Question

In which year were foreign currency futures introduced at the Chicago Mercantile Exchange (CME)?

• A. 1965
• B. 1972
• C. 1975
• D. 1980
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Hint:

The introduction of currency futures at the CME in 1972 marked the beginning of the modern financial derivatives era, which was triggered by the end of fixed exchange rates in 1971.

Answer 1

The Correct Option is B

Step 1: Understanding the History of Derivatives:
Following the collapse of the Bretton Woods system of fixed exchange rates in 1971, currency exchange rates became volatile, creating a market need for currency risk hedging tools.

Step 2: Identifying the Launch Venue:
The Chicago Mercantile Exchange (CME) established a specialized division, the International Monetary Market (IMM), to trade financial derivatives.

Step 3: Pinpointing the Launch Year:
The IMM launched the world’s first exchange-traded foreign currency futures contracts on May 16, 1972 (B), establishing the modern financial derivatives market.