Definition of Commodity Exchange

Commodity exchange is a legal body that regulates and imposes rules and procedures for the trading standardized commodity contracts and related investment products. It also refers to the physical centre where trading takes place.

Modern commodity markets started with agricultural products being traded. It was done in the 19th century. Chicago was considered to be the main hub for commodity exchange. Modern commodity market involves trading in investment vehicles.

Points to remember:

• They are often used by investors from the producers of goods and commodities.
• It is also used by investment speculators.