The Chicago Board of Trade in the US

When is someone in the US is making reference to the 'Board Of Trade' they are usually talking with respect to the stock market and typically the Chicago board of trade (known as CBOT) which is the worlds oldest options and futures exchange. Also the Chicago Boards building is often referred to by the exchange name.

Kansas city also has a board that is associated with trading, it is a options and a commodity futures exchange that is regulated by the 'Commodity Futures Trading Commission'. Of course New York has a similar exchange which is a physical commodities futures exchange.

There are others, for example there is what is known as a committee of the Privy Council of the United Kingdom, this originated as a committee of inquiry sometime in the 17th century and evolved slowly over time into a government department with a diverse range of functions. Also worthy of passing mention is the Vancouver Board (of trade) which is a non-profit group which seeks to facilitate and promote the Pacific region as a centre that is available for travel, commerce and trade.

Here we will give focus and a little history of the CBOT (mentioned above). The CBOT came about to provide a central location where sellers and buyers could meet and arrange their 'forward' contracts.

These 'forward contracts' could be traded on the exchange, these were the first 'futures contracts'. It can also be noted that one of the hallmarks of the CBOT exchange was that the futures contracts were standardized, so that futures traders had known standard futures contract sizes.

The listing of these standardized forward contracts (Futures contracts) was first done by the CBOT in 1864. Around 1919 the Chicago Butter and Egg Board was shuffled around to allow traders to carry out futures trading and its name was changed to the Chicago Mercantile Exchange (the CME).

The CBOT has been located at West Jackson Boulevard, Chicago since about 1930 and initially was the tallest building in Chicago. The building is now considered a national historical landmark.

The CBOT trading 'floor' is made up of trading pits. Whilst the trading pits are still used and are considered the favoured place for complex option trades to be filled, the advent of electronic trading has seen the use of trading pits decrease.

Source : ezinearticles