International Monetary Market (IMM)

What Is the International Monetary Market?

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

International Monetary Market Explained

The IMM division of the CME incorporates such currencies as the U.S. dollar, the British pound, the euro, and the Canadian dollar. Alongside currencies, the IMM trades the London Interbank Offer Rate (LIBOR), the 10-year Japanese bond, and the U.S. Consumer Price Index (CPI).

History of the International Monetary Market (IMM)

The Chicago Mercantile Exchange was established in 1898. Its original name was the "Chicago Butter and Egg Board" despite the fact that it changed its name in 1919. The CME was the main financial exchange to "demutualize" and become publicly traded in 2002. In 1961, the CME sent off its most memorable futures market for frozen pork bellies. In 1969, it added financial futures and currency contracts. The primary interest rate, bond, and futures contracts started in 1972.

As per its 2019 annual report, the CME on average handles an average daily volume of 19.2 million contracts, a slight decline from 2018. While some trading keeps on occurring in the traditional open outcry method, 80% of trading is done electronically through its CME Globex electronic trading platform.

In 2007, the CME merged with the Chicago Board of Trade to make the CME Group, quite possibly of the biggest financial exchange in the world. The CME acquired NYMEX Holdings, Inc., the parent of the New York Mercantile Exchange (NYMEX) and Commodity Exchange, Inc. (COMEX) - all in 2008. In 2010, the CME had expanded further, purchasing a 90% interest in the Dow Jones stock and financial indexes. In 2012, it forged ahead with its growth binge CME with the purchase of the Kansas City Board of Trade, which was the prevailing player in hard red winter wheat. In 2017, the CME started trading in Bitcoin futures.

Moreover, CME Group operates CME Clearing, a leading central counter-party clearing provider.

Limitations of the International Monetary Market

While critical rewards are conceivable while trading financials futures, the CME frames specific risks connected with this segment of its business, including:

• Economic, political and geopolitical market conditions
• Legislative and regulatory changes
• Broad or quick changes in the industry and financial markets
• Changes in price levels, contract volumes and additionally volatility in the derivatives markets, alongside underlying markets in equities, foreign exchange, interest rates and commodities
• Changes in global or regional demand or supply for commodities