What Are Cme Group Margin Requirements
Market participants on CME exchanges have both initial and maintenance for positions.
- Initial margin This is the up-front payment made prior to initiating a transaction. The initial margin is a percentage of the trade price.
- Maintenance margin After posting the initial margin, a market participant is required to keep up a maintenance margin, which is the amount of equity required to retain an open position.
Speculative/non-member initial margin requirements for all products are set at 110% of the maintenance margin requirement for a given product.
Hedger/member initial margin requirements for all products are set at 100% of the maintenance margin requirement for a given product.
Traders can consult the CME Group website and search by exchange, asset class, and product for the maintenance margin requirements for each product.
Important History Of Cme Group
The history of CME Group dates back to the mid-1800s in the United States. The US economy was expanding rapidly, and the population was spread out over an increasingly bigger geographical area.
Feeding the population required organized and efficient markets for buying, selling, and transporting foodstuffs to cities across the country.
What Educational Materials Do Cme Group Offer
CME has a large library of educational resources to teach traders the derivatives and risk management business. The website divides the educational material into five sections:
- This section covers the real-world factors that impact prices of futures and options.
- Learn About Trading This section contains videos, articles, courses, research, analysis, and other materials for traders of all skill levels.
- Practice Trading In this section, traders can use simulated trading programs to gain trading experience.
- Hedging and Risk Management This section offers comprehensive materials on how to manage risk using futures and options. The section is divided into clearing and price risk management.
- Portfolio Diversification This section covers managed futures and hedge fund trading strategies.
Other supplementary educational resources for traders and clearing firms include:
- CME Institute This online university has a huge catalog of courses traders can access for free.
- Glossary This comprehensive dictionary of trading terms helps traders decipher the language of futures and options markets.
- Education Search Engine This tool enables traders to search for educational materials on the site by type of content, topic, and product.
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Chicago Board Of Trade Building
Since 1930, the Chicago Board of Trade has been operating out of 141 West Jackson Boulevard, Chicago, in a building designed by architectsHolabird & Root that is 605 feet tall, the tallest in Chicago until the Richard J. Daley Center superseded it in 1965. This Art Deco building incorporates sculptural work by Alvin Meyer and is capped by a 31-foot tall statue of the Roman goddessCeres in reference to the exchange’s heritage as a commodity market. Ceres is often claimed to be faceless because its sculptor, John 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. However, this popular rumor was disproved, with the sculptor intending to give the statue an ethereal and god-like look by being faceless.
On May 4, 1977, the Chicago Board of Trade Building was designated a Chicago Landmark. The building is now a National Historic Landmark. Today the Board of Trade Building is closely joined by numerous skyscrapers in the heart of Chicago’s busy Loop commercial neighborhood.
Registered Futures Commission Merchant Responsibilities
Individuals and companies cannot buy and sell futures contracts directly through commodity exchanges. A registered broker places futures contract orders on behalf of processors, producers or buyers. However, some brokerage companies do have electronic platforms that enable clients to enter their orders via computer.
Brokers are formally referred to as Registered Futures Commission Merchants , and are regulated and licensed by their membership through the commodity exchange.
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How Does The Chicago Board Of Trade Work
The CBOT was established in the mid-19th century in order to assist farmers and commodity consumers to control the dangers by abolishing price unpredictability of agricultural products. At some point, futures were included in products like cattle and other species. Chicago was preferred as a trade-off due to its closeness with US farmland and the city as a key transit location for livestock and better rail infrastructure. As a result, it enhanced delivery of products to CBOT futures to be traded easily, safely and affordable. The emergence of the CBOT portfolio sold financial products, energy, and precious metals contracts. In the 1970s, option contracts encouraged investors and traders to boost their risk management strategies. Commodities are very vital in the CBOT trade and US government bonds. As a result, futures for the stock index have been quoted there. Currently, CBOT and CME are related, although CME Group is the most significant and widespread derivatives market globally comprising of four markets namely CME, CBOT, NYMEX, and COMEX. It is important to note that CME and CBOT merged in the year 2007 to add agricultural products, equity indices and interest rates to the current group offerings.
