The CBOT was established in 1848 to provide commodities buyers and sellers with a centralized location to negotiate forward contracts. In 1865, the CBOT listed the first exchange-traded derivative in the US. Actually a standardized forward contract, the CBOT called it a futures contract. Backed by the CBOT, the futures contract was introduced in response to the problem of credit risk inherent in private forward agreements. In the late 1890s the Chicago Butter and Egg Board was spun off from the CBOT, eventually becoming the Chicago Mercantile Exchange. The CME now handles all clearing for CBOT contracts. Today, the CBOT trades contracts on precious metals, interest rates, and the Dow, in addition to the agricultural products of its roots. For the first 150 years of its history, the CBOT conducted business by open outcry in trading pits, but in recent years the CBOT has been has been frequently improving and upgrading its electronic trading systems. |
