History Of The Commodity Market

The commodities market is both a wholesale and retail market. The term commodity is a generic term for all natural resources used in the industry for the production of finished or semi-finished products, either as components or as energy entering cycle of production or delivery of the product. These markets are exchanged between other copper, gold, wheat, cotton and oil.

The players in this market are producers (farmers, mining companies, industrial ), financial institutions (banks, asset managers, institutional investors, hedge funds, etc.), corporations (as issuers in the primary market, or as investors), and individuals. Since the early 1980s, there was a strong development of derivatives (forwards, futures, options, warrants, swaps) so that today the bulk of trade takes place via these products. Generally, the commodities market, like other markets elsewhere, transactions take place either on organized markets or on the OTC market, also called OTC (Over-the -counter market).

Commodity

Organized markets, which are grants and futures markets are markets in which transactions are standardized (in terms of quantity, quality, maturity for merchandising, etc.) and there is no counterparty risk (that is to say, failure of the counterparty) due to the existence of a clearing house that comes between any buyer and seller and check their creditworthiness with daily margin calls. In contrast, the OTC market is a market where the buyer entered into the transaction directly with the seller. The transactions are less standardized, but also better fit the specific needs of operators.

The commodities market is now almost entirely paperless (more as paper) and electronic (very few transactions "open outcry"). Trade is mainly conducted via the CME Group, which contains the CBOT (Chicago Board of Trade), CME (Chicago Mercantile Exchange), NYMEX (New York Mercantile Exchange) and COMEX (New York Commodity Exchange). It is currently the largest trading exchange futures (contracts) with the widest choice of commodity contracts. LME (London Metal Exchange) and ICE (Intercontinental Exchange), formerly NYSE, are the other two major stock exchanges trading commodities.

History Of The Commodity Market