Leveraged investment
Similar to other futures, leverage mechanism and short-selling mechanism make leveraged investment in treasury bonds futures more efficient and flexible than spot treasury bonds in bear market. Comparing the price fluctuation in government bond index, it is not difficult to find that the price fluctuation range of the simulated contract index of government bond futures is greater than that of government bond index. For a single cash coupon, the volatility of treasury bond futures is much greater than that of treasury bonds, which provides a better tradable variety for unilateral investors. At the same time, the minimum margin for treasury bonds futures is 2%, and even when the delivery month is approaching, the maximum margin ratio is only 4%. According to the double margin to prevent market fluctuations, its leverage ratio has reached 12 times. If it is in a non-adjacent delivery range, the leverage ratio can reach more than 20 times.
Duration management
The traditional bond management is to set a fixed portfolio term. When the term structure of interest rate changes, asset prices are less affected by interest rate fluctuations. Even if portfolio managers strongly expect interest rates to rise or fall, they can change the maturity of bond portfolios to benefit from it. Generally speaking, if the interest rate rises, the longer the term of the portfolio, the more its value drops. At this time, it is more beneficial to shorten the duration of bond portfolio, and vice versa. After the treasury bond futures are listed, investors can use them to adjust the duration, and the advantage will be obvious, because the treasury bond futures market is more liquid than the spot market. By buying and selling treasury bond futures, investors can adjust the duration at a lower cost while maintaining the same investment portfolio.
risk control
The risk types of treasury bond futures market are complex, involving a wide range, with the characteristics of amplification and prevention. Its risks mainly include: market price risk caused by interest rate fluctuation, system risk caused by macro factors and policy changes, liquidity risk caused by market and capital liquidity, institutional risk caused by imperfect trading system, technical system risk caused by technical system failure and operational error. Different market participants need to take different risk control measures.
Risk control of investors
Investors who actually participate in treasury bond futures trading are the main risk takers in the market, and they will face multiple normal risks in the futures market, especially those that need attention, such as market risk and forced liquidation risk.
Treasury bond futures and treasury bond spot face the same risk of interest rate fluctuation, and futures have the characteristics of leverage, which makes interest rate fluctuation magnified several times. At present, the margin ratio of the treasury bond simulated futures contract exchange is 2%. Considering the risk control requirements of futures companies, the general possible margin ratio is 4%, and the leverage can be enlarged to 25 times. Therefore, it is very important for investors to control their positions. Professional investors can use quantitative methods such as VAR to measure and prevent market risks. In addition, investors need to pay close attention to the risk of forced liquidation of treasury bonds futures.
Risk management of futures companies
As an intermediary institution of futures market transactions, futures companies are also one of the risk concentration points. In order to better cope with the risks that treasury bonds futures may face after listing, futures companies should not only conduct strict qualification examination and risk awareness education for customers, but also strengthen their own risk management level, such as strengthening the management of settlement and risk control, enhancing the risk prevention skills of employees, and strengthening self-monitoring and inspection awareness. Futures companies need to find problems in time and avoid serious risk accidents from both customers and themselves.