The CME Center for Innovation (CFI) today announced that Eugene Fama, the Robert R. McCormick Distinguished Service Professor of Finance at the University of Chicago Graduate School of Business, will be the 2007 recipient of the CME Fred Arditti Innovation Award. CME, the world's largest and most diverse derivatives exchange, established the CFI in 2003 to identify, foster and showcase examples of significant innovation and creative thinking pertaining to markets, commerce and financial services in the public and private sectors.
Fama will be presented with the award at a recognition dinner to be held on April 24, 2007, at the Four Seasons Hotel in Chicago.
In announcing the recipient, Myron S. Scholes, Nobel-prize winning economist and Chairman of CME's Competitive Markets Advisory Council (CMAC), said, "Eugene Fama has had path-breaking insights into the functioning of markets, asset-pricing theory and corporate finance that have benefited market participants worldwide. He has written extensively on the efficiency of markets setting the backdrop for the transfer of risks through futures contracts such as those traded on the CME. His innovative research has resulted in his participation in the development of many new finance products and in the development of new futures contracts for hedging risks."
"Fama has demonstrated that prices are expected to reflect supply and demand as well as people's expectation about risk and return," says CME Chairman Emeritus Leo Melamed, who is also CMAC's Vice Chairman. "Fama's work goes hand in hand with the price discovery feature of CME futures markets, which provide the ability to manage the risk that efficient markets and unpredictable prices create."
"While it is always gratifying to receive an award, it is especially rewarding to receive one that celebrates innovation," said Fama in accepting the award. "Innovation has created new risk management tools, such as those offered at CME, which have transformed global financial markets. The ability to manage risks associated with future price fluctuation enables markets to operate more efficiently and efficient markets are a cornerstone of capitalism."
Fama received an MBA from the University of Chicago, Graduate School of Business in 1963 and a Ph. D. in 1964. His empirical and theoretical work on market efficiency changed and defined the way financial practitioners perceive markets. Recently, Fama has worked with Kenneth French, the Carl E. and Catherine M. Heidt Professor of Finance at the Tuck School of Business at Dartmouth College, to develop the three-factor model to describe market behavior, which practitioners have adopted as the benchmark for asset allocation decisions -- as well as for academics in research. Fama and French's three-factor model considers that market, size and value best explain performance and pricing.
Fama has published approximately 100 articles related to portfolio theory and asset pricing, corporate finance, microeconomics and macroeconomics, including The Theory of Finance, which he co-wrote with Nobel Laureate Merton H. Miller. Today, Fama is also the director of research of Dimensional Fund Advisors, Inc., an investment advising firm.
Oversight of the CME's Center for Innovation is provided by the CMAC, which includes three Nobel Prize winners, Myron Scholes, Gary Becker and Robert Merton, along with Leo Melamed, Craig Donohue, CME Chief Executive Officer; Terry Duffy, CME Chairman; John Gould, Steven G. Rothmier Professor and Distinguished Service Professor of Economics, University of Chicago Graduate School of Business; David Hale, international economist and founder, Hale Advisors, LLC; Jack Sandner, former CME Chairman and Special Policy Advisor; and Robert Shiller, Stanley B. Resor, Professor of Economics, Yale University and Chief Economist, Macro Securities Research, LLC.
CME's award is named after the exchange's former Chief Economist Fred Arditti, who was instrumental in developing CME's Eurodollar futures contract, the world's most actively traded futures contract. The CME Fred Arditti Innovation Award honors an individual or group whose innovative ideas, products or services have created significant change to markets, commerce or trade. The award strives to celebrate innovation that through practical application has had a positive impact on the economic well-being of individuals, industry or a nation.
Past recipients of the award are Leo Melamed, CME Chairman Emeritus and Nobel Prize winner William F. Sharpe. For more information on the CME Center for Innovation, please go to http://www.cme.com/about/ins/cfi.
CME (http://www.cme.com) is the world's largest and most diverse derivatives exchange. As an international marketplace, CME brings together buyers and sellers on the CME Globex(R) electronic trading platform and on its trading floors. CME offers futures and options on futures in these product areas: interest rates, stock indexes, foreign exchange, agricultural commodities, energy, and alternative investment products such as weather, real estate and economic derivatives. CME is a wholly-owned subsidiary of Chicago Mercantile Exchange Holdings Inc. (NYSE, Nasdaq: CME), which is part of the Russell 1000(R) Index and the S&P 500(R) Index.
