Kansas City Board of Trade

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The Kansas City Board of Trade, part of the CME Group and located in Kansas City, Missouri, is a futures exchange that deals primarily with hard red winter wheat. Prices discovered at the Kansas City Board of Trade are the benchmark for global wheat prices. 
In 2012, CME Group paid $126 million for the Kansas City Board of Trade, ending a history of Kansas City grain trading dating to 1856. It sold the KCBOT building in January 2014.
Prior to the sale, The Kansas City Board of Trade was ranked as the world's 43rd-largest derivatives exchange by volume, according to the annual volume survey published by the Futures Industry Association (FIA). The FIA report, published in March 2011, notes that the exchange's total volume for 2010 jumped by 51.2 percent from the previous year, reaching almost 5.7 million contracts. The 2010 volume was a record for the exchange.
KCBT legacy contracts, which include both KCBT Hard Red Winter Wheat futures and options contracts, trade on CME Group's CBOT agricultural complex.
The KCBT’s wheat futures contract has provided a risk management tool for grain elevators, exporters, millers and producers, who use the exchange to protect their cash positions by buying or selling futures and options. Investors also utilize KCBT products as investment tools; speculators perform the crucial role in any futures market of assuming risk from hedgers. 
== History ==
The Kansas City Board of Trade was founded in 1856 by a group of Kansas City merchants. It served a function similar to a chamber of commerce. 
The KCBT was formally chartered in 1876, the same year a "grain call" was established, marking the beginning of futures trading. Located on the northern border between Kansas and Missouri and the junction of two rivers, Kansas City is situated in one of the most productive wheat-growing regions of the world. Early trading at the exchange was primarily in cash grains. 
The KCBT incorporated as a Delaware for-profit corporation in 1973.
The KCBT launched Value Line stock index futures, the world’s first stock index futures contract in 1982.
Options began trading on the Hard Red Winter wheat futures contract in 1984.
In 2004, the KCBT listed its products for trading on the e-cbot platform, but with the merger of CME and CBOT, KCBT products, migrated to CME Globex in January 2008.
In 2006 side-by-side trading began in the HRW wheat futures contract and exchange volume topped 600,000 for the first time in a single month, in August. 
The year 2007 brought a couple firsts at the exchange. A new all-time monthly trading volume record was set in the HRW futures contract as 565,463 contracts were traded during the month of August. Later in the year, a KCBT membership sold for a record $725,000. One year earlier, that record had been $320,000. 
In 2008, electronic trading was switched to the CME Globex platform. KCBT HRW wheat futures trading volume set a new single-day trading volume record of 47,933 contracts. Side-by-side trading in the wheat options contract began. The HRW wheat futures contract was amended starting with the July 2008 wheat futures contract. Salina/Abilene and Wichita were added as delivery points and various contract delivery terms and conditions were changed.
==A Snapshot of the Exchange and Important Milestones Prior to the Merger==
== Board Members ==
Board members and directors were elected in January 2012.
*Chairman: Steven Campbell, Louis Dreyfus Commodities
*First Vice Chairman: James S. Bosley, Jr., an individual member
*Second Vice Chairman: Matthew A. Siegel, Matthew A. Siegel & Co., Inc.
Directors:
*John P. Crowe, John P. Crowe & Company
*Daniel L. Gibson, Wolcott & Lincoln Futures LLC
Director serving second year of two-year term:
*R. Morgan Shay III, Shay Grain Company (two-year term)
*Richard W. Tinberg, an individual member
Outside Directors:
*Michael Braude, retired KCBT president and CEO
*Michael Dunn, former CFTC commissioner
*Barry L. Flinchbaugh, Kansas State University
*James Lammle, retired from the CFTC
== Senior Staff ==
*Jeff Borchardt, President
*Joseph Ott, Vice President, Compliance
*Shelia A. Summers, Vice President, Marketing
*Dan L. Umstattd, Vice President, Information Technology
*Deborah J. Bollman, Assistant Vice President, Marketing
*Jeffery G. Hughes, Assistant Vice President, Compliance
*Christine Wohn, Director of Membership Services
==Annual Volumes==
===2011===
In June 2011, the exchange reported a record month, trading 809,204 contracts, breaking the prior record month of April 2011 by 5.2 percent. For the first half of 2011, KCBOT's volume totaled 3.74 million contracts, up 67 percent, from 2.23 million a year earlier.
