history of futures

Discussion in 'Financial Futures' started by vanilla2, Aug 5, 2003.

  1. Does anybody know where and when the first futures exchange in the world was started?

    Also in the US? Was the CME or the CBOT first?

  2. gnome


    Rice market in Japan... 1700's
  3. Pabst


    In the U.S. it was the CBOT by a longshot. Started pre Civil War (I think 1858) the Cme not until perhaps the 1920's.
  4. Momento


    I think that's where they came out with the CANDLESTICKs analysis too.
  5. Very interesting, thanks guys. I knew futures were very old, but didn't realize they dated to 18th century Japan. Fascinating, thanks.
  6. jay567


    there's a brief history of the japanese rice futures market in Nison's candlestick book
  7. "The Japanese were the first to use technical analysis to trade on of the world's first futures markets - rice futures. The Japanese started trading in this market in the 1600s. Interestingly, the birth of the Japanese rice futures market was a consequence of the country's military history.

    "After a century of internal warfare among the daimyo (Japanese feudal lords), General Tokugawa Ieyasu, who ruled from Edo (the ancient name of Tokyo), won the famous battle at Sekigahara in 1600. This was the battle that helped unify Japan. Tokugawa thereafter became Shogun of all Japan. After his vicotry over the daimyo, General Tokugawa cleverly required that all the feudal lords live in Edo with their families. When the lords returned to their respective provinces, the entire family stayed at Edo as hostage. The feudal lord's main source of income was rice that was collected as tax from the peasants who worked their land. Since this rice could not be transported from the daimyo's provinces all the way to Edo, they set up warehouses in the port city of Osaka to store their rice.

    "Because all these powerful daimyo lived so close to each other in Edo, they attempted to outdo one another in lavish dress, mansions, and other luxuries. Thie was reflected by a popular saying at the time," The Edoite will not keep his earnings overnight." Thie showed that the daimyo in Edo were seen as spendthrifts with an expensive lifestyle. To maintain this liefstyle, the daimyo sold rice from their warehouse in Osaka; sometimes they even sold rice from FUTURE harvests (emphasis added by me). The warehouse would issue receipts for thie future rice. These were called empty rice contracts ('empty rice' since the rice was not in anyone's physical possession) and they were sold in the secondary market. This was the beginning of one of the world's first futures market(s).
  8. msfe


    by 1633 the Dutch upper classes were gripped by "Tulip Mania", the frenzied trading in tulip bulbs. Prized tulip bulbs were selling for astronomical prices. Fortunes were made in trading tulip futures (primarily by tulip bulb merchants), and fortunes were lost. As in so many "hot stock markets" (dot.com comes to mind), buyers eventually realized that a tulip bulb was just a tulip bulb.

    When the Tulip Bubble Burst

  9. jessie


    Actually, in the U.S., I believe that the predecessor of what became the mid-am preceded the CBOT, and is (was) the oldest U.S. futures exchange.
  10. Momento


    Domo arigato sensei :p
    #10     Aug 7, 2003