Paper commodities are “mechanical derivatives trading activities” including crude oil futures, options and Singapore’s over-the-counter contracts, which are also commonly known as paper commodities trading.

Paper commodities market Similar to the futures market, many terms of paper market contracts are highly standardized and easier to operate.

Due to the flexible trading and large number of participants in the paper market, paper goods are highly liquid. , most of the paper market involves hedging transactions and closing positions, with cash settlement and less physical delivery.

Extended information:

Paper market participants

1. , Participants in the energy derivatives market

Business participants include: producers (crude oil, natural gas), refineries (crude oil, gasoline, diesel, aviation kerosene, fuel oil), transportation companies (aviation, shipping transportation, freight), industry (crude oil, natural gas, diesel, fuel oil), public utilities (crude oil, natural gas, diesel, fuel oil)

Non-commercial participants: speculators, investors, Funds

2. Paper market participants------brokers and dealers

Brokers focus on spot markets, forward contracts, futures or over-the-counter transactions Market.

They execute orders on a certain exchange or find counterparties to provide the desired transactions. They have market pricing functions, they do not take risks, and usually do not operate on their own, and only charge fees based on transaction volume.

Proprietary traders manage price and credit risks as counterparties to transactions and sometimes make markets.

They can trade with brokers or directly with market makers. .

3. Paper market participants------spot merchants and financial institutions

Spot merchants use the paper market: as a supplement to spot transactions; make full use of spot resources. Advantages.

Paper markets are usually developed from spot groups: European diesel market; Brent London 15-day market; Singapore swap market

Financial institutions only from paper. The purpose of starting with the theoretical value is to: expand risk management experience, expand customer network, and help complete financial business.

Reference source: Baidu Encyclopedia-Paper Market