How do we develop a currency futures contract ?
In other words, when I order the cars, my U.S. dollar is worth a certain number of Euro, a value we will call X.
from which to mark the beginning of
futures trading in the United States.
Chicago Mercantile Exchange (CME)

The CME was established in 1919. It traded futures in eggs, butter, cheese, potatoes,
How do we develop a currency futures contract ?
In the event that the Euro has
decreased against the U.S. dollar
the opposite condition will hold true.
How do we develop a currency futures contract ?
swaths of coastline knee-deep in water Sunday as it plowed through parts of Florida.
An earthquake
Jim Batson carefully walks across bricks in his living room after An earthquake Tuesday, Sept. 28, 2004, in Parkfield, Calif.
risk to businesses and investors who count
the interest earned or paid on borrowed money as a source of profit or expense.
Interest Rate Futures
If I am a banker, for instance, I may want to invest some of my bank’s assets in government securities. drop in value, meaning I
could buy more Euro with U.S. dollars three
months hence.
An Overview of Market Sectors
Foreign Currency Futures
In order to hedge against fluctuations in
currency relationships, a producer can use
foreign currency futures as his or her vehicle.
Interest Rate Futures
Interest rate volatility represents a large
Chapter 5 The Variety of Futures Markets
CBOT

Even though the CBOT was established in 1848, a formal set of rules for trading futures contracts was not written until 1865, which is a more accurate date
response to increased price volatility,
international instability, growing consumer
demand, and unstable global weather conditions.
Hurricane Jeanne
Satellite image (September 26, 2004) shows Hurricane Jeanne as the oncepowerful storm weakened to a tropical storm while inland in Florida. Hurricane Jeanne peeled off roofs, snapped power lines and left large
and onions until 1945.
Proliferation of Futures Markets

Futures and futures options trading has been growing steadily in volume yearly.

This explosive growth has been a natural
International Markets
In 1972 the CME established the
International Monetary Market (IMM)
division and initiated trading in seven
foreign currency futures contracts.
How do we develop a currency futures contract ?

If I am an automobile distributor, and I place an order for 20 million dollars worth of German cars to be delivered three months, I face the risk that when I pay for the cars the value of the Euro, which I must use to pay the manufacturer, may have gone up in relationship to the dollar.