CME – Corporate Auction Block for Global Free Trade
Ever wonder who really sets the “free market” price for your food? Why would people in Brazil, South Africa, Japan, India, or Australia, care so much about what a handful of traders are doing in Chicago?
What is the Chicago Mercantile Exchange (CME)?
Founded in 1898 as the Chicago Butter and Egg Board, the CME (or MERC) has now grown into the world's largest commodity trader and futures clearinghouse . Each day an elite group gathers at the CME’s trading floor in downtown Chicago to swap futures in such products as cheese, butter, live cattle, pork bellies, timber, and fertilizer. Within seconds their trading activity is translated around the world, affecting the farm gate prices and grocery bills for billions of people. In 2002 the CME issued it sown stock options, and in 2007 bought out the Chicago Board of Trade (CBOT) with $8 billion in stock to form the CME Group. In 2008 the CME also bought out the rival New York Mercantile Exchange (NYMEX) for $8.9 billion in cash and stock. In 2008 the CME reported revenues in excess of $2.5 billion, handling over a billion contracts worth over $1,000 trillion dollars. While some shouting by human traders still occurs at the Merc, over 70% of its activity now happens quietly behind the scenes via computers through its Globex electronic trading platform. Beyond its global headquarters in Chicago, the CME also has offices in New York, Houston, Washington DC, Sydney, Singapore, London, Hong Kong, and Tokyo.
CME – Insider Trading Cloaked in Secrecy
Because the CME is a private corporation, it is not subject to the same transparency and accountability rules governing public agencies. While the CME often fondly invokes the public trust doctrine, its primary fiduciary responsibility is to its private investors. In this respect, the undemocratic character of the CME fits well with that of other global free trade entities such as the International Monetary Fund (IMF), World Bank, and the World Trade Organization (WTO) – all of which are run by unelected officials who ostensibly police themselves. According to the CME’s own mission statement, “Integrity and openness are critical. We expect the highest ethical standards from our employees and market participants. We rigorously regulate our markets.” Many of those who have been victimized by the CME would beg to differ.
The Commodity Futures Trading Commission (CFTC) is charged with overseeing the CME, but since much of the corruption problem involves commodity cash trading, it can only step in if this spot market affects futures trading. In 2004 the Dept. of Justice in conjunction with twenty three State Attorney Generals began an anti-trust investigation of collusion by the dairy giants at the CME, but this effort was stymied by the Bush White House and has yet to be taken up by the new Obama administration. In 2008 the CFTC finally ruled against Dairy Farmers of America (DFA) for CME price rigging and levied a $12 million fine. But much more needs to be done to free farmers and consumers from the greed of corporate speculators in Chicago.
How Can You Help Bring Fair Trade to the Global Food Market?
Contact the Commodity Futures Trading Commission to demand a democratic overhaul of the CME that prevents corporate price fixing:
CFTC, 1155 21st St. NW, Washington, DC 20581 tel. (202) 418-5000
Contact the Senate Judiciary Committee to demand a thorough Congressional and U.S. Dept. of Justice investigation of unfair trading practices at the CME:
Patrick Leahy (D-VT, Arlen Specter (R-PA), Russ Feingold (D-WI), Dianne Feinstein (D-CA), Herb Kohl (D-WI), - Congressional Switchboard #202-224-3121
