It is a paradox of our times that, as global financial markets become more integrated and singular in character, their financial futures and options counterparts continue to fragment. So, too, do the number and geographical dispersal of the exchanges trading these increasingly popular instruments. While regulatory constraints and investor conservatism still impede progress in some quarters, the liquidity of the more successful markets reveals a growing acceptance of the risk-transfer virtues of futures and options by money managers, corporate treasurers and central bankers alike.
To the exchanges that operate such markets, however, the key to success remains the popularity of the various futures and options contracts they trade. Exchanges which have pioneered and diversified are generally the ones that have succeeded, the best example being the mighty Chicago Mercantile Exchange. With a product basket embracing currencies, interest rates, stock indices and agricultural contracts, the CME manages, in the process, to maintain a remarkable degree of aggregate liquidity.
"Our goal is to broaden the product line as much as possible,' explained CME chairman and chief executive officer William Brodsky, "because there are times when one contract is active and another is not.' Its two neighbouring exchanges--the Chicago Board of Trade and the Chicago Board Options Exchange--are good examples of a lopsided configuration heavily dependent upon bonds and the Standard and Poor's 100 Stock Index, respectively.