The earliest recognized futures trading exchange is the Dojima Rice Exchange, established in 1710 in Japan for the purpose of trading rice futures. Western commodity futures markets started trading in England during the 16th century, but the first official commodity trading exchange in England, the London Metals and Market Exchange, was not established until 1877.
The United States had the earliest official commodity trading exchange in the west, the Chicago Board of Trade (CBOT), formed in 1848. The CBOT arose in the aftermath of railroads and the telegraph connecting the agricultural marketplace hub of Chicago with New York and other cities in the eastern U.S. The first traded futures contracts in the U.S. were for corn. Wheat and soybeans subsequently followed, and these three basic agricultural commodities still account for the bulk of trading business conducted at the CBOT.
The next large market to begin trading futures contracts was the cotton market. Forward contracts in cotton began trading in New York in the 1850s, leading eventually to the establishment of the New York Cotton Exchange (NYCE) in 1870. Futures contracts for other products developed over time, including commodities such as cocoa, orange juice and sugar. Massive U.S. cattle production in the led to cattle and pork futures contracts.
The 1970s saw a large expansion in the futures trading markets. The Chicago Mercantile Exchange (CME) started offering futures trading in foreign currencies. The New York Mercantile Exchange (NYMEX) began offering trading in various financial futures, including U.S. Treasury bonds (T-bonds) and eventually futures in stock market indexes. The Commodities Exchange provided futures trading in gold, silver and copper, and later added platinum and palladium when gold ceased to be pegged to the U.S. dollar. The rapid expansion of trading in financial futures led to the creation of futures contracts on the Dow Jones and S&P 500 stock indexes.
Although there are now futures trading exchanges worldwide, the U.S. exchanges remain the most widely traded, due in large part to the fact that two of the most heavily traded markets are the U.S. bond market and the wheat market.