Forex futures trading refers to a transaction in which both parties agree to buy and sell a certain amount of foreign currency at an agreed exchange rate on a certain date in the future. Compared with forward foreign exchange trading, it has three advantages: (1) the scope of investors is expanded. In the forward foreign exchange market, any investor (no matter large enterprises, small enterprises or individuals) can make forex futures trading through brokers as long as the margin is paid as required. However, in forward foreign exchange transactions, the scope of investors is relatively small, and generally only large enterprises with good business relations with banks and reputable brokers are eligible. (2) The market is liquid and effective. There are a large number of hedgers and speculators in the forward foreign exchange market, so the forward foreign exchange market is relatively liquid. (3) Foreign exchange futures contracts are standardized contracts, and the currencies traded are limited to a few currencies, so foreign exchange futures contracts are easier to change hands and settle accounts.
Forex futures trading first appeared in the international money market of the Chicago Mercantile Exchange on May 1972. After years of development, it has become the main means for foreign trade enterprises to guard against exchange rate risks.
Forex futures trading has two purposes: hedging and speculation. Judging from the actual situation of foreign trade enterprises, most foreign trade enterprises do futures trading for hedging, so as to avoid or reduce the monetary loss of enterprises.
Because the hedging transaction of foreign exchange futures can make the importing enterprises lose less foreign exchange when the exchange rate changes are unfavorable to the importing enterprises, and it will make the importing enterprises have less foreign exchange surplus when the exchange rate changes are favorable to the importing enterprises, which is the characteristic of foreign exchange futures hedging. 1982, the Philadelphia Stock Exchange first started trading foreign exchange options. From 65438 to 0984, the international money market of CME also started the business of foreign exchange options. Foreign exchange options trading, like futures trading, has strict contractual requirements. The currencies they buy and sell are generally freely convertible hard currencies, and the exchange rate adopts a floating system. The maturity date of the option is exactly the same as the delivery date in the forward foreign exchange market. Its particularity is only manifested in the fact that the last trading day of foreign exchange options is Friday before the third Wednesday of the expiration month.
In addition to the general characteristics mentioned above, foreign exchange options trading also has its unique advantages, mainly as follows: (1) foreign exchange options trading can fix the hedging cost and make it limited to option fees; (2) Foreign exchange options trading can manage the risk of uncertain foreign exchange trading in the future, because options trading gains a right rather than an obligation, and the execution of foreign exchange options must depend on whether the currency at the agreed price appreciates or depreciates.
In import and export trade, if the importer uses foreign exchange options in advance, then if the exchange rate changes are unfavorable to him, he may give up the options and limit his losses to the option fees paid in advance. However, if forex futures trading is adopted, the futures trading business must be actually performed on the maturity date. If there is a loss in foreign exchange futures, it is necessary to use spot profits to make up for this loss, then the role of hedging will be greatly reduced. It is for the above reasons that foreign exchange options trading has developed rapidly in recent years. In order to avoid exchange rate risk better, investors mostly adopt the method of mixed operation of foreign exchange options and foreign exchange futures, thus providing a better way to avoid exchange rate risk.
At present, there are still some problems in carrying out forex futures trading in China: First, the all-round reform of the foreign exchange system has just begun, and many aspects of specific operation are still immature. For example, China's current RMB floating exchange rate system is single and managed, and RMB is not a freely convertible currency. Second, the foundation of forex futures trading is too thin. There are many kinds of transactions in the forward foreign exchange market, such as term, forward foreign exchange transactions, futures transactions, swaps, options, hedging and arbitrage, but there is only one spot transaction in China. Brokers have limited futures knowledge, insufficient experience and weak foundation. Third, the scale of inter-bank foreign exchange transactions is small. Fourth, the bank clearing system is underdeveloped, and the foreign exchange futures business needs an efficient clearing system. The inefficiency of the bank's own settlement system will certainly affect the settlement of futures trading. The above situation shows that China's foreign trade enterprises can not fully use foreign exchange futures and options to avoid exchange rate risks in the near future, and the more practical choice should be forward foreign exchange trading.
However, with the further development of China's economy and the further improvement of the futures market, the development of the forward foreign exchange market is an inevitable trend.