future exchange(3)

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Worlds Major Commodity Exchanges:

1. The New York Mercantile Exchange (NYMEX)

The New York Mercantile Exchange is the worlds biggestexchange for trading in physical commodity futures. It is the primary trading forum forenergy products and precious metals. The Exchange has been in existence for 132 yearsand performs trades through two divisions, the NYMEX divisions, which deals inenergy and platinum and the COMEX division which trades in all the other metals.

A major contribution of the Exchange has been todevelop and launch energy futures and options contract in 1978 to facilitate pricetransparency and risk management in this key market. Exchange has become asignificant part of the commercial, civic and cultural life of New York. Exchange alsoclears trades for market participants who which to avoid counter-party credit risk byusing standardized contracts for Natural Gas, Crude Oil, Refined products and

Electricity.Commodities traded

Light Sweet CrudeOil, Natural gas, Heating Oil, Gasoline, RBOBGasoline, Electricity, Propane, Gold, Silver, Copper, Aluminum, Platinum, Palladium,etc.

2. London Metal Exchange (LME)

The London Metal Exchange (LME) is the worldspremier non-ferrous market, with highly liquid contracts. It is an innovative exchangethat has maintained its traditional strengths in a modern business environment byremaining close to its core users by ensuring that its contracts continue to meet the highexpectations of a demanding industry. It has become highly successful with a tradingturnover value of more than US$2000 billion per annum and contributes substantially tothe invisible earnings.

The Exchange was formed in 1877 as a directconsequence of the industrial revolution witnessed in Britain in the 19th Century. The

primary focus of LME is providing a market for participants from the non-ferrous basemetals related industry to safe guard against risk due to movements in base metal pricesand also arrive at a price that sets the benchmark globally. The exchange trades. 24hours a day through an inter-office telephone market and also through an electronictrading platform. It is famous for its open-outcry trading between ring dealing membersthat takes place on the market floor.

Commodities Traded

Aluminum, Copper, Nickel, Lead, Tin, Zinc, Aluminum Alloy,


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North American Special Aluminum Alloy (NASAAC), Polypropylene, Linear LowDensity Polyethylene, etc.

The LME metal futures contracts run a daily basis for aperiod of three months, unlike other commodity markets that are primarily based on amonthly prompt dates. The Exchange thus combines the convenience of settlement dates

tailored to individual needs with the security of a clearinghouse for its clearingmembers, The LME also offers options contracts based on each of these futurescontracts together with Traded Average Price Options contracts (TAPOs) based on themonthly average settlement price (MASP) for all metals futures contracts.

3. The Chicago Board of Trade (CBOT)

The first commodity exchange established on theworld was the Chicago Board of Trade (CBOT). During the year 1848 by a group ofChicago merchants who were keen to establish a central market place for trade. This wassituated in the premises of a flour store during its first four years, Prior to this farmersoften found no buyers for the grain they had transported to Chicago. Given the hightransport cost, they have been left with little choice but to dump the unsold produce inthe near by lake.

Presently, the Chicago Board of Trade is one of theleading exchanges in the world for trading in futures and options. More than 50contracts on futures and options are been offered by CBOT. Currently through open-outcry and/or electronically. CBOT is the oldest existing commodity exchange in the

world having established in the year 1848. Initially, CBOT dealt only in agriculturalcommodities like corn, wheat, soybeans, and oats. Futures contracts in CBOT evolvedover a period of time to facilitate trading in non-storable agricultural commodities andnon-agricultural products like gold and silver. The first electronic trading system inCBOT was introduced in 1994 after more than 150 years of open auction trading wheretraders used to meet to buy and sell futures contracts.

Commodities traded

Corn, Soybeans, Soybean Oil, Soybean Meal, Wheat, Oats,

Ethanol, Rough Rice, Gold, and Silver etc.

Like any other commodity exchange the primary role ofCBOT is to provide transparency and liquidity in its contracts to its members, clientsand market participants like farmers, corporate, small business men, financial serviceproviders, international trading firms and speculators for price delivery, riskmanagement and investment.


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4. Tokyo Commodity Exchange (TOCOM)

The Tokyo Commodity Exchange (TOCOM) is the secondlargest commodity futures exchange in the world with trade in metals and energycontracts. It has made rapid advancements in commodity trading globally since

inception 20 years back. One of the biggest reasons for this is the initiative TOCOMtook towards establishing Asia as the benchmark for price discovery and riskmanagement in commodities like the Middle East Crude Oil. TOCOMs recent tie-upwith the MCX to explore cooperation and business opportunities is seen as one of thesteps towards providing a platform for futures price discovery in Asia for Asian playersin Crude Oil since the demand-supply situation in US that drives the MYMEX isdifferent from the demand-supply in Asia.

In January 2003, in a major overhaul over its computerized tradingsystem, TOCOM fortified its clearing system in June by being the first commodity

Exchange in Japan to introduce an in-house clearing system. TOCOM launched optionson gold futures, the first options contract in Japanese market, in May 2004

.

Commodities Traded.

Gasoline, Kerosene, Crude Oil, Gold, Silver, Platinum, Palladium,Aluminum, Rubber, Etc.

5. Chicago Mercantile Exchange (CME)

Chicago Mercantile Exchange (CME) is the largestfutures exchange in the US and the largest futures clearing house in the world for futuresand options trading. Formed in 1898 primarily to trade in agricultural commodities, theCME introduced the worlds financial futures more than 30 years ago. Today it tradesheavily in interest rate futures, Stock indices and foreign exchange futures. Its productsoften serve as a financial benchmark and witness the larges the open interest in futurescontracts compared to any other exchange in the world. The commodities futures profileof CME consists of livestock, dairy and forest products and enables small family farmsto large agri-businesses to manage their price risks. Trading in the CME can be doneeither through pit trading or electronically.


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Commodities Traded.

Butter, Milk, Diammonium Phosphate, Feeder cattle, FrozenPork bellies, Lean Hogs, live Cattle, Non-fat Dry Milk, Urea, Urea Ammonium Nitrate,Etc.

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