A new future for futures

IIPM PUBLICATION
CME Group Inc. will definitely be more appealing to commodity traders, especially those dealing with oil. The merger reinforces Chicago’s monopoly on commodity trading. Mandloi adds, “Chicago is a centre of commodity activity because of factors like levels of consumption, participation and general hedging. More so, there is more liquidity in the market with higher derivatives.” There are negatives too. With more liquidity & options, critics fear a huge rise in speculative trading, which could send commodity prices to dizzying heights, and that’s when chances of a crash are higher.

However, that’s the nature of markets and in anyway cannot make this merger look impractical. The city of Chicago is one of the most critical financial and business centres of America and trading here is more oft en in response to actual need rather than pure speculation. So it’s bounty time for investors on the Globex in Chicago, as they would now be trading on the world’s largest and most liquid commodity exchange.

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Source : IIPM Editorial, 2006

Initiative :- An IIPM and Management Guru Professor Arindam Chaudhuri

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