Chicago Board of Trade
| File:CBOT logo.svg Logo based on the trading pit shape | |
| Company type | Subsidiary |
|---|---|
| Industry | Futures and options exchange |
| Founded | April 3, 1848 in Chicago, Illinois, United States |
| Fate | Merged with Chicago Mercantile Exchange to form CME Group in 2007 |
| Headquarters | Chicago , United States |
| Products | Futures contracts, options contracts |
| Parent | CME Group |
| Website | www |
The Chicago Board of Trade (CBOT) is a prominent American futures and options exchange that was established in 1848. On July 12, 2007, CBOT combined with the Chicago Mercantile Exchange (CME) to create the CME Group. Today, CBOT operates alongside CME, NYMEX, and COMEX as designated contract markets (DCM) under the CME Group umbrella.
History
Founded on April 3, 1848, the CBOT ranks among the globe’s earliest futures and options exchanges. It was initiated to establish a centralized platform where buyers and sellers could negotiate forward contracts, mitigating the credit risks that U.S. merchants faced. The exchange came into existence following a gathering of merchants and business leaders who formalized its constitution and bylaws.
In 1864, CBOT pioneered the first standardized "exchange traded" forward contracts, which are now known as futures contracts. The Chicago Mercantile Exchange (CME) originated in 1919 as a reorganization of the Chicago Butter and Egg Board, initially a CBOT offshoot, to facilitate futures trading. A significant legal milestone occurred in 1917 during Chicago Board of Trade v. United States, where the U.S. Supreme Court interpreted the Sherman Antitrust Act of 1890 under a "rule of reason" framework rather than a strict literal approach.
On October 19, 2005, CBOT went public with an initial offering of 3,191,489 shares priced at $54 each; by the end of its first day on the NYSE, the stock had surged 49% to close at $80.50. The 2007 merger with CME consolidated their market presence under CME Group.
Chicago Board of Trade Building
Since 1930, the Chicago Board of Trade has been headquartered at 141 West Jackson Boulevard in Chicago. This 605-foot (184m) Art Deco skyscraper was designed by Holabird & Root and held the title of Chicago’s tallest building until 1965. It features sculptural elements by Alvin Meyer and is crowned with a 31-foot (9.5 m) statue of the Roman goddess Ceres, symbolizing its connection to grain trading. The statue’s faceless design by John Storrs reflects either stylistic choices consistent with Art Deco or practical visibility considerations.
The building received designation as a Chicago Landmark in 1977 and was listed as a National Historic Landmark in 1978. It continues to be a notable feature within Chicago's Loop business district.
The Pit
The trading pit is an elevated octagonal arena where open-outcry trading takes place during regular trading hours (RTH). Its amphitheater-style layout enables hundreds of traders to communicate visually and audibly, underscoring its vital role in trading activities. The pit’s distinctive shape is so iconic that it forms the basis of the CBOT’s logo.
Within the pit, transactions are executed through vocal bids or offers paired with hand signals that convey price and volume, reducing errors in communication. For instance, a trader purchasing ten contracts at eight would announce "8 for 10" while using specific hand gestures; selling five contracts at eight involves saying "5 at 8" accompanied by corresponding signals. A documented guide to these hand signals exists for historical preservation.
Although historically central to CBOT operations, electronic trading has largely replaced pit trading for many contracts. In 2015, CBOT discontinued open outcry for all agricultural commodities in favor of electronic systems—a move that sparked debate among seasoned traders but aligned with industry-wide modernization trends.
News highlights
- Trading activities at the Chicago Board of Trade were suspended on August 1, 1974, following an unidentified bomb threat.
- On October 22, 1981, both the CBOT and the Philadelphia Stock Exchange experienced trading interruptions due to anonymous bomb threat warnings.
- The CBOT launched side-by-side trading for agricultural futures on August 1, 2006, enabling orders submitted electronically or through open outcry to utilize a unified liquidity pool.
- The Chicago Mercantile Exchange declared its $8 billion acquisition of the Chicago Board of Trade on October 17, 2006, resulting in the establishment of CME Group, Inc.
- Shareholders of CBOT gave their consent to merge with the Chicago Mercantile Exchange on July 9, 2007, creating the largest derivatives marketplace worldwide.
See also
- Chicago Board of Trade Independent Battery Light Artillery
- Commodity Exchange Act
- Horatio G. Loomis
- List of futures exchanges
- List of traded commodities
- New York Mercantile Exchange
- Board of Trade of City of Chicago v. Olsen 262 U.S. 1 (1923)
- Chicago Board of Trade v. Christie Grain 198 U.S. 236 (1905)
References
Notes
Bibliography
- Michael Durica (2006). Product Development for Electronic Derivative Exchanges: The case of the German Ifo business climate index as underlying for exchange traded derivatives to hedge business cycle risk. Pro Business. Berlin. .
- Oliver Ryan (Nov. 14, 2005). "Chicago's Making A Contracts Killing". Fortune, p. 22.
Further reading
- Cari Lynn (2004). Leg the Spread: A Woman's Adventures Inside the Trillion-Dollar Boys' Club of Commodities Trading. Random House/Broadway.
External links
- Chicago Board of Trade
- Inside Chicago Walking Tours featuring CBOT and other landmarks
- CME Group Collections at University of Illinois at Chicago
- TradingPitHistory.com documenting CBOT trading pit hand signals
- Chicago Board of Trade membership approves restructuring
- CME Group
- Commodities trader at the Chicago Board of Trade
- News coverage on the merger: Chicago bulls