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Futures exchange
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===Ancient times=== In Ancient Mesopotamia, around 1750 BC, the sixth Babylonian king, [[Hammurabi]], created one of the first legal codes: the [[Code of Hammurabi]]. Hammurabi's Code allowed sales of goods and assets to be delivered for an agreed price at a future date; required contracts to be in writing and witnessed; and allowed assignment of contracts. The code facilitated the first derivatives, in the form of forward and futures contracts. An active derivatives market existed, with trading carried out at temples.<ref>Archived at [https://ghostarchive.org/varchive/youtube/20211211/kd2pE5s33Qg Ghostarchive]{{cbignore}} and the [https://web.archive.org/web/20200425021624/https://www.youtube.com/watch?v=kd2pE5s33Qg&gl=US&hl=en Wayback Machine]{{cbignore}}: {{cite AV media|url=https://www.youtube.com/watch?v=kd2pE5s33Qg|title=A History of Derivatives: Ancient Mesopotamia to Trading Places, by Edmund Parker & Geoffrey Parker|date=17 December 2014|work=YouTube}}{{cbignore}}</ref> One of the earliest written records of futures trading is in [[Aristotle]]'s ''[[Politics (Aristotle)|Politics]]''. He tells the story of [[Thales]], a poor philosopher from [[Miletus]] who developed a "financial device, which involves a principle of universal application". Thales used his skill in forecasting and predicted that the olive harvest would be exceptionally good the next autumn. Confident in his prediction, he made agreements with local [[Olive oil extraction#Olive presses|olive-press]] owners to deposit his money with them to guarantee him exclusive use of their olive presses when the harvest was ready. Thales successfully negotiated low prices because the harvest was in the future and no one knew whether the harvest would be plentiful or pathetic and because the olive-press owners were willing to [[Hedge (finance)|hedge]] against the possibility of a poor yield. When the harvest-time came, and a sharp increase in demand for the use of the olive presses outstripped supply (availability of the presses), he sold his future use contracts of the olive presses at a rate of his choosing, and made a large amount of money.<ref>Aristotle, Politics, trans. Benjamin Jowett, vol. 2, The Great Books of the Western World, book 1, chap. 11, p. 453.</ref> This is a very loose example of futures trading and, in fact, more closely resembles an [[option contract]], given that Thales was not obliged to use the olive presses if the yield was poor.
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