On Wednesday, April 2, my fellow Business Scholars and I went to the Chicago Mercantile Exchange (CME), an American commodity derivative exchange, founded in Chicago in the year 1898. There, my fellow Scholars and I had the wonderful opportunity to listen to James Oliff, a member of CME for over 30 years who now currently serves on the advisory board of The Review of Future Markets.
James Oliff talked to us Scholars about all the different goods that are traded at CME which included commodities, options, derivatives, currencies, and futures. As Business Scholars, we were given a tour of the various trading platforms in CME. Oliff told us that there were two methods of trading that was conducted. One type was done electronically, and the other type was done using the open outcry method—a method where the traders stood inside a pit to call out prices and quantity of different commodities. Inside the pits, there were people wearing colored jackets, and Oliff explained that each jacket color signified the different roles the person within the pits. The alternating colors represented whether one was a trader, a clerk, a runner, etc.
One thing I found very interesting were the plethora of hand signals that were used to communicate within the pits. Oliff explained that these hand signals have been used ever since the 1970s to make communicating easier. The hand signals were used to represent whether the trader wants to buy or sell, and it also expresses price and quantity.
Overall, visiting the Chicago Mercantile Exchange allowed me to learn so much about how trading occurs within CME and it was definitely a wonderful experience.
Thanks for reading!