International Monetary Market (IMM)

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International Monetary Market (IMM)

Overview

The International Monetary Market (IMM) is the division of the Chicago Mercantile Exchange (CME) that handles currency and interest-rate futures and options. It was established in the early 1970s as part of the CME’s expansion into financial futures and remains a key venue for hedging and speculating on foreign exchange and interest-rate risk.

What the IMM trades

Key instruments traded on the IMM include:
* Major currency futures and options (e.g., U.S. dollar, British pound, euro, Canadian dollar)
* Interest-rate products such as LIBOR-based contracts and government bond futures (including a 10-year Japanese bond contract)
* Inflation-related contracts tied to price indexes (for example, U.S. Consumer Price Index derivatives)

Brief history

  • The Chicago Mercantile Exchange began in 1898 as the Chicago Butter and Egg Board and later expanded into a wide range of commodity and financial futures.
  • In 1961 the CME introduced its first futures market (frozen pork bellies). By 1969 it had added financial futures and currency contracts.
  • The IMM’s trading activity began in the early 1970s when the CME launched its interest-rate, bond, and currency futures programs.
  • Over subsequent decades the CME Group grew through mergers and acquisitions:
  • 2007: merged with the Chicago Board of Trade to form CME Group
  • 2008: acquired NYMEX/COMEX
  • 2010: formed a joint venture to operate Dow Jones indexes
  • 2012: acquired the Kansas City Board of Trade
  • 2017: began trading Bitcoin futures
  • By 2019 the CME reported average daily trading volumes in the tens of millions of contracts and had moved the majority of trading to its electronic platform.

Trading and clearing

  • Trading methods: while some open-outcry trading remains, the vast majority of activity occurs electronically via the CME Globex platform.
  • Clearing: CME Group operates CME Clearing, a major central counterparty that manages counterparty credit risk for exchange-traded derivatives.

Risks and limitations

Trading IMM products can offer significant opportunities but also involves substantial risks, including:
* Economic, political, and geopolitical events that drive market moves
* Legislative and regulatory changes affecting markets or specific contracts
* Rapid shifts in market conditions, volatility, price levels, and contract volumes
* Correlated moves across underlying markets (equities, foreign exchange, interest rates, commodities)
* Changes in global or regional supply and demand for commodities that affect related derivatives

Sources

Primary information is drawn from CME Group materials and public filings.