5 The worldwide demand of many financial products results in the mutual offset link by the Singapore International Monetary Exchange (SIMEX) to the Chicago Mercantile Exchange (CME), which allows a contract bought on one exchange to be sold on another. On the Chicago Mercantile Exchange (CME) floor, the most popular stock index traded is the S&P 500.The interest in overseas stocks explains why the CME holds the exclusive rights outside Japan to create, market, and trade the Nikkei 225 Stock Average futures contract. The Nikkei Averages are a Japanese stock index based on stocks of all the major publicly held Japanese corporations. The averages are developed by NKS (Nihon Keizai Shimbun), which publishes the world’s largest circulation daily business newspaper. The CME has sublicensed its rights for the Nikkei 225 to the SIMEX for trading in the Asian time zone because too few Japanese stocks are traded on US security exchanges.

Some believe that, in the future, that which is traded will be the averages based on stock prices of companies worldwide. One development in this direction is Morgan Stanley’s granting the CME a license to trade futures based on the Morgan Stanley Capital International Europe, Australia, and Far East (EAFE) stock index.The EAFE index is a diversified portfolio on non-US stocks that cover thirty-eight industries and represents 63 percent of the total market value of these countries’ stock exchanges. It is considered the performance benchmark of international market activity.

Do you think that the day may come when US stock indices (e.g., Dow-Jones Industrial Averages, S&P 500) may be overshadowed or even replaced by a world or global stock index that represents the movement of stock prices worldwide?