The Chicago Mercantile Exchange Competition is based in Chicago, Illinois and is the world’s leading and most diverse derivatives marketplace. The competition gives students a chance to compete trading derivatives in a commodity trading challenge.
The goal of the competition is to give students the experience of what it is like to be a commodity trader. The individual challenge is a simulation of floor trading while the team challenges are done through electronic trading. Derivatives are often talked about in the markets but few truly understand how derivatives work.
For this competition there are two divisions, the team challenge and the individual challenge. Rob Berg, Zach Kolar, Rick Presthus, Knut Lindaas, and Josh Tabert were all in the team competition. In addition, Rob Berg and Josh Tabert also competed in the individual challenge.
The team challenge was composed of 170 teams from universities all over the United States and took place for two weeks this spring. Each team was composed of five members.
“Throughout the competition we were studying different technical patterns and formulating our own strategies,” said Rob Berg. “To see and capitalize on those strategies as they worked out just as we had predicted was exciting,” said Knut Lindaas and Rob Berg. “It was a great experience and a really exciting competition.”
The individual competitions were held at the University of Houston, where the simulation represented an oil futures pit, and the New York Mercantile Exchange, where they traded futures in sweet crude oil in the gold futures pit. Rob Berg competed in Houston and Josh Tabert competed in New York. This competition simulated what it is like to be a floor trader.
For the competition, the students would act as brokers and market makers. The key for this competition was to fill all the customers’ orders and to demonstrate successful floor trading abilities. The judges would also randomly give market orders to see how the students executed those as well.
Trading in the futures pit is very exciting. Everyone is shouting out their bid or offer trying to execute their orders as fast as possible so that they do not miss the price at which the customers want their orders filled. The judges were checking to make sure that the traders were executing their customer’s orders, and using the correct terminology and signals when placing the trades.
This competition is just one of the many experiential learning opportunities that are available through the College of Business & Public Administration.