In futures trading, although the proportion of actual delivery is very small, once delivery is needed, the delivery of ordinary commodity futures is more complicated. In addition to strict regulations on delivery time, delivery place and delivery method, delivery grades should also be strictly divided. The physical inventory and transportation are also very complicated. In contrast, the delivery of financial futures is obviously much easier. Because in financial futures trading, the delivery of stock index futures, European dollar time deposits and other varieties is generally settled in cash, that is, when the futures contract expires, the price difference between the two parties is settled according to the price change. This cash settlement method is naturally simpler than physical delivery. In addition, even if some financial futures (such as foreign exchange futures and various bond futures) need to be delivered in kind, due to the homogeneity of these products, there is basically no transportation cost, and their delivery is much more convenient than ordinary commodity futures.
2. The blind spot of the delivery price of financial futures has been greatly reduced.
In commodity futures, due to the existence of large delivery costs, these delivery costs will bring certain losses to both long and short sides. For example, the delivery price of soybeans is 2000 yuan/ton. Even if this price is consistent with the local spot price at that time, the seller of this price may actually only get 1970 yuan/ton, because transportation, storage, inspection, delivery and other expenses must be deducted. For the buyer, it may actually cost 2020 yuan, plus transportation and delivery fees. 50 yuan, where is the difference between the two is the price blind spot. In financial futures, because there are basically no transportation costs and storage costs, this price blind spot has been greatly reduced. For varieties that use cash delivery, the price blind spot even disappears completely.
3. Financial futures are easier to carry out medium-term arbitrage transactions.
In commodity futures, the arbitrage transactions carried out by speculators are basically concentrated in the form of spread (also known as spread arbitrage). The reason why arbitrage is rarely used is related to high extra cost, poor liquidity and difficulty in spot trading. In financial futures trading, because the financial spot market itself has the characteristics of low additional cost, good liquidity and easy development, it has attracted a number of powerful institutions to specialize in spot arbitrage trading. Arbitrage is prevalent in financial futures, which not only promotes the liquidity of futures trading, but also keeps the difference between futures prices and spot prices within a reasonable range.
4. It is difficult for financial futures to forcibly open positions.
In commodity futures, sometimes there will be forced liquidation. Usually, the performance of forced market is that the futures price differs greatly from the spot price, far beyond the reasonable range, and the futures price does not converge to the spot price at the time of delivery or near delivery. The more serious forced liquidation market is that the manipulator controls both the spot and the futures. It once appeared in the US silver futures of 1980, and there was also a short soybean market in CBOT of 1989. However, in the history of the world financial futures, the forced market has never happened. The forced liquidation of financial futures is difficult to happen because the financial spot market is a huge market, and the bookmakers can't manipulate it; Secondly, because of the existence of strong arbitrage power, they will bury those bookmakers who try to launch a short-selling market; Finally, for some financial futures with cash delivery, the final delivery price of futures contracts is the spot price at that time, which is equivalent to establishing a compulsory convergence margin system, completely eliminating the possibility of forced liquidation.
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