In October 2011, the KCBT set new annual trading volume records in the Hard Red Winter wheat futures contract and the exchange as a whole. Through Oct. 31, a total of 5,646,965 HRW wheat futures contracts or 28.23 billion bushels had traded, exceeding last year’s annual volume record of 5,549,842 contracts or 27.75 billion bushels by 1.8 percent. Total exchange volume also set an annual volume record with a total of 5,873,465 contracts traded, exceeding last year’s annual volume record of 5,697,874 contracts by 3.1 percent. 
By the conclusion of 2011, the exchange's new annual volume record had grown to 6,582,673 contracts, a 15.5 percent increase over the record 5,697,874 contracts traded in 2010. In the HRW wheat futures contract, the new annual volume record amounted to 6,342,782 contracts, a 14.3 percent increase over the 2010 record. 
=== News ===
* The KCBT announced changes in the settlement procedures for the KCBT Hard Red Winter wheat futures contract effective on Tuesday, Sept. 2, 2008, subject to Commodity Futures Trading Commission approval. The changes were made to address the issue of individual contract months settling out of line with spread trade. Current settlement procedures require all contract months to settle based on the weighted average of trade in each contract month. At times, these procedures create disparities between individual contract month settlements and the traded spread differentials between contract months. In an effort to mitigate these disparities, changes were made that provide for settlements on all but the lead contract month based on spread relationships. The settlement price of the lead contract month (defined as the contract month with the largest open interest) shall be determined by the weighted average method of the trades in the closing period in accordance with KCBT rules. The remaining contract months shall be settled based on spread price relationships, considering spread trades reported during the close.
*On June 16, 2010 KCBT HRW wheat futures set a new daily volume record of 40,588 contracts for electronic trading, breaking the previous daily record of 27,456 contracts set on September 25, 2009 by 47.8 percent.
* On June 28, 2010 the KCBT announced it had received approval from the Commodity Futures Trading Commission (CFTC) to clear over-the-counter wheat calendar swaps through the Kansas City Board of Trading Clearing Corporation with a July 1 launch date.
* The KCBT shattered all previous monthly volume records during the month of June 2010 as a new all-time monthly volume record was set for Hard Red Winter Wheat futures, as was a new exchange monthly volume record. A total of 612,733 HRW wheat futures contracts were traded in June, which was an increase 8.4 percent over the previous all-time monthly volume record of 565,463 contracts set in August 2007. Total exchange volume in June amounted to 620,982 contracts, topping the previous monthly volume record of 612,113 set in August 2006 by 1.4 percent.
* The KCBT on July 15, 2010 set a new all-time daily volume record in its Hard Red Winter Wheat futures contract. A new daily volume record was set for electronic trading in the contract as well. HRW wheat futures volume (open outcry plus electronic) tallied 47,937 contracts, exceeding the previous record of 47,933 contracts set on Feb. 11, 2008. HRW wheat futures electronic trading volume for the day amounted to 42,913 contracts, breaking the previous daily record of 40,588 contracts that was set nearly a month before, on June 16, by 5.7 percent. 
* The KCBT set a multitude of new records as of July 30. New records were set for Hard Red Winter wheat single-day volume and open interest. Trading volume for the month of July broke all previous monthly records for the exchange and for the HRW wheat futures contract. A total of 60,534 HRW wheat futures contracts were traded, which broke the previous single-day volume record of 47,937 contracts, which was just set on July 15, by 26.2 percent. A new single-day volume record was also set for electronic trading as 50,336 contracts were traded, breaking the previous record of 42,913 contracts that was set on July 15. Open interest at the end of July 30 stood at 202,876 contracts in the HRW wheat futures contract, which was also an all-time high. Open interest set several new records throughout the month of July. A total of 635,546 HRW wheat futures contracts were traded in July, an increase of 3.7 percent over the previous all-time monthly volume record of 612,733 contracts set just last month. 
* In August 2010, the KCBT broke all previous monthly exchange volume records. This was the third month in a row that a new all-time monthly volume record was set for the HRW wheat futures contract and the exchange as a whole. KCBT exchange volume traded during the month of August totaled 765,357 contracts, breaking the previous monthly volume record of 650,626 contracts, set the previous month, by 17.6 percent. HRW wheat futures trading volume in August amounted to 752,383 contracts, breaking the previous monthly volume record of 635,546 contracts, also set last month, by 18.4 percent. Open interest in the HRW wheat futures contract was nearly double that of a year prior. 
