Futures trading in the modern sense originated in Chicago, USA in the middle of19th century. 65438+During the 1930s and 1940s, with the large-scale development of the Midwest of the United States, Chicago developed from an unknown small village into an important grain distribution center because of its proximity to the grain-producing areas in the Midwest and Lake Michigan. Cereals from the midwest gather here and are transported from here to the eastern consumption area. However, due to the unique seasonality of grain production and the shortage of warehouses and inconvenient transportation at that time, the contradiction between grain supply and demand was extremely prominent. Every year during the grain harvest season, farmers transport grain to Chicago by car and boat. Due to the centralized listing of grain in a short time, the supply greatly exceeded the local market demand, and the price fell again and again. However, in the following spring, due to the shortage of food and soaring prices, consumers suffered greatly, and processing enterprises also faced difficulties due to the lack of raw materials. Under the repeated impact of the contradiction between supply and demand, grain merchants began to set up warehouses beside the main roads, buy grain from farmers in the harvest season and send it to other places in the next year, thus alleviating the seasonal contradiction between supply and demand of grain. However, grain merchants therefore bear huge price risks. Once food prices fall in the coming year, profits will be reduced or even lost. To this end, they immediately went to Chicago and signed supply contracts with local grain processors and sellers in the spring of the following year to determine the sales price in advance and ensure profits. In the long-term business activities, a set of forward trading methods has been explored.
1848, 82 businessmen in Chicago initiated the establishment of the Chicago Stock Exchange (CBOT). In fact, the original Chicago Board of Trade was not a market, but a naturally formed chamber of commerce to promote the development of industry and commerce in Chicago. In the early stage of development, the Chicago Board of Trade mainly improved transportation and storage conditions, and provided members with price information and other services to facilitate buyers and sellers to reach a transaction. It was not until 185 1 that the Chicago Board of Trade introduced forward contracts. At that time, grain transportation was very unreliable, and ships and flights were irregular. It took a long time for the news of supply and demand in the eastern United States and Europe to reach Chicago, and the price fluctuated greatly. In this case, farmers can use forward contracts to protect their own interests and avoid losses caused by falling prices or insufficient demand when transporting food to Chicago. Processors and exporters can also use forward contracts to reduce the risk of rising processing costs caused by various reasons and protect their own interests.
However, this long-term trading method encountered a series of difficulties in the subsequent trading process, such as the quality, grade, price, delivery time and delivery place of the goods, which were all reached according to the specific conditions of both parties. When the situation of both parties or market price changes, it is very difficult to transfer the signed contract. In addition, whether the forward transaction can be finally fulfilled mainly depends on the reputation of the other party, and a comprehensive and detailed investigation of the reputation of the other party is time-consuming, costly and difficult to carry out, which increases the risks in the transaction.
In view of the above situation, the Chicago Board of Trade launched a standardized contract on 1865, and at the same time implemented a deposit system, charging both parties with a deposit not exceeding 10% of the contract value as a performance guarantee. This is a historic institutional innovation, which contributed to the birth of real futures trading. Subsequently, in 1882, the exchange allowed hedging to be exempted from performance obligations, which further promoted the participation of speculators and increased the liquidity of the futures market. 1883 set up a clearing association to provide hedging tools for members of the Chicago Board of Trade. However, the clearing association was not a well-managed organization at that time. After the establishment of 1925 BOTCC, all transactions of the Chicago Board of Trade have to enter the clearing company for settlement, and the settlement institution in the modern sense has initially taken shape.
This explains why the futures market is obviously a virtual transaction, but it still exists before the physical transaction.