A futures exchange, also known as the futures market, is a central marketplace where people can trade futures contracts and options on futures contracts. A futures contract is a standardized contract to buy or sell a specified quantity of an asset on a future date at a predetermined price.
With the growth in electronic trading in recent times, futures markets now include the electronic marketplace where futures contracts are traded. Apart from bringing buyers and sellers together and organizing the contracts into standard units, many large future exchanges also provide settlement and clearing services.
There are many futures exchanges in different countries on our planet. Here are the largest futures exchanges in the world:
1. CME Group (US)
The CME Group is the largest futures exchange in the world. It consists of Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT), New York Mercantile Exchange (NYMEX), Commodity Exchange Inc. (COMEX), Kansas City Board of Trade (KCBT), and the NEX Group. It is headquartered in Chicago and has offices in New York, Washington, Houston, London, Sydney, Tokyo, Beijing, Hong Kong, Sao Paulo, and Alberta.
Created in 2007 when the CME merged with the CBOT, the CME Group has only grown since then. In 2008, the group purchased NYMEX Holdings, the parent company of the NYMEX and COMEX. It acquired the KCBT, the major exchange for hard-red winter wheat, in 2012. Finally, the CME Group added NEX Group, a UK-based electronic marketplace for financial institutions, to its list of subsidiaries.
Through its numerous subsidiary futures exchanges, the CME Group offers the widest range of products across all major asset classes, including interest rates, energy, agricultural products, metal, equity indexes, and foreign exchange. Some of the most popular futures traded on their various exchanges include Us Treasury Bond, Crude Oil (WTI), Corn, Gold, E-mini S&P 500, and EUR/USD.
2. National Stock Exchange of India (India)
The National Stock market of India (NSE) is the largest capital market in India, and it is located in India’s biggest city, Mumbai. Although it started off as an equity market, it has since expanded into futures and other derivatives, and it provides a fully automated electronic trading system for easy access and transparency.
Incorporated in 1992, it started trading operations in 1994 with debt and equity securities. The NSE first introduced its futures exchange on the 12th of June 2000, with the launch of index futures which is based on the Nifty 50 index. Since then, its futures market has grown, introducing the S&P 500 index and Dow Jones Industrial Average futures in 2011.
In 2018, the NSE’s futures exchange launched the bullion and energy futures. In addition to the index and commodity futures, other popular futures contracts on the NSE include interest rate futures, currency futures, and stock-based futures.
3. Intercontinental Exchange (US)
The Intercontinental Exchange (ICE) is an American company that runs purely electronic-based futures exchanges all over the world. It started as an energy futures exchange but has grown to include other commodities, equity index, and foreign exchange futures. It currently operates over 23 regulated exchanges and six clearinghouses in many parts of the world.
The ICE was founded in May 2000 by Jeffery Sprecher to provide a transparent and more efficient internet-based trading system for energy commodities. The company has grown from there, acquiring several exchanges around the world, such as the New York Stock Exchange, the Liffe futures exchange in Europe, International Petroleum Exchange in the UK, Winnipeg Commodity Exchange in Canada, to name but a few.
Although the ICE’s initial focus was energy-based contracts, with its numerous acquisitions, it has expanded into foreign exchange, equity index, and agricultural product futures. But energy futures are still the most popular on this futures exchange.
4. CBOE Holdings (US)
CBOE Holdings — currently known as Cboe Global Markets — is an American company that provides trading and investment solutions to investors all over the world. It offers a wide array of products, including option, futures, U.S. and European equities, and volatility products (Volatility Index), through its subsidiaries like the Chicago Board Options Exchange (the largest options exchange in the world), Cboe Futures Exchange, and BATS Global Markets (its stock exchange operator).
Cboe Futures Exchange (CFE) commenced trading services in 2004. It is an all-electronic futures exchange which operates an open access market model with dedicated market makers and market participants providing liquidity.
The most popular futures contracts traded on the CFE are based on equity indexes, such as the S&P 500 index. Furthermore, CFE is well known for its volatility futures which are based on the Cboe Volatility Index (VIX). All trades on the Cboe Futures Exchange are cleared by the Options Clearing Corporation (OCC).
