What is the Futures Exchange Market?

Video Transcript

"My name is Phillip Beningoso, I'm an investment professional and I'm going to be discussing what is the futures exchange? Now the futures exchange legally known in the U.S. as a designated contract market is at its core in auction market. Okay, highly regulated. It's technical and very complex but an auction market none the less. Let me go in and give you a definition of exactly the difference between an auction market and a dealer market. An auction market is an example of buying and selling of financial instruments that take place on the floor of an exchange such as the New York Stock Exchange. Sometimes these are referred to as outcry. People stand around a pole and they bid back and forth. This is an auction market. Now, a dealer market is a market where dealers are assigned for specific securities. That's where a brokerage firm or a trading department of the brokerage firm buys shares for itself and they hold those shares and make a fluid market for people. This is the NASDAQ. Okay? The futures exchange is the only place where futures and options on futures can be traded. Trading may take place either on that exchange trading floor, or via electronic platforms. Now the futures exchange is a U.S., are subject to a great deal of regulation. They are monitored by the Commodities Future Trading Commission or the CFTC and the National Futures Association or NFA. Okay, there are currently thirteen future exchanges registered in the United States but not all are hosting active trading. The CME is the largest futures exchange in the U.S. by volume and the first U.S. futures exchange to become a four profit corporation. After revising it's original private membership. The information provided here is for informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Any investment or strategies mentioned here may not be suitable for everyone. My name is Phillip Beningoso and I'm an investment professional."