commodity and futures
Futures Market Definition
What Is a Futures Market?
A futures market is an auction market in which participants buy and sell commodity and futures contracts for delivery on a specified future date. Futures are exchange-traded derivatives contracts that lock in future delivery of a commodity or security at a price set today.
Examples of futures markets are the New York Mercantile Exchange (NYMEX), the Kansas City Board of Trade, the Chicago Mercantile Exchange (CME), the Chicago Board of Trade (CBoT), Chicago Board Options Exchange (CBOE) and the Minneapolis Grain Exchange.
Originally, such trading was carried on through open outcry and the use of hand signals in trading pits, located in financial hubs such as New York, Chicago, and London. Throughout the 21st century, like most other markets, futures exchanges have become mostly electronic.
KEY TAKEAWAYS
A futures market is an exchange where futures contracts are traded by participants who are interested in buying or selling these derivatives.
In the U.S. futures markets are largely regulated by the commodities futures clearing commission (CFTC), with futures contracts standardized by exchanges.
Today, the majority of trading of futures markets occurs electronically, with examples including the CME and ICE.
Unlike most stock markets, futures markets can trade 24 hours a day.
The Basics of a Futures Market
In order to understand fully what a futures market is, it’s important to understand the basics of futures contracts, the assets traded in these markets.
By MARSHALL HARGRAVE
Updated Apr 14, 2020
Futures Market
commodity and futures