5 Eurex (Europe)
Also known as the Eurex Exchange, Eurex is a European exchange which offers trading services in Europe-based products. It is the largest options and futures exchange in Europe, and it is a subsidiary of Deutsche Borse AG. Eurex Exchange has its headquarters in Eschborn, near Frankfurt am Main, and its transactions are fully electronic.
The Eurex was created in 1998 when Deutsche Borse AG and SIX Swiss Exchange partnered to develop an electronic trading system that would take over the traditional open outcry and pit system. The partnership lasted till 2012 when Deutsche Borse AG acquired all SIX’s Eurex shares.
Some of the most popular futures contracts that trade on this exchange are based on German bonds, Swiss bonds, European stocks, and European stock indexes. Apart from facilitating trades, the exchange also provides contract settlement and clearing services. The Eurex Clearing, which serves as a central counterparty, takes care of those services.
6. NASDAQ (US+ Europe)
Nasdaq is an American multinational financial service company which owns the Nasdaq Stock Exchange and other stock market networks in Europe. Although they have their headquarters in New York City, they have offices in many parts of the world.
The group operates 25 markets, including futures exchanges (NFX), one clearinghouse, and five central depositories, and provides trading services across multiple asset classes.
Nasdaq Futures Exchanges (NFX) offer mostly key energy and commodity futures in oil, gas, U.S. power, petrochemicals, and ferrous. They provide cost-effective horizontal clearing model serviced by the Options Clearing Corporation (OCC). The NFX brings a mix of, clearing services, products, and innovative technology with open and neutral access via standardized APIs.
The National Association of Securities Dealers founded NASDAQ in 1971 but divested from it between 2000 and 2001.
7. Moscow Exchange (Russia)
The Moscow Exchange is the largest exchange in Russia and offers trading services in bonds, equities, commodities, options, and futures. The Exchange is operated by the Moscow Exchange Group which also operates the largest clearing service provider in the country — the National Clearing Center.
Moscow Exchange was created from the merger between the Moscow Interbank Currency Exchange (MICEX) and the Russian Trading System (RTS) in December 2011. The two exchanges were among the largest exchanges in Russia before merging to form MICEX-RTS, which rebranded in 2012 to Moscow Exchange.
Its future exchange trades contracts of all asset classes, including energy, bonds, currencies, equity indexes, both Russian and foreign equities, precious metal, and agricultural products. All trades are cleared by the National Clearing Center.
8. Korea Exchange (South Korea)
The Korea Exchange (KRX) is the only financial exchange in South Korea. Although its headquarters is in Busan, it has oversight office in Seoul, the country’s capital. It consists of the futures exchange, stock exchange, and stock market. The exchange also offers clearing services.
The exchange was established in 2005 by the Korea Stock & Futures Exchange Act which ensured the integration of the Korea Stock Exchange, KOSDAQ Stock Market, and Korea Futures Exchange. Prior to the integration, the various groups were existing as independent units, and the stock exchange had adopted electronic trading as of 1988.
There are different classes of futures that trade on the exchange. Some of the notable index futures include KOSPI 200 index futures and KOSTAR futures. Commodity futures, Stock futures, currency futures, and interest rate futures are also prominently traded on the exchange.
9. Shanghai Futures Exchange (China)
The Shanghai Futures Exchange is the largest futures market in China mainland. It is a self-regulated futures exchange and functions according to the procedures laid down by the Chinese government. Its trading floor is located, in the Pudong district of Shanghai.
The exchange was formed by the integration of the Shanghai Metal Exchange, Shanghai Commodity Exchange, and the Shanghai Foodstuff Commodity Exchange on the 21st of December 1995. Prior to the integration, the Shanghai Metal Exchange was the largest non-ferrous metals futures exchange in China.
The Shanghai Futures Exchange provides futures trading services in gold, silver, lead, aluminum, copper, zinc, steel wire rod, natural rubber, fuel oil, and other products.
Future exchanges are central marketplaces where investors can trade standardized futures contracts. They provide the necessary liquidity by bringing buyers and sellers together. In addition to this, most futures exchanges also provide clearing and settlement services which help to reduce the risk of counterparty defaults.
Here, we have listed some of the largest futures exchanges in the world and highlighted some of their key features to help you appreciate their peculiarities. It’s good to study them if you intend to trade futures.