What is a foreign exchange futures contract?
Foreign futures contracts (foreign futures contracts)
Foreign exchange futures contracts are standardized legal contracts formulated by exchanges. The contract stipulates that both parties pay a certain margin and commission, and buy and sell a certain amount of foreign exchange according to the transaction currency, quantity, delivery month and place. In practice, both parties rarely deliver the actual currency, but reverse the operation before the expiration to offset the original contract.
Main characteristics of foreign exchange futures contracts
1. forex futures trading is a contract for centralized public bidding transactions on an exchange. Trading places is usually fixed and trading time is limited.
2. Foreign exchange futures contracts are standardized contracts.
3. The foreign exchange futures contract shall be subject to the margin system.
Comparison between foreign exchange futures contracts and foreign exchange forward contracts
Foreign exchange futures contracts and foreign exchange forward contracts have the same definition and similar functions, but there are still some differences. The main differences between the two are as follows:
1, different market nature
Foreign exchange futures contracts are traded in the centralized market (exchange), and foreign exchange forward contracts are traded in the OTC market (bank counter).
2. Different due dates
Foreign exchange futures contracts have a standardized expiration date and month, while the expiration date of foreign exchange forward contracts is tailored to the needs of customers, usually within one year.
3. The price is determined in different ways.
The price of foreign exchange futures contracts is determined by public bidding on exchanges or through electronic trading systems. The buying price and selling price of foreign exchange forward contracts are determined by traders in the wholesale market after considering the difference between spot exchange rate and interest rate.
There are different ways to prevent breach of contract.
The control of foreign exchange futures contracts on customers' credit risk depends on margin requirements and daily evaluation system to prevent blocking default events. There is no margin requirement for foreign exchange forward contracts, but banks will conduct credit surveys on customers, or only provide forward contracts for customers with good long-term relationships.
5. Different delivery methods
The settlement of foreign exchange futures contract positions rarely adopts physical delivery, but mostly adopts cash delivery; Almost all foreign exchange forward contracts are delivered in kind.
6. Different transaction costs
The transaction cost of foreign exchange futures contracts is commission, while foreign exchange forward contracts do not charge commission, but the bid-ask spread is actually a form of "commission" charged by banks.
7. The trading hours are different.
Foreign exchange futures contracts are traded within the business hours stipulated by the exchange. Foreign exchange forward contracts are traded through the bank's global network connection system, which can be said to be 24-hour trading.
Renminbi-denominated foreign exchange futures contracts
Chicago Mercantile Exchange Group announced the launch of a brand-new RMB-denominated foreign exchange futures contract yesterday. CME said that in order to meet the growing demand of global customers for RMB-denominated products, these innovative futures contracts will be quoted on interbank (European) terms, reflecting the amount of US$ 65,438+0 converted into RMB. These futures products conform to the norms of non-deliverable forward contracts in the OTC market, and at the same time can reduce the counterparty risk of exchange derivatives trading. These new currency products, which will be listed in CME and subject to its rules and regulations, will be listed and traded in CME International Money Market (IMM) on Monday, August 22nd, 20 1 1 and delivered in September, 201. [ 1]p
RogerRutherford, managing director of foreign exchange products of Chicago Mercantile Exchange Group, pointed out: "In view of the development of RMB in the direction of free convertibility and the increasing offshore trading volume of RMB in Hong Kong, Chicago Mercantile Exchange Group has developed these innovative new RMB futures contracts. The new RMB contract products we launched this time are closely related to mature markets and emerging markets, which reflects the consistent commitment of Chicago Mercantile Exchange Group to global customers. We believe that this new contract product will continue the success of similar products in other emerging markets. For example, our Russian ruble and Brazilian real related products have increased by 350% and 450% respectively so far this year. The significant increase in trading volume and open contracts reflects the increasing demand of our customers to reduce the credit risk of emerging market products. We believe that these new RMB futures products provide the same benefits to customers who want to control the RMB exchange rate risk. "
In order to serve the institutional and retail markets, the Chicago Mercantile Exchange Group will launch a complete USD/RMB contract and an E-micro version. These new contracts will become part of the existing RMB/USD futures contracts launched by the Chicago Mercantile Exchange Group in June 2006, which can be traded on CMEGlobex, or through CMEClearPort for bulk trading and futures spot conversion.
The Chicago Mercantile Exchange Group provides a series of global innovative products, including 54 futures and 365,438+0 option contracts. In 20 10, the daily average foreign exchange trading volume of CME was 930,000 lots, which was 49% higher than that of 2009, equivalent to the daily average nominal value of $654.38+20 billion. E Wei 20 1 1 The average daily foreign exchange trading volume in the first quarter was more than 6,900 lots, up nearly 109% compared with the same period last year.