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Chicago Board Of Trade history
Chicago Board Of Trade company history timeline
An early 1848 discussion between Thomas Richmond and W. L. Whiting regarding the propriety of creating a board of trade led to the March 13 meeting merchants and businessmen in favor of establishing it and a resulting resolution for such an establishment and a Constitution.
Chicago Board of Trade (CBOT), in full Board of Trade of the City of Chicago, the first grain futures exchange in the United States, organized in Chicago in 1848.
1848: The company is founded by 25 Chicago businessmen.
In 1855 the French government abandoned its practice of buying grain in New York and came to Chicago instead.
1856 – The Kansas City Board of Trade is established by local Kansas City merchants as a means of trading grain.
By 1856, the CBOT had about 150 members, and it moved to new quarters on the corner of South Water and LaSalle Streets.
1858 – Standardized terms are created for forward or “to-arrive” contracts.
In 1859 the Illinois legislature granted the CBOT a charter, which allowed it authority to govern itself.
In 1864, the CBOT listed the first ever standardized "exchange traded" forward contracts, which were called futures contracts.
The CBOT standardized its futures contracts in 1865, and moved to its first permanent facility, in the Chicago Chamber of Commerce Building.
1870 – The New York Cotton Exchange is founded.
1872 – The Butter and Cheese Exchange of New York, predecessor to the New York Mercantile Exchange, is founded.
1876 – Futures trading begins at the Kansas City Board of Trade.
1877 – The CBOT begins publishing futures prices on a regular basis.
1881 – The Minneapolis Chamber of Commerce establishes an exchange designed to promote trade in grains and to prevent abuses.
1882 – The Butter and Cheese Exchange of New York is renamed the New York Mercantile Exchange.
1883 – The first clearing organization is established to clear CBOT contracts, initially on a voluntary basis.
When the CBOT moved again in 1885, this time to its own building on LaSalle Street and Jackson Boulevard, protesters called the organization the 'board of thieves.' Nevertheless, the CBOT continued to grow and prosper.
In 1897 Joseph Leiter, 28-year-old son of one of the founders of Chicago's famed Marshall Field department store, attempted to corner the wheat market, driving the price per bushel up from 67 cents in April 1897 to $1.85 a bushel a year later.
Leiter's corner broke down in May 1898, reputedly at the same time his father returned to Chicago and found out what he was doing.
July 1, 1898 – The first federal tax on futures (and cash) transactions is imposed, at a rate of one basis point (0.01 percent) of the notional amount.
Christie Grain and Stock Company (1905). Justice Oliver Wendell Holmes, Jr., wrote the brief for the majority affirming the board's ownership of its quotations and speculation as a means that an economy adjusts to changing conditions.
August 18, 1914 – The Cotton Futures Act, which imposes a prohibitive tax on cotton futures contracts that do not meet certain regulatory requirements, is enacted.
October 13, 1915 – The Supreme Court declares the Cotton Futures Act unconstitutional on the grounds that it was a revenue bill that originated in the Senate rather than the House of Representatives.
December 1, 1917 – A two basis point federal tax is imposed on futures transactions.
After the armistice in November 1918, foreign governments were given access to the nation's grain supplies.
1919 – The Chicago Butter and Egg Board is renamed the Chicago Mercantile Exchange.
September 15, 1920 – The Federal Trade Commission releases the first of seven volumes of its Report on the Grain Trade.
August 24, 1921 – The Future Trading Act which provides for the regulation of futures trading in grain (corn, wheat, oats, rye, etc.) is enacted.
May 15, 1922 – The United States Supreme Court declares the Future Trading Act unconstitutional in Hill v.
Their activities disrupted the grain market and resulted in the federal regulation of commodity markets with the passage of the Grain Futures Act of 1922.
June 22, 1923 – The Grain Futures Administration implements a large trader reporting system, under which each clearing member is required to report on a daily basis the market positions of each trader exceeding a specified size.
Arthur Cutten tried to corner wheat in 1924, driving prices up more than a dollar per bushel.
Several volumes discuss the grain futures markets (referred to at that time as “future markets”) and make recommendations regarding the regulation of grain futures contracts (including the establishment of speculative position limits). The final volume is released in 1926.
February 26, 1927 – The Secretary of Agriculture temporarily suspends large trader reporting requirements, effective until November 1, 1927, in response to complaints that the requirements were preventing large bullish speculators from entering the market, thus allegedly depressing grain prices.
The decade ended with the passage of the Agricultural Marketing Act of 1929, which created the Federal Farm Board and made the federal government a competitor in the private grain market.
Construction began in 1929 and was completed the following year.
Since 1930 the CBOT had been housed in an impressive 45-story building at LaSalle and Jackson Streets, a landmark Chicago structure.