Delivery Or Price Reference Points
Delivery or price reference points are important for the proper functioning for each futures contract. These physical locations are designated by the exchange. For example, the ICE canola contract prices physical delivery of Canada canola free-on-board at primary delivery points in eastern Saskatchewan, with additional delivery points across the Canadian prairies.
This price reference point is referred to as the FOB Par region. This means that all buyers and sellers of ICE canola futures know that they are negotiating a price for canola at or within the Par region.
Find other discounts or premiums based on transportation costs on the ICE website.
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Agricultural And Food Prices
The availability of commodity, wholesale, and market prices for agricultural products is equaled only by data on publicly traded stocks and companies. Early on, the USDA invested money through the Agricultural Marketing Service to place market news professionals in all major production areas of the United States. These professionals report prices being received at wholesale markets, shipping points, and terminal markets, and when possible, a sense of the relative volume, quality, and types of products moving through markets. These data are very rich in detail across time, with 400 daily, weekly, monthly, and summary annual reports covering most major foods and some ornamental horticulture products. The high frequency of the data is important because of the industry’s seasonality and the perceived need for real-time information for planning by producers, shippers/distributors, and processors. The USDA now has all of these data products available on-line for researchers, and in some cases, offers compiled reports for those doing historical price analysis across a longer time period.
E.R. Yescombe, in, 2014
Understanding The Chicago Board Of Trade
The Chicago Board of Trade originated in the mid-19th century in order to help farmers and commodity consumers manage risks by removing price uncertainty from agricultural products such as wheat and corn. Later, futures contracts on products such as cattle and other livestock were added. Chicago was chosen as the exchange location because of its railroad infrastructure, its proximity to the American agricultural heartlands and the city’s position as a key transit point for livestock. The delivery of the products underlying the futures contacts and traded on the exchange was made easier and more affordable by its physical location.
As the exchange evolved and developed over time, contracts related to financial products, energy, and precious metals also began to be traded. In the 1970s, options contracts emerged, allowing traders and investors to refine their risk management strategies even further. Commodities still play a central role in trading on the Chicago Board of Trade, but other products like U.S. Treasury bonds and equity index futures now trade there as well.
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Cme Cattle Hog Futures Finish Higher
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CHICAGO, Dec 1 – Chicago Mercantile Exchange livestock futures finished higher on Wednesday as the markets recovered after dropping the previous session to their lowest prices in more than a week.
Prices rose as investors’ concerns eased about the Omicron coronavirus variant, which rattled commodity and financial markets on Tuesday, traders said. Chicago Board of Trade grain futures also advanced after falling on Tuesday.
The United States on Wednesday identified its first known case of Omicron, though brokers said there were no signs of disruptions to demand for agricultural products. read more
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CME February lean hogs settled up 0.150 cent at 80.125 cents per pound, after dropping on Tuesday to the lowest price since Nov. 11 at 78.675 cents. The contract on Wednesday stayed within Tuesday’s trading range.
The wholesale U.S. pork carcass cutout price fell by $1.01 to $86.70 per cwt on Wednesday, the U.S. Department of Agriculture said. Ham prices pulled back $4.82 to $65.18.
In the beef market, prices for choice cuts shipped to wholesale buyers in large boxes fell $5.90 to $271.68 per cwt, the USDA said. Prices for select cuts of boxed beef eased $1.73 to $260.29 per cwt.
CME January feeder cattle advanced 0.975 cent to 165.825 cents per pound on Wednesday.
Tightening cattle supplies and strong demand from meat packers recently pushed cattle futures higher.
