Financial futures contracts are also called interest rate futures contracts. This kind of contract is based on financial documents, and its price changes with the change of interest rate. The drastic change of interest rate is a very important phenomenon in western economic life. For example, 1974, the preferential interest rate in the United States reached 12%, while 1976 fell to 6%, 1979 rose to 15.75%, and 1980 rose again in April and February. Banks, companies and other investors are all faced with financial risks related to interest rates, which requires financial futures trading to avoid risks. The financial futures trading market came into being.
Historical development futures trading has been carried out in traditional commodity exchanges for many years, and commodities such as grain have been successfully used in futures trading. 1848 after the completion of the Illinois-Michigan canal in the United States, Chicago's grain can be transported by water from now on, but every June 165438+ 10, the inland transportation is blocked, and the grain in the next season can't be shipped out until the next spring, so grain futures trading is produced. By concluding a forward contract, grain merchants can buy the grain delivered in Chicago in May all year round, which is also very beneficial to farmers. Chicago financial futures market is established by imitating a set of practices of grain and other commodity futures trading.
1May, 97216th, Chicago Mercantile Exchange established the international money market for the first time to trade foreign exchange futures. The foreign currencies it deals in are British pound, Canadian dollar, Dutch guilder, German mark, Japanese yen, Mexican peso, Swiss franc and French franc. Gold futures started at 1974. 1975 10 10 On October 20th, the Chicago Stock Exchange opened the certificate of the National Mortgage Association, which was successful. In order to keep in touch with the futures market, the Institute opened US Treasury futures 1977 in August, 90-day commercial paper 1977 in September, 30-day commercial paper 1979 in May and medium-term treasury bonds 1979 in June. Since then, there have been futures such as certificates of deposit and European dollar stock indexes in the market.
New york Stock Exchange established new york Financial Futures Exchange on 1980, and London International Financial Futures Exchange appeared in London on 1982 on September 30th. Since then, several other international financial futures markets have been established.
Financial futures trading has two main purposes: hedging and speculation.
Hedging refers to selling or buying futures contracts in the futures market while buying or selling financial certificates (spot). After the futures contract expires, the losses caused by price changes in spot trading can be made up by the profits of futures contract trading. Anyone who intends to invest in the future can protect himself by hedging in the futures market to prevent interest rates from falling and suffering losses. Holders of fixed-income securities can also protect themselves by selling futures to prevent interest rates from rising and securities prices from falling. The price of financial documents is inversely proportional to the annual rate of return. When interest rates rise, the prices of fixed-income securities such as long-term and short-term treasury bonds will fall; When interest rates fall, the market price of fixed-income securities will rise.
Speculation for profit, speculators and hedgers have completely different attitudes towards risk. Hedgers use the futures market as a means to protect them from unpredictable price changes. Speculators use the futures market to make profits, so they are willing to take the risk of price changes. They buy and sell according to the forecast of futures price changes, and their trading also contributes to market liquidity.
Speculators are mostly members of the exchange, which can be divided into: ① hat snatchers. They keep buying or selling (sometimes for only a few seconds) to make small profits. ② One-day traders. They only keep the market for one day and seldom spend the night. (3) Maintaining the status of futures trading. They are concerned about the price changes caused by long-term (days, weeks, months) supply and demand, and most of them are not members of the exchange. (4) those responsible for diffusion. They observe the futures market and pay close attention to the changes in the relationship between different trading months of the same futures, or the different prices of the same futures or different futures in different markets. When these relationships change, the people in charge of diffusion will sell in high market and buy in low market, and their behavior will lead to the price gradually returning to normal relationship until it is unprofitable.
Procedures and processes of financial futures trading The financial futures market is a place for public auction, and futures prices are determined through competition. The price in the market is announced at any time, and traders can adjust their asking price and asking price with the change of price. Because every transaction is carried out all over the world, brokers are the main participants in the market. They trade according to the customer's order requirements.
There are many kinds of orders, mainly including: ① market orders. After receiving the instruction, the broker immediately buys or sells the required number of futures contracts at the best price in the futures market. 2 orders are limited. Refers to the price limit for customers to buy or sell, and the order can only be executed at the specified price or better. ③ Orders that are always valid. This kind of order can be valid until it is cancelled, and the order can be completed at any time before it is cancelled. 4 orders are valid within one day. In other words, the order is limited to a specified day. Unless otherwise specified, all orders are valid for one day.
The functions of the commission company The Chicago Board of Trade has a commission company, or brokerage company. It is a bridge between brokers and clients. Their business scales vary greatly, and some of them are large international investment companies, active in the futures market and the securities market. Others are just a few. These companies employ specialized people to handle customers' accounts. Brokerage companies and bookkeepers must register with the Commodity Futures Trading Commission. The Committee is the federal agency that regulates futures trading. Regardless of the size of the commission company, its basic function is to help customers make profits in the futures market or help customers achieve risk management. The company's service to customers is mainly to write orders, manage deposits, provide basic accounting records, and be a good consultant to customers on market conditions.
The transaction takes place at the appointed time and place. When the business hours of Chicago short-term and long-term treasury bonds are 8 ~ 14; 30-day and 90-day commercial bills are 8: 30 ~ 1 1: 45. The designated place is the designated trading railing in the Chicago Stock Exchange, that is, the octagonal venue surrounded by wooden railings, and different financial documents are traded in different trading railings.
Customer orders are sent to the exchange by telephone from all over the world. After receiving the call at the telephone station specially set up by the exchange, the special person appointed by each customer immediately sent a messenger to fly to the broker of the exchange. If the order is "market price", it should be executed at the best price immediately. If it is the "maximum price limit", the broker will wait with other orders according to the price classification, and execute it immediately when the market price changes to this range. If the broker has multiple orders with the same price, the orders will be processed according to the time of receipt. After the transaction is completed, the broker indicates the price and the number of another broker who accepts the transaction on the order. The courier was immediately sent to the telephone operator, who immediately told the brokerage company that the customer would know the transaction price soon.
Exchange and margin In futures trading, there is no direct relationship between buyers and sellers. Trading all exchanges is the buyer of each seller and the seller of each buyer. The exchange consists of exchange members. It is not a profit-making organization. Its duty is to supervise the strict implementation of trading rules, pay close attention to the financial situation of members at any time, and collect deposits from participants every day according to changes in market prices to eliminate bad debts. After the market opened, each trader handed the order to the clearing house. At the end of each business day, the exchange exchanges money for them, and the accounts are rolled up every day, making profits and bearing losses. If a member loses money due to price changes and the deposit becomes insufficient, the exchange will recover it from him. Because the exchange pays close attention to the deposit every day, it will recover it immediately if it is not enough, so it is rare that the contract cannot be fulfilled. Even if it happens, the loss will not be great, at most, it will be caused by the price change of 1 ~ 2 days. Stock exchanges also have a margin system, but the concept of margin in the two markets is slightly different. The security deposit in the securities market is paid according to a certain proportion of the operating stock value, which is a kind of advance payment, and the remaining unpaid part is the loan given by the securities firm to the customer, and the interest is charged to the customer. Margin is not an advance payment in the financial futures market, but a real "margin" paid by buyers and sellers when the final hedging transaction loses money.