Futures option. 1984, foreign exchange futures options appeared in the international money market (IMM) of Chicago Mercantile Exchange (CME).
Foreign exchange futures option means that the option buyer has the right to execute or give up execution on or before the option expiration date to buy or sell the underlying foreign exchange futures at the execution price. The difference with foreign exchange options is that when foreign exchange futures options are executed, the buyer obtains or delivers the futures contract of the underlying foreign exchange, not the underlying foreign exchange itself. Foreign exchange futures option is the earliest variety of financial futures. 1972 May, Chicago Mercantile Exchange
CME is the first in the world to launch foreign exchange futures. With the development of international trade and the acceleration of world economic integration, our forex futures trading has maintained a vigorous development momentum for many years. The Central American Commodity Exchange (MCE) and Philadelphia Futures Exchange (OT) in the United States have also launched forex futures trading, but the number is small, so their influence is far less than that of CME. In terms of trading network, CME took the lead in 1984 and established the world's first cross-exchange trading network with SIMEX. The rapid expansion of European dollar, pound, yen and Deutsche Mark futures trading in the forward foreign exchange market has also brought a series of crisis events that have sensationalized the world. For example,1February, 1994, officials in Orange County, California, USA speculated on a large number of derivative taxes, resulting in a loss of1500 million dollars, which led to the bankruptcy of the richest local government in the United States; American Procter & Gamble Company. G company claims hundreds of millions of dollars for losses in interest rate swap market transactions; Oil trading losses of German Metal Company; Naoki Inose case of Daiwa Bank, Ellison incident of Bahrain Bank, Sumitomo Bin Zhongtai Men's Storm and so on.
In view of this, the research report of the Commodity Futures Trading Commission (CFTC) of the United States points out that in today's international financial market, funds have no national boundaries, and fraud has no national boundaries. In order to ensure the healthy development of financial markets, it is necessary to strengthen the supervision of self-regulatory organizations and international cooperation. The premise of international cooperation is to understand the concept of futures market risk and recognize the supervision of forward foreign exchange market. First of all, be clear about the risk you can bear. Starting from objective reality (including financial and psychological factors), setting an acceptable risk range will easily lead to business crisis; Too small is not conducive to making full use of the preservation and appreciation of enterprise assets.
Clarify the rights and responsibilities of each governance layer. Do equal rights and responsibilities, encourage enterprising, and prevent excesses.
Risk-taking behavior, through the level and scope of governance to achieve optimal management. Formulate the governance structure of risk governance. Specifically, it includes: risk identification, risk measurement, risk management method selection, risk control, risk monitoring, risk reporting and evaluation. In August 2005, China allowed forward trading and swap trading in the inter-bank market, but in terms of trading volume, the inter-bank foreign exchange market in China is still dominated by spot trading. In the international mature foreign exchange market, derivatives market is dominant, and spot trading is often in a secondary position. At present, the development of China's foreign exchange market is relatively backward, and it cannot play its functions of price discovery, resource allocation and risk management. With the increasing expectation of RMB appreciation, China's commercial banks, foreign trade enterprises and foreign exchange investors objectively need a new financial tool to avoid the risks brought by exchange rate changes. Foreign exchange futures options can provide all subjects with a way to prevent the risk of exchange rate fluctuations. Therefore, we should speed up the development of derivatives trading in the foreign exchange market and provide more and better risk management tools for commercial banks, enterprises and individual investors.