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The differences between forex futures trading and forward foreign exchange transactions mainly include
Forward foreign exchange trading and futures foreign exchange trading will have some similarities in concept, so many people often confuse them, but in fact they are different in many ways. This paper sorts out some contents to introduce the connection and difference between forward foreign exchange trading and futures foreign exchange trading.

First, let's look at their respective definitions.

forward exchange transaction

Forward foreign exchange transaction refers to a transaction in which both parties agree on the trading conditions such as currency, amount, exchange rate and delivery time in advance without immediate delivery after the transaction expires.

forex futures trading

Futures foreign exchange trading refers to the foreign exchange delivery method in which the buyer and the seller make delivery at the agreed exchange rate within the expiration date stipulated in the contract after the futures exchange is closed, that is, the contract signed by the buyer and the seller according to the agreed quantity, price and delivery date.

As can be seen from the above definition, both of them are actually delivered at the agreed exchange rate on the agreed date, so what is their difference?

Mode of delivery

Although the delivery forms are similar in definition, in most cases, only a few foreign exchange futures contracts will actually be delivered on the maturity date, and most futures contracts will be closed by hedging before the maturity date; Most forward foreign exchange transactions will be cashed by actual delivery on the agreed delivery date.

Delivery period: the transaction amount and delivery period of forward foreign exchange transactions are determined by both parties through free negotiation. Forex futures trading has standardized and unified the above matters. The foreign exchange futures contract stipulates that the expiration date of the contract is Wednesday of the third week of the delivery month (the delivery months of different varieties are completely different, and the delivery months of foreign currency futures are generally March, June, September and 65438+February each year).

Transaction form: forex futures trading adopts open bidding in the futures exchange, and telecom tools are used in the forward foreign exchange market, at the same time, the bid price and the bid price are quoted. In forex futures trading, the two parties to the transaction are not in contact with each other, but each uses the clearing house to settle the middleman and bear the credit risk.

Trading tools: let's look at the trading tools of the two, that is, the theme. Forex futures trading foreign exchange futures contract, forward foreign exchange transaction forward foreign exchange contract. The specific difference is that foreign exchange futures contracts are standardized contracts, and the transaction amount is expressed by the number of contracts. The amount of each contract will vary according to the currency, and the currency is limited to a few major currencies. There are no fixed rules for trading instruments of forward foreign exchange contracts, and the details of the contracts are decided by both parties themselves, and there are no special restrictions on trading time, place, price and market disclosure.

Trading place: forex futures trading is conducted by floor brokers and floor dealers in a highly standardized futures exchange managed by the government, with strict trading rules and procedures; Forward foreign exchange transactions are conducted off-site, and there is generally no fixed trading place.

Trading participants: In the forward foreign exchange market, any investor can make forex futures trading through a foreign exchange broker with the clearing membership of the futures exchange as long as he deposits the deposit according to the regulations, thus making forex futures trading an active and efficient market; There are no restrictions on the trading qualifications of traders in the forward foreign exchange market, but most of the participants are professional brokers or large manufacturers with good relations with banks, and it is extremely difficult for individual investors and small and medium-sized enterprises without bank credit lines to participate.

Trading rules: forex futures trading adopts the margin system, and daily transactions are cleared through the clearing house. Surplus people can withdraw excess cash, while losers need to pay a deposit. Forward foreign exchange transactions do not require margin, and both parties to the transaction only make settlement when they are due for delivery.

Contract transfer: Foreign exchange futures contracts are transferable, while forward foreign exchange contracts are non-transferable, so the liquidity is weak.