Chicago Board of Trade

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The Chicago Board of Trade (CBOT) NYSE: [BOT], established in 1848, is the world's oldest futures and options exchange. More than 50 different options and futures contracts are traded by over 3,600 CBOT members through open outcry and eTrading. Volumes at the exchange in 2003 were a record breaking 454 million contracts.

Contents

1 History
2 The Building
3 News lines
4 See also
5 References
6 External links

History

Trading floor at the Chicago Board of Trade.

The concerns of U.S. merchants to ensure that there were buyers and sellers for commodities have resulted into forward contracts to sell and buy commodities. Still, credit risk remained a serious problem. The CBOT took shape to provide a centralized location, where buyers and sellers may meet and negotiate and formalize forward contracts.

In 1865, the CBOT listed the first ever standardized “exchange traded” forward contracts, which were called futures contracts. In 1919, the Chicago Butter and Egg Board[link], a spin-off of the CBOT, was reorganized to enable member traders to allow future trading, and its name was changed to Chicago Mercantile Exchange (CME).

On 19 October 2005 the initial public offering (IPO) of 3,191,489 CBOT shares was priced at $54.00 (USD) per share. On its first day of trading the stock closed up +49% at $80.50 (USD) on the NYSE.

The Building

Board of Trade building

Since 1930, the Chicago Board of Trade has been operating out of 141 West Jackson Boulevard, Chicago. It is housed in a building designed by architects Holabird & Root and it is 184.4 meters tall. This Art Deco building incorporates sculptural work by Alvin Meyer and is capped by a statue of the goddess Ceres in reference to the exchange's heritage as a commodity market. Ceres is faceless because its sculptor, John H. Storrs, believed that the forty-five story building would be sufficiently taller than any other nearby structure and as a result that no one would be able to see the sculpture's face anyway.

On 4 May 1977, the Chicago Board of Trade Building was designated a Chicago Landmark[link]. Today the Board of Trade Building is closely joined by numerous skyscrapers in the heart of Chicago's busy Loop commercial neighborhood.

Trades are made in the pit through two forms of communication. One is bidding or offering a price and quantity depending on if you want to buy (bid) or sell (offer). The other is using a physical representation of the order with your hands and face called arbitrage. If you want to buy a beans, for example, in the pit you would say 8 for 10, or price before quantity, and face you hands in. If you want to sell beans you would say ten at 8, or quantity before price, and face your hands out. The difference between the way you bid and offer is a protection against errors.

News lines

On October 22, 1981, trading was halted on the Chicago Board of Trade and the Philadelphia Stock Exchange after anonymous callers said bombs had been placed in those buildings.

References

Ryan, Oliver (Nov. 14, 2005). "Chicago's Making A Contracts Killing". FORTUNE, p. 22.

External links