The Trial-and-Error Development of the Chicago Futures Markets

Financial professionals are well aware that the ongoing implementation of the Dodd-Frank Act may cause changes to market structure, including in the futures markets. Should market participants be concerned? The short answer is not necessarily, given that the history of U.S. futures trading is one of responding to constant adversity through innovation. This paper reviews the evolution of US futures markets including: how and why modern futures trading started in Chicago; the transformation of U.S. futures exchanges from primarily agricultural futures exchanges to financial futures exchanges; how the Chicago and New York futures exchanges have had to constantly innovate in order to remain in business; and why some futures contracts fail