What is the International Money Market?
There is a part of the Chicago Mercantile Exchange (CME) called the International Monetary Market (IMM) that trades currency and interest rate futures and options. Trading on the IMM began when the CME and the IMM joined in May 1972.
How the International Monetary Market Works
The U.S. dollar, the British pound, the euro, and the Canadian dollar are all part of the CME’s IMM section. The IMM also deals in the London Interbank Offer Rate (LIBOR), the 10-year Japanese bond, and the U.S. Consumer Price Index (CPI).
A Look Back at the History of the International Monetary Market
In 1898, the Chicago Mercantile Exchange opened for business. The “Chicago Butter and Egg Board” was its first name, but it changed it in 1919. In 2002, the CME was the first stock exchange to “demutualize” and start trading on the stock market. The CME opened its first futures market for frozen pork bellies in 1961. Financial futures and currency options were also added in 1969. 1972, the first interest rate, bond, and futures arrangements were made.
The CME’s 2019 yearly report says it typically handles 19.2 million contracts daily, a little less than in 2018.2Even. Though some selling is old-fashioned (open outcry), 80% of trading is now done electronically through the CME Globex platform.
A significant financial market called the CME Group was made when the CME and the Chicago Board of Trade merged in 2007. The Commodity Exchange (COMEX) and the New York Mercantile Exchange (NYMEX) are owned by NYMEX Holdings, Inc. It was bought by the CME in 2008. The CME grew even more in 2010 when it bought a 90% stake in the Dow Jones stock and financial indexes. 3 In 2012, it bought the Kansas City Board of Trade, the most significant player in hard red winter wheat, as part of its growth spree. Coin futures were first traded by the CME in 2017.
CME Group also runs CME Clearing, one of the best central counter-party clearing providers.
What the International Monetary Market Can’t Do
- There are big rewards that can come from buying financial futures, but the CME lists some risks that come with this part of its business, such as:
- Market factors in terms of economics, politics, and geopolitics
- Laws and rules may be changed
- Significant or quick changes in the business world and money markets
- Changes in prices, contract quantities, or volatility in the derivatives markets, as well as in the markets for stocks, bonds, currencies, interest rates, and commodities
- Changes in the supply or demand of goods around the world or in a particular area
