Friday Fun Fact: International Money Market

The Continuing Evolution of Financial Futures

On the heels of the 1972 creation of the International Money Market (IMM) and the launch of currency futures, it did not take other exchanges long to introduce additional products on financial instruments.

With the failure of the Bretton Woods Agreement, the likelihood of more volatility in the currency markets was all but assured and there would be other consequences as well. If currency rates could become more volatile, so could interest rates on both the short and long end of the yield curve. Ditto for stock indexes such as the S&P 500 or the Dow Jones.

About three years later, The Chicago Board of Trade (then the primary competitor to the Chicago Mercantile Exchange’s IMM) launched the first interest rates contract on mortgages, specifically Government National Mortgage Association CDRs (collateralized depository receipts). Following that, the CBT introduced the U.S. Treasury bond contract, which went on to become very successful.

Over the next five to10 years, the race was on as both the IMM and the CBT launched products that would allow hedgers and speculators to trade or hedge the entire yield curve from three-month Treasury bills and three-month Eurodollars to 30-year Treasury bonds.

A few decades later, the Treasury futures and options complex and the Eurodollar futures and options complex have become the most liquid futures and options contracts in the world, reaching a record 39 million contracts being traded on May 29, demonstrating that CME markets really are where the world comes to manage risk.

About CME Group

As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. Comprised of four exchanges - CME, CBOT, NYMEX and COMEX - we offer the widest range of global benchmark products across all major asset classes, helping businesses everywhere mitigate the myriad of risks they face in today's uncertain global economy.

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