History of Derivatives may be mapped back to several centuries. Some of the specific
milestones in evolution of Derivatives Market Worldwide are given below:
- 12th Century - In European trade fairs, sellers signed contracts promising future delivery
of the items they sold.
- 13th Century - There are many examples of contracts entered into by English Cistercian
Monasteries, who frequently sold their wool up to 20 years in advance, to foreign
merchants.
- 1634-1637 - Tulip Mania in Holland: Fortunes were lost after a speculative boom in tulip
futures burst.
- Late 17th Century - In Japan at Dojima, near Osaka, a futures market in rice was
developed to protect rice producers from bad weather or warfare.
- In 1848, The Chicago Board of Trade (CBOT) facilitated trading of forward contracts on
various commodities.
- In 1865, the CBOT went a step further and listed the first “exchange traded” derivative
contract in the US. These contracts were called “futures contracts”.
- In 1919, Chicago Butter and Egg Board, a spin-off of CBOT, was reorganised to allow
futures trading. Later its name was changed to Chicago Mercantile Exchange (CME).
- In 1972, Chicago Mercantile Exchange introduced International Monetary Market
(IMM), which allowed trading in currency futures.
- In 1973, Chicago Board Options Exchange (CBOE) became the first marketplace for
trading listed options.
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