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CME Group Joins The Linux Foundation
The Linux Foundation has announced its latest new member: the CME Group, billed as "the world's largest and most diverse derivatives exchange." "CME Group has been recognized as one of the financial services industry's biggest users of Linux. It first realized the benefits of Linux in 2003 when it reported that by using the operating system it would save significant costs, increase reliability, and dramatically reduce the round-trip time of a trade transaction. Since then, broader use and newer versions of Linux coupled with match engine and application improvements have helped continue that trend. In an industry where low latency is paramount, this reduction extended the fundamental savings of Linux by enabling more transactions to be made in a given day."
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CME Group Joins The Linux Foundation Posted Sep 23, 2008 19:46 UTC (Tue) by allenp (guest, #5654) [Link]
It is ironic that Linux, that hopeful champion of freedom and cooperation, has facilitated the trading of products that appear poised to take down the world economy. Mortgage-backed-securities are examples of derivatives. It's been estimated that the combined gross national product of the planet is about $60T, while the size of the derivatives market is in excess of $1000T. <sound of a mind boggling>
While I'm happy for the Linux Foundation's adding a member and for Linux again demonstrating its usefulness, I wonder how long the CME will be around in its current form to be a member of anything.
Paul Allen
CME Group Joins The Linux Foundation Posted Sep 23, 2008 23:07 UTC (Tue) by woooee (guest, #54179) [Link]
Trading commodities has been around since before recorded history and will remain. Without traders in the middle, one side, usually the large corporate buyers of commodities, would dominate which would keep prices so low that farmers would go bankrupt. The Merc has nothing to do with who qualifies for a loan, and nothing to do with high unemployment. People who loose their job can not afford to pay those loans. That is generally the result government policy. Note the similiarites between Reaganomics of the 80s (S&L's going under, high oil prices & unemployment, and Black Monday on the stock market, which this economy probably hasn't hit yet), and what is happening today. Unfortunately, it is both political parties that are contributing to the mess. Not the Merc.
CME Group Joins The Linux Foundation Posted Sep 24, 2008 1:11 UTC (Wed) by allenp (guest, #5654) [Link]
Ummm. note that I said nothing about commodities trading, the mortgage loan qualification process, or the Merc. The CME Group bills itself as the largest derivatives exchange, and derivatives are at the root of the current crisis. You're certainly right that the trend for both parties since 1980 has been to de-regulate the financial markets. Plenty of blame for the current crisis could be assigned. This is not the place to do it.
I still think it's a delicious irony that an entity that facilitated the current melt-down finds our open-source OS so useful that it has joined the Linux Foundation. I'm grinning and grimacing simultaneously, so to speak.
CME Group Joins The Linux Foundation Posted Sep 24, 2008 13:43 UTC (Wed) by ajrh (subscriber, #9036) [Link]
You may find it ironic, but you're a bit off-target. First, the universe of "derivatives" so large and broad now that you can't validly excoriate an institution simply because of an association with the word. It's no more accurate than saying "money" is at the root of the current crisis and then implying that all profit-seeking corporations are to blame.
But worse, you've missed the point exchanges like the CME grew up during the crises of the early 20C - the Great Depression et al - and were designed and had evolved to help prevent the current mess. Daily margining and mark-to-market and a centralized clearing house with unquestioned credit are two of the key strengths of exchange traded contracts. These are things which have been thrown to the wind in the loosely-regulated gold-rush of credit structuring.
So your point about how long the CME will be around in its current form is exactly backwards. It's the over-the-counter markets which are dead. When financial markets eventually recover, they will have relearned the lessons of last century, and they're all going to look much more like the CME, not the other way around.
CME Group Joins The Linux Foundation Posted Sep 24, 2008 13:52 UTC (Wed) by ami.ganguli (guest, #9613) [Link]
The root of the current crisis is the housing bust, caused by low interest rates, caused by a large and persistent trade deficit.
Mortgage based derivatives are part of the reason the problem blew up so dramatically, but they're not at the root. And they have very little to do with commodity derivatives which are traded in Chicago.
Derivatives are basically a way to trade risk and you benefit from this every time you buy insurance of any sort. The fact that some people used the to make very foolish gambles isn't the fault of derivatives, it's the fault of the traders and the regulators who let it happen.
CME Group Joins The Linux Foundation Posted Sep 25, 2008 4:17 UTC (Thu) by allenp (guest, #5654) [Link]
Thanks for the clarification on the broad nature of derivatives and on the role of the CME Group in the derivatives market, guys. My connection of the CME Group to the collapse related to "mortgage-backed securities" through the term "derivatives" was naive.
So, on the CME Group joining the Linux Foundation, I'm now 100% grins. :-) On roots and causes, I'm going to keep my trap shut 'cause this is not the place.
Paul Allen
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