Definition of the international money market (IMM)

What is the international money market?

The International Money Market or IMM is a division of the Chicago Mercantile Exchange (CME) that deals with the trading of futures and options on currencies and interest rates. Trading on the IMM began in May 1972, when the CME and IMM merged.

Explanation of the international money market

The IMM division of CME includes currencies such as the US dollar, British pound, euro and Canadian dollar. In addition to currencies, IMM trades the London Interbank Offer Rate (LIBOR), Japanese 10-year bond, and the US Consumer Price Index (CPI).

History of the International Money Market (IMM)

The Chicago Mercantile Exchange was founded in 1898. Its original name was the “Chicago Butter and Egg Board” although it changed its name in 1919. The CME was the first financial exchange to “demutualize” and be listed on the stock exchange in 2002. In 1961, CME launched its first frozen pork belly futures market. In 1969 he added financial futures and currency contracts. The first contracts on interest rates, bonds and futures began in 1972.

According to its 2019 annual report, the CME manages on average an average daily volume of 19.2 million contracts, down slightly compared to 2018.Although some trades continue to take place using the traditional open cry method, 80% of trades are done electronically through its CME Globex electronic trading platform.

In 2007, the CME merged with the Chicago Board of Trade to create the CME Group, one of the world’s largest financial exchanges. The CME acquired NYMEX Holdings, Inc., the parent company of the New York Mercantile Exchange (NYMEX) and the Commodity Exchange, Inc. (COMEX) – all in 2008. By 2010, the CME had further grown, acquiring a 90% stake. in the Dow Jones stock market and financial indices.In 2012, it continued to grow with the takeover of the Kansas City Board of Trade, which was the dominant player in hard red winter wheat.

In addition, CME Group operates CME Clearing, one of the leading providers of central counterparty clearing.

Limitations of the international money market

While significant rewards are possible when trading financial services futures, the CME describes the specific risks associated with this segment of its business, including:

  • Economic, political and geopolitical market conditions
  • Legislative and regulatory changes
  • Significant or rapid changes in industry and financial markets
  • Changes in price levels, contract volumes and / or volatility in derivative markets, as well as the underlying equity, currency, interest rate and commodity markets
  • Changes in global or regional demand or supply of commodities

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