The Federal Warehousing Act of 1931 extended federal oversight to grain elevators.
June 15, 1936 – The Commodity Exchange Act is enacted.
Soybean futures trading had come to the CBOT in 1936.
April 7, 1938 – The Commodity Exchange Act is amended to add wool tops (a type of processed wool that is ready to be manufactured into textiles) to the list of regulated commodities.
October 9, 1940 – The Commodity Exchange Act is amended to add fats and oils (including lard, tallow, cottonseed oil, peanut oil, soybean oil, and all other fats and oils), cottonseed meal, cottonseed, peanuts, soybeans, and soybean meal to the list of regulated commodities.
December 5, 1942 – The Agricultural Marketing Administration is merged into the Food Distribution Administration, with the Commodity Exchange Branch renamed the Compliance Branch.
March 26, 1943 – The Food Distribution Administration is consolidated with three other agencies to form the Administration of Food Production, which is renamed the War Food Administration on April 19, 1943.
February 1, 1947 – Responsibility for administering the Commodity Exchange Act is transferred to the Commodity Exchange Authority, an agency of USDA.
In 1947, it became the Minneapolis Grain Exchange.
August 28, 1954 – The Commodity Exchange Act is amended to add wool (as opposed to wool tops) to the list of regulated commodities.
August 5, 1955 – The Commodity Exchange Act is amended to allow the Commodity Exchange Authority to set the level of registration and renewal fees for futures commission merchants and other registrants.
The complaint charges the respondents with one attempted upward manipulation (of the November 1955 contract), one attempted price stabilization manipulation (of the November and December 1955 contracts), and one successful downward manipulation.
June 18, 1956 – The Commodity Exchange Authority issues a complaint charging Vincent W. Kosuga, Sam S. Siegel, and National Produce Distributors with manipulating and/or attempting to manipulate three onion futures contract months.
August 28, 1958 – The Onion Futures Act bans futures trading in onions, but does not amend the Commodity Exchange Act.
On June 3, 1960, a USDA Judicial Officer found that the respondents performed the attempted stabilization and successful downward manipulation, but did not find sufficient evidence for the upward manipulation.
June 13, 1962 – The Commodity Exchange Authority publishes the first monthly Commitments of Traders report, replacing the annual reports that had been published in previous years.
July 21, 1964 – The Senate passes a bill (introduced by Senator Edmund Muskie) to ban futures trading in potatoes, but it does not become law.
The CBOT had admitted its first women traders in 1969.
Financial data was tracked by computer at a separate facility starting in 1970.
The CBOT had been trading securities options since 1970, but by setting up a separate facility, the Board's traders were insulated from the risks of options trading.
The board opened the Chicago Board Options Exchange in 1973.
1973 – Grain and soybean futures prices reach record highs.
Onions remain on the list of regulated commodities until 1974 and the Onion Futures Act remains in effect to this day.
A futures contract in government-insured mortgages began to trade on the board in 1975.
The Board of Trade's most successful contract, federal government bond futures, began trading in 1977.
The Hunts began buying and stockpiling silver in 1979, causing the price to rise.
The Board began a 23-story addition in 1980, to provide for more offices and more trading space.
By 1981, Treasury bonds were the most actively traded commodity contract in the United States.
The new 32,000-square-foot trading floor opened in 1982.
In 1984 it introduced options on soybean futures.
The cost of membership in the CBOT swung higher and higher, reaching $550,000 in 1987.
By 1990, the CBOT traded 154 million contracts annually, making it the busiest exchange in the world.
The resulting trials were long and drawn out, but in 1991 eight CBOT soybean traders were convicted and sentenced to prison terms.
The Board negotiated with the Chicago Mercantile Exchange to develop a new trading system, when in 1993 the CME suddenly announced it would work on its new system with the New York Mercantile Exchange instead.
The CBOT also negotiated to buy the New York Commodity Exchange, but the deal fell through in mid-1993.
1996: Project A is launched.
Within only weeks, the open outcry system at MATIF was dead. It had been designed for after-hours use, but in September 1998, Project A became available for daytime trades as well.
In 1998, a German/Swiss all-electronic exchange called Eurex opened for business.
Eurex racked up 379 million contracts traded for 1999, passing the CBOT by a wide margin.
As of March 2001, the CBOT planned to move ahead with restructuring and to form an alliance with the electronic German/Swiss exchange Eurex.
On October 19, 2005, the initial public offering (IPO) of 3,191,489 CBOT shares was priced at $54.00 (USD) per share.
In 2007, the CBOT and the Chicago Mercantile Exchange merged to form the CME Group.
In 2015 the CME Group closed most of its trading pits for futures contracts, replacing the era of open outcry trading—which had been the main method of trading futures contracts throughout CBOT’s history—with online trading systems.
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