Advertisement

The Co-construction of Modern Futures Markets, 1923–1926

  • Rasheed Saleuddin
Chapter
Part of the Palgrave Studies in the History of Finance book series (PSHF)

Abstract

One key result of the weak Grain Futures Act of 1922 was the formation of a new technocratic overseer that was allowed to investigate suspected manipulation and fraud, and make detailed reports to the public, grain market users and Congress. During most of the interwar years, the US Administration and Congress had no desire to control the markets with further legislation. However, there were still significant problems with the markets that could not and would not be addressed by the Chicago Board of Trade membership. Pragmatic leaders of the Board worked closely with the US Federal Government and the regulators to convince the members to adopt three key improvements to the markets: modern clearing, Business Conduct Committees (BCC) operated by the Board but using information gathered by the government and the requirement for large traders to report their positions. Markets could not have effected these critical changes, important even in today’s markets, on their own.

Keywords

Market co-construction Modern clearing house Co-regulation 

Bibliography

Archives

  1. CME Archives at the Richard J. Daley Library Special Collections and University Archives, University of Illinois at Chicago.Google Scholar
  2. Records of the Commodity Futures Trading Commission (and the Former Commodity Exchange Administration and Grain Futures Administration), US National Archives and Records Administration, Kansas City, Missouri. Record Group 180.2: Records of the Commodity Exchange Administration and its Predecessors. Archival Research Catalogue Identification Number 4730947.Google Scholar
  3. Records of the Office of the Secretary of Agriculture, US National Archives and Records Administration, College Park, Maryland. Record Group 16.Google Scholar
  4. USDA History Collection. National Agricultural Library. Beltsville, Maryland.Google Scholar

