Futures is a financial contract, including financial instruments or the sale of physical goods for future delivery (usually on a commodity exchange). A futures contract is a contract for buying and selling futures, and it is a proof that both parties agree to trade at a specific time. It is a cross-period trading method.
By signing a standardized contract (futures contract), the buyer and the seller agree to deliver a specified amount of spot at a specified time, price and other trading conditions. Usually, futures are traded on the futures exchange, but some futures contracts can be traded on the Counter﹞.
Many futures markets are developed from forward contracts, which refer to one-to-one intertemporal trading contracts, and the trading details are agreed by buyers and sellers themselves. Futures contracts are standardized by exchanges, allowing traders from all directions to easily match transactions on the same platform. Option is another derivative financial commodity derived from futures contracts.
The emergence and development of futures;
The future in English is the future, which evolved from the word "future". It means that both parties to the transaction don't have to deliver the physical object at the initial stage of buying and selling, but agree to deliver the physical object at some time in the future, so China people call it "futures".
The original futures trading developed from spot forward trading. The initial spot forward transaction is a verbal commitment by both parties to deliver a certain amount of goods at a certain time. Later, with the expansion of the scope of transactions, oral promises were gradually replaced by sales contracts.
This kind of contract behavior is becoming more and more complicated, which requires the guarantee of intermediary agencies to supervise the timely delivery and payment of goods. Therefore, the Royal Exchange, the world's first commodity forward contract exchange, opened in London on 157 1. In order to adapt to the continuous development of commodity economy.
1848, 82 businessmen initiated the organization of Chicago Board of Trade (CBOT) to improve transportation and storage conditions and provide information for members; 185 1 Chicago Board of Trade launches forward contracts; 1865, Chicago Grain Exchange introduced a standardized agreement called "futures contract" to replace the previous forward contract.