forex futures trading first appeared in the international money market of the Chicago Mercantile Exchange on May 16th, 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 foreign exchange futures hedging transaction can make the importing enterprises lose less foreign exchange when the exchange rate changes are unfavorable to the importing enterprises, but when the exchange rate changes are favorable to the importing enterprises, it will make the importing enterprises have less foreign exchange surplus, which is the characteristic of foreign exchange futures hedging. In 1982, the Philadelphia Stock Exchange first started trading foreign exchange options. In 1984, the international money market of Chicago Mercantile Exchange (CME) also started the business of foreign exchange options. Foreign exchange options trading, like futures trading, has strict contractual requirements. The currencies it buys and sells are generally freely convertible hard currencies, and the exchange rate adopts a floating system. The expiration date of the option is exactly the same as the delivery date in forward exchange market. Its particularity is only manifested in the fact that the last trading day of foreign exchange options is the 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, which are mainly manifested in: (1) foreign exchange options trading can fix the hedging cost and make it limited to option fees; (2) Foreign exchange option trading can manage the risk of uncertain foreign exchange transactions in the future, because the option 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 is appreciating or depreciating.
in the 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 option and limit his losses to the prepaid option fee. However, if forex futures trading is adopted, the futures trading business must be actually performed at maturity. If there is a loss in foreign exchange futures, it is necessary to make up for this loss with spot profits, so 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 are not mature in concrete operation. For example, China's current floating exchange rate system of RMB 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 forward exchange market, such as time limit, forward foreign exchange transactions, futures transactions, swaps, options, hedging, arbitrage and so on, while there is only one spot transaction in China. Brokers have limited knowledge of futures, lack of 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 in the near future, China's foreign trade enterprises can not fully use foreign exchange futures and options to avoid exchange rate risks, 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 forward exchange market is an inevitable trend.