When Chicago’s International Monetary Market (IMM) launched currency futures trading in 1972, forward exchange markets had already been in existence for a century.1 Many of the ‘grey beards’ in the well-established forward market regarded the new entry with some scorn. How could this new currency market, which shared a floor with the pork belly and soyabean pits, situated in the depths of the mid-West, hope to compete with the highly liquid conventional market?
KeywordsReal Interest Rate Future Market Forward Market Clearing House Deutsche Mark
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- 1.See P. Einzig, A Dynamic Theory of Forward Exchange (London: Macmillan, 1975) ch. 1.Google Scholar
- 3.See J. M. Burns, ‘Electronic Trading in Futures Markets’, Financial Analysts Journal (February 1982) for a description of this particular type of abuse.Google Scholar
- 6.A swap transaction can be shown to be equivalent to a borrow and lend operation; see B. D. Brown, ‘The Swap Market and its Relation to Currency Forward and Futures Markets’, in Futures Markets, ed. M. E. Streit (Oxford: Blackwell, 1983).Google Scholar