Eurodollar futures are time deposits denominated in U.S. dollars and held at banks outside the United States. Often confused with the currency pair EUR/USD or euro FX futures, they are not related to Europe's single currency, the Euro, which was launched in 1999.
The Eurodollar futures contract was launched in 1981 by the Chicago Mercantile Exchange (CME), as the first cash-settled futures contract. Reportedly, people camped out the night in front of the exchange before the contract’s open, flooding the pit when the CME opened the doors. That trading pit was the largest pit ever, nearly the size of a football field, and quickly became one of the most active on the trading floor, with over 1500 traders and clerks coming to work every day on what was then known as the CME’s upper trading floor. That floor is no longer, with the CME having moved over to the CBOT’s trading floor and 98 percent of Eurodollar futures trading now done electronically.
The Eurodollar futures market includes U.S. and foreign corporations, individuals and foreign governments. London is a major Eurodollar center because its markets operate during the American and Asian markets. It is one of the world's primary international capital markets. Eurodollar futures are a way for companies and banks to lock in an interest rate today, for money it intends to borrow or lend in the future. Companies use Eurodollars to settle international transactions, invest excess cash, to offer short-term loans and finance imports and exports.
|Contract Symbol||Contract Unit||Price Quotation|
|GE||$100,000||dollars per contract|
|Trading Exchange||Trading Hours||Tick Value|
|CME GLOBEX||17:00 - 16:00||0.005 = $12.50|