The Chicago Mercantile Exchange (CME) and CheMatch.com have signed an agreement to jointly develop and market chemical futures and options products for delivery over the GLOBEX2 electronic trading system. The deal marks the first joint development project between a futures exchange and a B2B marketplace to create risk management products targeted to a specific industry.
The venture aims to create a new group of derivative products that chemical companies, traders and financial institutions can utilise to improve operational efficiencies and to implement their risk management strategies. Members and customers of the CME can use the products to take a position in the chemicals market.
The agreement also marks the first time futures products will trade on a futures exchange with an electronic link to an online B2B marketplace. An Internet link between the CheMatch platform the GLOBEX2 system will interface the two sites and offer chemical companies, traders and financial institutions the ability to trade both physical and derivative products.
Carl McCutcheon, chairman and CEO, CheMatch.com, says: "A liquid futures market will be a great tool to help our clients hedge risks, remove pricing volatility and make better capital expenditure decisions.”
Chicago Mercantile Exchange officials say the CheMatch deal is the first of a range of agreements the Merc plans to clinch with leading B2B marketplaces.
Goldman Sachs Investment Research estimates that the value of transactions conducted online between companies will reach $1.5 trillion by 2004, with more than 40 percent of such transactions – $600 billion – passing through organised online marketplaces.