Chicago Board of Trade

Financial Dictionary -> Investing -> Chicago Board of Trade

Located in Chicago, Illinois, the Chicago Board of Trade is an options and futures specific exchange, and the oldest of its kind in the world, first opening in 1848. The CBOT (its abbreviated form) uses both traditional trading floor (where traders use the outcry technique on the famous raised octagonal pit) and electronic eTrading methods for all round satisfaction and efficiency. It makes an estimated 454 million contract trades in volume (as of 2003), with data suggesting it is on the rise each year.

The exchange trades primarily in both traditional financial contracts and agricultural contracts for commodities such as wheat. Other commodities such as silver and gold are also becoming common on the exchange.

Although it still exists under a subsidiary, the Chicago Board of Trade is owned by the CME Group after a merger with the Chicago Mercantile Exchange in 2007. CME now also owns the New York Mercantile Exchange, altogether making it the largest future and option contract exchange in the world.

The CBOT is often known by its famous raised octagonal pits that look more like theatre stages than that of financial transaction areas. Traders use a language of hand signals to express transactions and typical outcry techniques.

One of the more famous incidents surrounding the Chicago Board of Trade occurred in 1981, when trading had to be put on hold due to false bomb scare telephone calls. This was an attempt to cause a crash, although nothing major came of it and it was only closed for the one day.