Open Outcry Versus Electronic Trading In The Late 1990s
The situation was probably not helped by much acrimonious jockeying for the chairmanship of the CBOT. While the negotiations with Eurex were playing out, the CBOT also had to work out an arrangement with the Chicago Board Options Exchange, which it had created in 1973. The two planned to merge and, together, transform into a for-profit company with both electronic and open outcry trading platforms. The CBOE objected to the form of the restructuring and threatened to cut off CBOT traders rights at the CBOE. In December 2000, Nickolas Neubauer was elected chairman of the CBOT, upsetting the incumbent chairman by 7 votes . Neubauer wasted no time in hiring a CEO for the board. This crucial post had been open for months. When the new president and CEO, David Vitale, took over in March 2001, he announced that converting the CBOT to a for-profit company was his top priority. He resolved to work out a restructuring that would satisfy the fractious CBOE. As for moving to an electronic format, Vitale claimed to believe that it could co-exist with the open outcry system. Competition is going to drive the exchange to the most efficient format, he told Futures, an industry journal, in April 2001. The CBOT faced declining volume, budget cuts, and an uncertain path as it entered the new millennium.
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Who Are Cme Group
The CME Group operates some of the largest and most important commodities and derivatives trading exchanges in the world.
CME Group exchanges, on average, handle over 3 billion contracts worth about $1 quadrillion annually.
CME Group operates four exchanges:
These exchanges offer trading in global benchmark products across all major asset classes, including futures and options based on forex, interest rates, energy, equity indices, agriculture, metals, weather, real estate, and cryptocurrency.
CME Group operates a global electronic trading platform that enables users worldwide to access markets in all of the products it trades.
It also operates CME Clearing, which is one of the worlds leading central party clearing providers for products traded in the over-the-counter market.
Its huge array of products and significant role in clearing trades makes CME Group one of the most important global exchanges for commodities markets.
CME Group plays a critical role in bringing together individuals, institutions and companies that need to manage risk or seek to profit from taking on risk.
How To Start Trading Cme Group Products
Traders in can open an account at one of these regulated brokerage firms to trade commodities based on CME Group products:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. < b> Between 74%-89% of retail investor accounts lose money when trading CFDs.< /b> You should consider whether you can afford to take the high risk of losing your money.
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Chicago Board Of Trade
41°5240N87°3756W / 41.877821°N 87.632285°W / 41.877821 -87.632285The Chicago Board of Trade , established on April 3, 1848, is one of the world’s oldest futures and options exchanges. On July 12, 2007, the CBOT merged with the Chicago Mercantile Exchange to form CME Group. CBOT and three other exchanges now operate as designated contract markets of the CME Group.
What Is The Chicago Board Of Trade
The Chicago Board of Trade is a commodity exchange established in 1848. The Chicago Board of Trade originally traded only agricultural commodities such as wheat, corn, and soybeans. Now it offers options and futures contracts on a wide range of products including gold, silver, U.S. Treasury bonds, and energy.
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Merging With Other Exchanges
In the 2000s, growth followed by consolidation in the financial services industry led to the formation of the modern CME Group.
In 2002, the CME listed on the New York Stock Exchange and became a public company.
In 2005, the CBOT followed suit and went public on the NYSE.
CBOT
In 2006, CME and CBOT signed a merger agreement, and in 2007 formed CME Group Inc., one of the worlds largest derivatives marketplaces.
NYMEX
In 2008, CME Group acquired NYMEX, which added energy and metals trading to its offerings.
Kansas City Board of Trade
In 2012, CME Group acquired the Kansas City Board of Trade and added hard red winter wheat to its suite of products.
The KCBT was founded in 1856, shortly after the founding of the city itself. At that time, the board operated as the frontier citys Chamber of Commerce.
The transition to commodity exchange was formalized in 1876 when it became apparent that the rapid increase in wheat production in Missouri and the surrounding states needed an institution to facilitate trading and despatch of the grain being produced.
KCBT has grown to become the worlds primary wheat exchange.
What Market Data Does Cme Group Make Available
CME Group makes several types of market data and licenses available to market participants:
Real-Time Market Data
CME Group offers real-time pricing data for interest rate, equity index, energy, agricultural commodity, foreign exchange markets, and digital assets .
Traders can license real-time information, including the following:
- Current bid/ask and price quotes
- Opening & closing ranges
- Integrated S& P, Dow Jones newsfeeds
CME DataMine
This service allows traders to access historical data and back-test trading strategies. Some CME historical data dates back to the 1970s.
Derived Data
CME Group offers a Derived Data Licensing Agreement that allows traders to use CME Group data to create new products and services.
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