Futures, Commodities and the CME

A futures contract is a standardised promise to buy or sell a fixed quantity of something on a future date at a price agreed today, traded on an exchange and guaranteed by a clearing house that stands between buyer and seller. Futures began as a farmers' and merchants' hedge in grain and became the most leveraged, most liquid and most regulated way to trade almost anything: stock indices, Treasury yields, interest rates, currencies, oil, gas, metals, grains, livestock and, since 2017, bitcoin. The United States dominates the business through one company. CME Group, which grew from the Chicago Mercantile Exchange and absorbed the Chicago Board of Trade (founded 1848, from memory, verify; merger closed 12 Jul 2007) and NYMEX (closed 22 Aug 2008; both dates as settled in the Finance KB), reported a record average daily volume (ADV) of 28.1m contracts in 2025 and record annual revenue of ~$6.5bn (+6%) (CME results release, 4 Feb 2026), then a third-quarter record ADV of 29.4m contracts in Q3 2026, with open interest of 128m contracts at the end of September (CME release, 21 Oct 2026). Worldwide, futures are the growing half of listed derivatives: the Futures Industry Association (FIA) counted 30.64bn futures contracts traded in 2025 (+8.6%), while total listed futures and options fell 42.2% to 119.3bn because Indian index-options volume collapsed after SEBI's 2024 measures (FIA, Jan 2026). Futures also produced the most famous price in recent trading history: the May 2020 WTI crude contract settled at −$37.63 a barrel on 20 Apr 2020 (Shared facts), because holders who could not take delivery had to pay someone to take their oil. This section explains how futures work (margin, marking to market, delivery, cash settlement), the history from the Chicago pits to Globex, the equity-index contracts that retail traders use (the E-mini S&P 500 of 1997 and the Micro E-mini of 2019), the term structure of commodity prices (contango, backwardation and roll yield), what negative oil taught, who regulates futures (the CFTC, speculative position limits and the weekly Commitments of Traders report), who trades them (hedgers, speculators, CTAs, market makers and retail), and the futures markets of Europe and Asia. It has no worked example (not a ★ section); two small stylized tables, computed in Python, illustrate roll yield and contract size.