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Commodity Exchange Basics and Exchanges
The
commodity exchange, or ‘Designated Contract Market’ (by CFTC oversight) is an exchange that forms the hub of futures markets. Having its origins in 19th century America, for trading certain agricultural commodities, it is where futures contracts and options are now traded. The exchange establishes benchmark pricing for traded commodities, some of which are necessities for everyday living, such as gasoline, heating oil, wheat and other food products. It is where hedgers, both large and small, and speculators invest in the markets.
Orders are typically sent to a trading floor, and specifically
the pit, where an auction takes place. However an exception
is the ICM - Intercontinental Exchange, that is administered
strictly by electronic means.
The COMEX – New York Commodity Exchange, is one of the most
actively traded exchanges. The COMEX also goes by the name ‘Commodity
Exchange’ and this can cause some confusion between its abbreviated
equivalent and exchanges taken in the broader sense. The COMEX
is part of the NYMEX and it is where metals are traded like
Aluminum, Gold, Silver and Copper (softs are traded on the NYBOT – New
York Board of Trade).
The other major trading location within the United States is
Chicago, home to CBOT, also referred to as ‘The Merc’ and CME,
which specializes in meats among other commodities. In addition
to the ICM, it performs electronic trades via the CME Globex.
A coming addition to worldwide exchanges promises to be
the BCEX – Biomass
Commodity Exchange. Planned to help facilitate liquidity to the biobased
fuel markets.
For a list of major global exchanges
& commodities each trades.
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