The History of Trading

Although the first recorded instance of futures trading occurred with
rice in 17th Century Japan, there is some evidence that there may
also have been rice futures traded in China as long as 6,000 years
ago.
Futures trading is a natural outgrowth of the problems of
maintaining a year-round supply of seasonal products like
agricultural crops. In Japan, merchants stored rice in warehouses
for future use. In order to raise cash, warehouse holders sold
receipts against the stored rice. These were known as "rice tickets."
Eventually, such rice tickets became accepted as a kind of general
commercial currency. Rules came into being to standardize the
trading in rice tickets. These rules were similar to the current rules
of American futures trading.
In the United States, futures trading started in the grain markets in
the middleof the 19th Century. The Chicago Board of Trade was
established in 1848. In the 1870s and 1880s the New York Coffee,
Cotton and Produce Exchanges were born. Today there are ten
commodity exchanges in the United States. The largest are the
Chicago Board of Trade, The Chicago Mercantile Exchange, the
New York Mercantile Exchange, the New York Commodity
Exchange and the New York Coffee, Sugar and Cocoa Exchange.
Worldwide there are major futures trading exchanges in over twenty
countries including Canada, England, France, Singapore, Japan,
Australia and New Zealand. The products traded range from
agricultural staples like Corn and Wheat to Red Beans and Rubber
traded in Japan.
The biggest increase in futures trading activity occurred in the
1970s when futures on financial instruments started trading in
Chicago. Foreign currencies such as the Swiss Franc and the
Japanese Yen were first. Also popular were interest rate
instruments such as United States Treasury Bonds and T-Bills. In
the 1980s futures began trading on stock market indexes such as
the S&P 500.
The various exchanges are constantly looking for new products on
which to trade futures. Very few of the new markets they try survive
and grow into viable trading vehicles. Some examples of less than
successful markets attempted in recent years are Tiger Shrimp and
Cheddar Cheese.
Futures trading is regulated by an agency of the Department of
Agriculture called the Commodity Futures Trading Commission. It

regulates the futures exchanges, brokerage firms, money managers
and commodity advisors.