* The KCBT set new monthly volume records for the exchange as a whole and the Hard Red Winter wheat futures contract for the month of September. KCBT exchange volume traded during the month of September 2010 totaled 470,522 contracts, breaking the previous September volume record of 393,387 contracts set in 2007 by 19.6 percent. HRW wheat futures trading volume in September amounted to 453,084 contracts, breaking the previous September volume record of 345,462 contracts set in 2007 by 31.2 percent. Open interest in the HRW wheat futures continued to post large gains and set several new all-time records earlier in the month, culminating in a record 218,321 contracts outstanding on September 27.
* In October 2010, the KCBT's Hard Red Winter wheat futures contract set a new trading volume record for the month of October as 430,271 contracts were traded. The previous monthly October volume record was 421,499 contracts in 2006. Open interest in the HRW wheat futures continued to post large gains during the month of October, setting 14 new all-time records throughout the month. At month's end, the most recent record stood at 236,543 contracts and was set on October 28. 
* The KCBT set a new exchange trading volume record for the month of November as a total of 624,481 contracts were traded in November 2010, breaking the previous record of 472,244 set in 2005 by 32.2 percent. November volume was the third largest for any given month at the exchange, behind only July and August of this year. The HRW wheat futures contract set a new trading volume record for the month of November as well with 602,081 contracts, breaking the previous record of 441,194 set in 2005 by 36.5 percent. A new HRW wheat futures annual volume record was set on November 12, breaking the previous record of 4,763,168 set in 2006. Open interest in HRW wheat futures set several new open interest records during the month of November, topping out at 250,506 contracts on November 11. 
* The KCBT set a new annual volume trading record for the exchange as a whole in 2010, trading 5,697,874 contracts and breaking the previous annual volume record of 5,287,190 contracts set in 2006 by 7.8 percent. HRW wheat futures volume traded in 2010 set a new annual volume record as well. A total of 5,549,842 contracts were traded, breaking the previous record of 4,763,168 contracts set in 2006 by 16.5 percent. Also in 2010, the KCBT Board of Directors declared a record-high dividend of $29,000 per equity share (Class “AA” membership) for all shareholders of record as of September 28, 2010. The dividend was based on the 2010 earnings of the corporation; this is the 13th consecutive dividend the KCBT has paid to its shareholders based on annual earnings. The dividend amount represents a 7.4 percent return on investment relative to the latest share sales price of $390,000 on September 2.
* The KCBT received CFTC approval for amendments to its Hard Red Winter wheat futures contract as of the close of business Jan. 18, 2011. The changes were effective with the September of 2011 wheat futures contract month. 
* KCBT volume traded in January 2011 topped 500,000 contracts for the first time ever in the calendar month of January, resulting in new volume records in the Hard Red Winter wheat futures contract and the exchange as a whole. A total of 505,778 contracts were traded in January, breaking the previous January exchange volume record of 372,393 contracts set in 2006 by 35.8 percent. HRW wheat futures also broke the previous January volume record with a total of 485,591 contracts traded in January, exceeding the previous record of 337,641 contracts set in 2006 by 43.8 percent. 
* The KCBT set a new all-time daily volume record in its Hard Red Winter wheat futures contract on Feb. 23, 2011. Total HRW wheat futures volume tallied 61,328 contracts, breaking the previous daily record of 60,534 contracts set on July 30, 2010 by 1.3 percent. 
* KCBT trading volume was active in February 2011, resulting in the second-highest trading volume month in exchange history. As a result, new calendar month volume records were set for both the HRW wheat futures contract and the exchange as a whole. This marks the ninth consecutive month a new calendar month record has been set for HRW wheat futures. New exchange calendar month volume records have been set eight out of the last nine months. A total of 714,517 contracts were traded at the exchange in February, second only to 765,357 contracts traded in August 2010. HRW wheat futures trading volume in February was also the second largest in exchange history at 689,530 contracts, second only to 752,373 contracts in August 2010. The previous February volume record for the exchange was 547,690 contracts in 2006, with the previous HRW wheat futures record at 492,978 in 2006. 
