The October 17, 2006 was not like any other Tuesday winter morning in the Windy City; this was a day to remember in the history of the 159-year-old, Chicago Board of Trade (CBOT). Undoubtedly, the day was scheduled only for an ordinary conference call of CBOT's third quarter earnings. However, the conference call did not focus on the stunning earnings of the exchange that increased by 45% to $163.0 mn as compared to last year's third quarter earnings. The reason was quite simple. After a marathon bargaining session that prolonged until 6 a.m. on October 17 two crosstown exchanges and traditional rivals agreed to merge and create the world's largest and most diverse future derivative exchange valued at more than $25 bn.
After three unsuccessful attempts in a period of 30 years, at last the Chicago Mercantile Exchange (CME) convinced the executive of CBOT for a definitive agreement to merge.
One of the factors that led to the creation of over a century-old CBOT that is still one of the world's largest commodity exchanges, was that farmers coming to Chicago at times found no buyers, and had to dump their cereals unsold in Lake Michigan, adjoining the city. It is organized as a not-for-profit membership association. Chicago's strategic location at the base of lakes, close to fertile agricultural lands contributed to its rapid growth and development as a grain center. The CBOT was established on April 3, 1848 to bring the producers (farmers) and buyers (merchants) together. Thomas Dyer was elected as its first President. In 1865, the CBOT took steps to formalize futures contracts. Although the trading and development of financial futures began after World War II, financial products started trading electronically only in 1994. In October 2005, it became a public limited company. |
