The difference between foreign exchange futures and forward foreign exchange

Foreign exchange futures contracts and foreign exchange forward contracts are similar to some extent, and both parties agree to buy or sell a foreign exchange at some future time, but they are different in many aspects (see table 1). Foreign exchange forward contract is a kind of future transaction contract drawn up privately by buyers and sellers. Both parties may negotiate on the contract price, quantity of contract subject matter, contract term, delivery time and delivery method. Due to the above characteristics, foreign exchange forward contracts are generally traded in the OTC market. Unlike forward contracts, futures contracts are designed by the exchange and are standardized contracts traded on the exchange floor. During the trading hours specified by the exchange, futures contracts are traded by open bidding, which is highly competitive and open. For futures contracts with the same foreign exchange subject matter, there are usually multiple futures contracts with different maturities traded at the same time, which provides the market with multi-term investment tools. Buyers and sellers trade through exchanges and futures settlement institutions, and they don't know or care who the other party is. At the same time, in order to ensure the normal trading of futures contracts in the market, the exchange has formulated a series of trading rules and systems for futures contracts.

Table 1 Price difference between forward contract and futures contract

(1) Performance of secured transactions

After a futures transaction is concluded, the buyer and the seller pay a certain margin, and the settlement institution undertakes the responsibility of ensuring the timely performance of each transaction, becoming the buyer of all contract sellers and the seller of all contract buyers. If one of the traders breaches the contract, the settlement institution will bear the responsibility of performance first, which can greatly reduce the credit risk generated in the transaction.

(2) Settlement of trading profits and losses

The profit and loss of settlement transactions refers to the calculation of members' profits and losses by futures settlement institutions after settlement on each trading day. After the calculation is completed, members will be provided with the profit and loss data of the day, and members will use the profit and loss data of the day as the basis for settlement of customers.

(3) Controlling market risks

Settlement institutions can ensure the performance of both parties through the settlement and dynamic monitoring of member deposits. In this process, although the market situation is constantly changing, the clearing institution requires members' deposits to be above the specified amount. When the market price changes in an unfavorable direction, resulting in losses, so that the member's margin can not reach the prescribed level, the settlement institution will issue a notice to the member to recover the margin. After receiving the notice, the member must pay the deposit in full within the specified time of the next trading day, otherwise the settlement institution has the right to forcibly close the position of the member. Through the management of members' deposits, clearing institutions effectively control market risks and ensure the smooth operation of the futures market.

B

Dollar index futures, RMB foreign exchange futures

(1) dollar index futures

At present, the dollar index futures belonging to the Intercontinental Exchange (ICE) is also an old foreign exchange futures with a long history. As early as 1985, the financial products exchange, a branch of new york Cotton Exchange, specially compiled a new US dollar index to launch US dollar index futures, and officially traded US dollar index futures on that year1October 20th 165438+. If there are a few years, it is 35 years of history. Although the dollar index futures can't be compared with the foreign exchange futures under the Chicago Mercantile Exchange Group in terms of trading volume, it has always stood in the field of foreign exchange futures by virtue of its market influence. Table 2 shows the US dollar index futures contracts.

Table 2 US dollar index futures contracts

Dollar index futures also use physical delivery. Compared with the physical delivery of a single foreign exchange futures, the physical delivery of the index is relatively troublesome, because each delivery must prepare six different foreign currencies at the same time according to the proportion of foreign exchange components of the index.

(2) RMB futures of the Hong Kong Stock Exchange

The Hong Kong Stock Exchange began trading RMB futures on September 17, 2065438, and the trading currency was USD. This is the world's first futures contract involving the exchange of RMB into US dollars. See Table 3 for details of the contract.

Table 3 RMB futures contracts of Hong Kong Stock Exchange

The "settlement method" of HKEx stipulates that "according to the mechanism and terms contained in the trading rules of currency futures contracts and clearing house rules, the seller pays the amount of US dollars stipulated in the contract and the buyer pays the amount of RMB calculated at the final settlement price", which is actually the so-called physical delivery.

(CME RMB futures

Shortly after China and Hongkong launched RMB-USD futures trading, CME of the United States also launched RMB forex futures trading on February 25th, 20 13, in which RMB is offshore deliverable RMB (see Table 4). According to the convention of CME, contracts are divided into two types: standard futures contracts and electronic micro futures contracts, with contract scales of 654.38+million dollars and 654.38+million dollars respectively.

Table 4CME Offshore RMB-USD Futures Contract

Note that CME quotes euro futures in a different way from offshore RMB futures. In euro futures, the quotation method is USD/EUR, that is, how many dollars is equal to 1 euro, which is a direct quotation to the United States. In offshore RMB futures, it is offshore RMB/USD, that is, how much offshore RMB is converted into 1 USD, which is the indirect pricing method in the United States and China.