	
* Robust trading volume in March 2011 also yielded new calendar month volume records for both the HRW wheat futures contract and the exchange as a whole. This marked the 10th consecutive month a new calendar month record was set for HRW wheat futures. New exchange calendar month volume records have been set nine out of the last 10 months. A total of 574,969 contracts were traded at the exchange in March, breaking the previous March volume record of 421,222 contracts set in 2006 by 36.5 percent. HRW wheat futures trading volume of 547,543 contracts was also a March monthly volume record, breaking the previous record of 363,605 set in 2006 by 50.6 percent. Year-to-date trading volume was posting momentous gains over trading volume in 2010, a year in which new annual volume records were set. Total exchange trading volume was running 90.3 percent higher than last year, with HRW wheat futures volume running 87.2 percent ahead. 
* Total exchange volume at the Kansas City Board of Trade in April 2011 set a new all-time exchange volume record as 769,034 contracts were traded, breaking the previous monthly trading volume record of 765,357 contracts set in August 2010 by .5 percent. Additionally, a new calendar month record was set for the month of April, breaking the previous April record of 483,398 contracts in 2006 by 59 percent. This marked the 10th time in the last 11 months that a new record had been set. HRW wheat futures trading volume was the second largest in the history of the exchange. A total of 734,625 contracts were traded in April, second only to 752,383 contracts traded in August 2010. 
*The KCBT set new calendar month records in May 2011 for both the exchange and the Hard Red Winter Wheat Futures contract. A new calendar month record was set for the month of May in total exchange futures of 539,710 contracts, breaking the previous May record of 425,682 contracts in 2006 by 21 percent. This marked the 11th time in the last 12 months that a new record had been set for total exchange volume in a calendar month. In addition, HRW wheat futures trading volume set a new calendar month record for the month of May. A total of 517,416 contracts were traded in May, marking the 12th consecutive month this occurred. The previous monthly record for May was 365,497 contracts, with the new record a 29.4 percent increase. 
* The KCBT during the month of June 2011 traded more contracts than in any given month in the 155-year history of the exchange. New monthly volume records were set for the Hard Red Winter wheat futures contract and the exchange as a whole. Total exchange volume traded during the month of June amounted to 809,204 contracts, breaking the previous monthly volume record of 769,034 contracts set in April 2011 by 5.2 percent. This also marked the 12th time in the last 13 months that a new record had been set for total exchange volume in a calendar month. Total exchange volume was 30 percent greater than the previous June record of 620,982 contracts set in 2010. A new all-time monthly volume record was also set for the HRW wheat futures contract. A total of 772,607 contracts were traded in June, breaking the previous monthly volume record of 752,383 contracts set in August 2010. This also marks the 13th consecutive month a new calendar month record had been achieved. The previous monthly record for June was 612,733 contracts in 2010. 	
*The KCBT during the month of October 2011 set new annual trading volume records in the Hard Red Winter wheat futures contract and the exchange as a whole. Through October 31, a total of 5,646,965 HRW wheat futures contracts or 28.23 billion bushels had traded, exceeding last year’s annual volume record of 5,549,842 contracts or 27.75 billion bushels by 1.8 percent with two months remaining to build on the record. Total exchange volume also set an annual volume record with a total of 5,873,465 contracts traded, exceeding last year’s annual volume record of 5,697,874 contracts by 3.1 percent with two months remaining in the year. 
*The KCBT during the month of November 2011 continued to add to the annual trading volume records in the Hard Red Winter wheat futures contract and the exchange as a whole. The records were first set in October and exceeded the previous records set in 2010. Through November 30, a total of 6,089,068 HRW wheat futures contracts or 30.45 billion bushels had traded, exceeding last year’s annual volume record of 5,549,842 contracts or 27.75 billion bushels by 9.7 percent with one month remaining to build on the record. Total exchange annual volume amounted to 6,324,938 contracts at the end of November, exceeding last year’s annual volume record of 5,697,874 contracts by 11 percent with one month remaining in the year. 
* On June 8, 2012 KCBT announced that beginning July 25, 2012 it will extend open outcry sessions from a 1:15 p.m. CT close to a 2:00 p.m. CT close. Effective June 12, 2012, outcry sessions on the days of USDA WASDE and Grain Stocks reports will open at 7:20 a.m. CT. All other days, open outcry trading opens at 9:30 a.m. CT.
 
== References ==	
 
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Category:Futures Exchanges	
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Category:Wheat Futures Contracts	
Category:Agricultural Futures Contracts	
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