Bibliography

  1. Abel, Richard L. The Legal Profession in England and Wales. Oxford: Blackwell, 1988.Google Scholar
  2. Baldwin, Robert, Martin Cave, and Martin Lodge. Understanding Regulation. Oxford: Oxford University Press, 2011.Google Scholar
  3. Bignon, Vincent, and Guillaume Vuillemey. “The Failure of a Clearinghouse: Empirical Evidence.” Banque de France Working Paper 638 (2017).Google Scholar
  4. Chicago Board of Trade. Annual Reports of the Board of Trade of Chicago for the Year Ending December 31, 1924–December 31, 1936. Chicago: Hedstrom-Barry, 1925–1936.Google Scholar
  5. Cutten, Arthur, and Boyden Sparkes. “The Story of a Speculator.” Saturday Evening Post, 19, 26 November 1932.Google Scholar
  6. Falloon, William, and Patrick Arbor. Market Maker: A Sesquicentennial Look at the Chicago Board of Trade. Chicago: Chicago Board of Trade, 1998.Google Scholar
  7. Ferris, William G. The Grain Traders. East Lansing: Michigan State University Press, 1988.Google Scholar
  8. Garbade, Kenneth D., and William Silber. “Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and Liquidity Risk.” Journal of Finance 34 (1979): 577–593.CrossRefGoogle Scholar
  9. Gorton, Gary, and Andrew Metrick. “Securitized Banking and the Run on Repo.” Journal of Financial Economics 104 (2012): 425–451.CrossRefGoogle Scholar
  10. Janvey, Ralph. Regulation of the Securities and Commodities Markets. New York: Warren Gorham Lamonte, 1992.Google Scholar
  11. Jardine, William M. “Farmers’ Distribution Problem and Co-operatives.” The American Grain Elevator and Grain Trade (15 July 1925).Google Scholar
  12. Kendall, Leon. “The Chicago Board of Trade and the Federal Government.” PhD diss., Indiana University, 1956.Google Scholar
  13. Kroszner, Randall. Central Counterparty Clearing: History, Innovation, and Regulation. Speech at the European Central Bank and Federal Reserve Bank of Chicago Joint Conference on Issues Related to Central Counterparty Clearing. Frankfurt, Germany, 3 April 2006.Google Scholar
  14. Lambert, Emily. The Futures: The Rise of the Speculator and the Origins of the World’s Biggest Markets. New York: Basic Books, 2010.Google Scholar
  15. Lenox, Michael, and Jennifer Nash. “Industry Self-Regulation and Adverse Selection: A Comparison Across Four Trade Association Programs.” Business Strategy and the Environment 12 (2003): 343–356.CrossRefGoogle Scholar
  16. Markham, Jerry W. The History of Commodity Futures Trading and Its Regulation. Westport, CT: Praeger, 1987.Google Scholar
  17. Markham, Jerry W. “Manipulation of Commodity Futures Prices—The Unprosecutable Crime.” Yale Journal on Regulation 8 (1991): 281–305.Google Scholar
  18. McCraw, Thomas K. Prophets of Regulation: Charles Francis Adams, Louis D. Brandeis, James M. Landis and Alfred E. Kahn. Cambridge: Harvard University Press, 1984.Google Scholar
  19. Mehl, John M. Hedging in Grain Futures. Circular No. 151. Grain Futures Administration. Washington, DC: Government Printing Office, 1931.Google Scholar
  20. Morrill, Chester, and Albertson, Dean. Oral History. New York: Transcript from Columbia University, 1952.Google Scholar
  21. Moser, James T. “Origins of the Modern Exchange Clearinghouse: A History of Early Clearing and Settlement Mechanisms at Futures Exchanges.” Unpublished manuscript. Chicago: Federal Reserve Bank of Chicago, 1994.Google Scholar
  22. Ogus, Anthony. “Rethinking Self-Regulation.” Oxford Journal of Legal Studies 15 (1995): 97–108.CrossRefGoogle Scholar
  23. Peck, Anne E. “The Economic Role of Traditional Commodity Futures Markets.” In Futures Markets: Their Economic Role, edited by Anne E. Peck, 1–81. Washington, DC: AEI Press, 1985.Google Scholar
  24. Petzel, Todd E. “A New Look at Some Old Evidence: The Wheat Market Scandal of 1925.” Food Research Institute Studies 1 (1981).Google Scholar
  25. Romano, Roberta. “The Political Dynamics of Derivative Securities Regulation.” Yale Journal on Regulation 14 (1997): 279–406.Google Scholar
  26. Rubython, Tom. Jesse Livermore—Boy Plunger: The Man Who Sold America Short in 1929. Croydon, UK: Myrtle Press, 2014.Google Scholar
  27. Sadeesh, Soniya. “Clearing and Margining OTC Derivatives.” Deutsche Bank Special Report, 27 February 2017.Google Scholar
  28. Stafford, Philip. “Derivatives ‘Big Bang’ Catches Market Off Guard.” Financial Times, 1 February 2017.Google Scholar
  29. Taylor, Charles H. History of the Board of Trade of the City of Chicago. Vols. 1–3. Chicago: Robert O. Law, 1917.Google Scholar
  30. US Congress. Senate. Fluctuations in Wheat Futures. Senate Document 135. 69th Cong. 1st Sess., 3 June 1926.Google Scholar
  31. US Department of Agriculture. Annual Reports of the Department of Agriculture for the Year Ended June 30, 1923. Washington, DC: Government Printing Office, 1923.Google Scholar
  32. US Department of Agriculture. Annual Report of the Secretary of Agriculture for the Year Ended June 20, 1924. Washington, DC: Government Printing Office, 1924.Google Scholar
  33. Winerman, Marc, and William E. Kovacic. “Outpost Years for a Start up Agency: The FTC from 1921–1925.” Antitrust Law Journal 77 (2010): 145–203.Google Scholar
  34. Working, Holbrook. “Prices of Cash Wheat and Futures at Chicago Since 1883.” Wheat Studies of the Stanford Food Institute II (1934).Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  1. 1.Centre for Endowment Asset ManagementUniversity of CambridgeCambridgeUK

Personalised recommendations