Monday, 26 November 2012

Anatomy of a Trade - The NYBOT

This short documentary provides a good educational on how trading used to work at the NYBOT (New York Board of Trade), a commodities futures exchange that was taken over and rebranded by ICE aka IntercontinentalExchange. Essentially the NYBOT used to, and still does in its new form, provide: 1. Price Discovery; 2.Price Risk Transfer; and 3.Price Dissemination. The main two instruments traded are futures and options on futures; typically these instruments are used by participants primarily for risk management or hedging, but other participants accept risk i.e. speculators, and others still engage in arbitrage transactions. The documentary provides an anatomy of a trade by a corporate that is trying to hedge price risk and follows the transaction through from idea formation to order to execution and adjustment. Very interesting and educational documentary. See also: LIFFE Documentary and Floored

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  1. Surely an anatomy of a trade should include 'delivery' or closure of the trade?

  2. Maybe they want to encourage people to close out instead of deliver to promote trading volumes. Anyway delivery is a non-issue for most, even for hedgers.

  3. This was a nice history lesson lol.

    1. You think that was a history lesson, check this one: