Академический Документы
Профессиональный Документы
Культура Документы
Similarities Differences
Standardization Clearinghouse
Specify quality & quantity of goods. Act as a buyer to every seller & seller to
Delivery time & manner. every buyer.
Standardization promotes liquidity. Buyers/sellers know they can reverse
Speculators ⇒ gain exposure through their position at a future date.
futures contracts. Counterparty ⇒ clearinghouse
Hedgers ⇒ reduce exposure through historically never defaulted in U.S.
futures contracts.
Margin in Futures
Maintenance Margin
Variation Margin
Settlement Price
Avg. of prices of trades during the final few trades of the day.
Last period of trade (closing period) is set by the exchange.
Used to calculate margin requirements at each day end.
Marking to Market
Short delivers the underlying to terminate the Futures contract marked to market on last
contract. trading day.
Long pays contract price. Delivery is not an option.
Terms of delivery are specified in the contract.
Represent less than 1 % of all contract terminations.
Clearinghouse will net the position if exactly ‘Ex-pit’ (off the floor) transaction.
opposite trade position is taken. Sole exception to federal law.
Exact in terms of Two parties (not clearinghouse) negotiate to
a) Maturity deliver asset.
b) Quantity Parties are with opposite positions.
c) Good Actual exchange is done but contract does not
Most futures position settled this way. close in exchange.
Difference in price, if any, is adjusted against the Differ from regular delivery (method 1).
margin deposited in the account.
Euro-dollar Futures
Settled in cash.
Based upon some multiplier.
Value of contract = multiplier × index level.
If index > (<) previous settlement ⇒ long receives (pays) multiplier × ∆ in index.
Currency Futures