Futures Exchange

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DEFINITION

Traditionally, a term referring to a central marketplace where futures contracts and options on futures contracts are traded. More recently, with the growth in electronic trading, it is also used to describe the activity of futures trading itself.

INVESTOPEDIA EXPLAINS

The largest futures exchange in the U.S., the Chicago Mercantile Exchange, was formed in the late 1890s when the only futures contracts offered were for agricultural products. The 1970s saw the emergence of currency futures in major currencies. Today's futures exchanges are significantly larger, with hedging of financial instruments via futures comprising the majority of the futures market activity. Futures exchanges play an important role in the operation of the global financial system.


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