Guide to Analysing Companies

Chicago Board of Trade
The largest futures exchange in the world. The Chicago Board
of Trade (cbot) and the chicago mercantile exchange
(cme) between them handle about half of all the world’s
trading in futures. The cbot has had the edge in financial
futures and the cme in commodities. The cbot began life in
1848 as a market for grain and later launched the first con-
tract on the future price of grain. It subsequently pioneered
the trading of financial futures and options. Futures on Trea-
sury bonds and notes still make up a large part of its volume.
Like the cme, the cbot has links with markets in Europe and
Asia, and trades in many of its contracts 24 hours a day. It also
has a market to trade over the internet in paper, plastic, glass
and other waste materials.
Chicago Board Options Exchange
The largest options exchange in the United States and a sub-
sidiary of the chicago board of trade. The Chicago Board
Options Exchange (cboe) was the first to offer listed options on
the s&p 100 index in 1983. The contract gives the buyer the
right to buy or sell the dollar value of the index at maturity.
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It has since become one of the most popular contracts of its kind
and dominates the market for options on indices. As well as
options on individual shares, the cboe trades in a range of in-
novative products such as long-term equity participation se-
curities (or leaps, options which last for up to five years) and
exchange traded funds (which allow investors to buy or
sell shares in an entire portfolio of securities). 
Chicago Mercantile Exchange
The Chicago Mercantile Exchange (cme) is the world’s second
largest exchange for the trading of futures and options
on futures. Established in 1919, the “Merc”, as it is known,
was the first to trade in livestock futures (pork bellies and the
like). Now it is best known as a market in futures, and
options on futures, of interest rates, stock indices (such as
the s&p 500), foreign exchange and commodities. The
Merc still has trading floors, where the majority of its con-
tracts change hands, but it also has an electronic system,
called Globex, which operates more or less 24 hours a day
worldwide.
Chinese wall
A notional partition between two parts of a financial institution
that are supposed to act independently of each other in order to
avoid conflicts of interest between them. For example, it may be
a divide between the corporate finance side of an investment
bank (involved in new share issues) and its fund manage-
ment side. Without separation, the fund managers might be
tempted to buy the corporate financiers’ new issues in order to
help the bank sell something that was not going well, not
because they were a good investment for the fund. Or fund
managers within a firm whose investment banking division is
advising a client that is pondering a takeover bid might be
tempted to buy the shares of the target company. When the
takeover is announced, the target company’s shares may jump