CME Globex

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Globex, more formally called "CME Globex" ("CME" was added to the name to clearly brand Globex as a CME electronic trading platform versus an entity separate and apart from CME), was the first global electronic trading system for futures and options. It was developed by the Chicago Mercantile Exchange in conjunction with various technology and systems partners and went live in 1992.

Electronic trading of CME Group's futures and options accounts for more than 80 percent of its average daily volume.

Electronic trading on CME Globex is available virtually 24 hours a day from Sunday evening through late Friday afternoon, with a break that roughly varies from 30 and 60 minutes between close and reopening each day, depending on the product. Trading occurs during five daily sessions, allowing global customers to enter, view, modify and cancel electronic orders.

Some futures and options products are traded solely on Globex, while others are traded via open-outcry in addition to trading on Globex. More recently introduced futures products have tended to be made available for trading solely on the CME Globex platform.

Sessions

For CME Globex products, the start of the CME Globex session, which usually occurs in the afternoon or evening, generally marks the beginning of the next trading day. (For example, orders entered during Sunday's evening session are dated for and cleared on Monday). If the CME Globex and open outcry sessions overlap for a given product, the trading day includes both the CME Globex session (Electronic Trading Hours -- ETH) and the trading floor open-outcry session (i.e., Regular Trading Hours -- RTH).

Speed

In January 2008 CME Group announced that it would be launching an upgrade to the CME Globex electronic trading platform to significantly reduce message response time. According to CME Group, during testing under a replay of peak market conditions the upgraded CME Globex platform demonstrated more than a 50-percent reduction in response time, from an average of 31 milliseconds down to approximately 16.5 milliseconds.[1] At the same time the group announced that Globex would assume all operations of the acquired Chicago Board of Trade's former electronic trading platform eCBOT.

History

In 1987, CME pioneered electronic futures trading with conceptualization and initiation of development of the CME Globex electronic trading platform, and in 1992 the first electronic futures trades were transacted on the new platform. On February 2, 1989, the CFTC approved rules proposed by the CME for the basic Globex system, the first international electronic trading system to allow off-hours trading in exchange contracts.[2]

Typical with any system, Globex has gone through a number of iterations and systems enhancements over the years, linked with several partners. When Globex was first launched, it used Reuters technology and network, followed by a modified version of the NSC trading system, developed by the Paris Bourse for the MATIF (eventually merged into Euronext, which in turn was merged into NYSE Euronext).

Early on, Globex was named "PMT" ("Pre/Post Market Trading") to reflect when electronic trading took place, most of it originally envisioned as being outside of regular trading floor hours. Side-by-side trading, where both open-outcry trading and Globex trading co-exist, has become a thing of the past in most CME Group markets, but not all. Whereas, for example, 90 percent of all CME Group foreign currency futures trading is transacted electronically at the exchange, the livestock markets currently are, in very small part, electronic. In addition, CME Group continues to promote more active use of electronic trading in its futures options contracts, particularly in volume-giant CME Group Eurodollar options. In 2007, roughly 14.5 percent of the exchange's options contracts were electronically traded.

A new record established on October 5, 2007, put CME Globex volume over the one-billion-contract mark in a single year for the first time.[3]

Legacy CBOT Products/MGEX and KCBOT Move to Globex

CBOT products migrated to the CME Globex platform from e-cbot over two weekends in January 2008.[4] On Sunday, January 13, all e-cbot listed commodity and equity index products migrated to CME Globex. (In addition, the Kansas City Board of Trade and Minneapolis Grain Exchange simultaneously moved their products from eCBOT to Globex). CBOT interest rate products moved to Globex on Sunday, January 27.

Partnerships with Other Exchanges

In 2006, NYMEX sealed an agreement with CME to launch side-by-side trading of physically delivered energy futures and to use the CME Globex electronic trading platform during open outcry hours. Trading began on September 4, 2006. A number of additional NYMEX products have been added to the Globex roster since then.

As noted above, the Kansas City Board of Trade and the Minneapolis Grain exchange moved their futures and options products from eCBOT to Globex on the evening of Jan. 13, 2008. This coincided with the CBOT's legacy agricultural and Dow products moving to the Globex platform.

Also See

New York Mercantile Exchange, Inc. Move to Electronic Trading - Hybrid Approach

References

  1. "CME Group Delivers Merger Benefits to the Market Through Upcoming Technology Upgrades and Product Enhancements - Faster response time during peak CME Globex usage,”. CME Group.
  2. CHRONOLOGY OF CFTC APPROACH TO INTERNATIONAL REGULATION. Cadwalader.
  3. "CME Group Surpasses One Billion Contracts Traded on CME Globex in a Single Year. CME Group.
  4. "CME Group Delivers Merger Benefits to the Market Through Upcoming Technology Upgrades and Product Enhancements - Faster response time during peak CME Globex usage,” 1/9/08. CME Group.


Resources

[1] CME Group Web site