A futures contract, like a forward contract, is a fixed-term contract related to the class of solid transactions. But unlike the last, the futures contract is fully standardized, that is, all its parameters except the price are known in advance and do not depend on the will and desire of the parties to the contract. This contract is only in the course of exchange trading. The guarantor of its execution is the stock exchange itself, or, more accurately, the settlement organization servicing the exchange trade (clearing organization).
The conclusion of a futures contract on the terms of its buyer is called the "purchase" contract, and on the terms of the seller - sale contract. The assumption of a contractual obligation (on the terms of a buyer or seller) is called the opening of the position & quot ;. Elimination of the obligation under this contract by entering into a reverse transaction with a similar contract - "closing the position."
When the position is opened, the owner of the contract pays the initial margin, or contribution, in the amount of several percent of the value of the contract, which is accounted for (returned to it) when the position is liquidated. If the position remains (passes) the next day (remains open ), then it calculates the variable margin as the difference between the market prices of the contract used for this purpose, or the so-called settlement prices of this and previous days. In the event of a price increase, these differences are paid by sellers on open positions, but buyers - owners of open positions receive. In case of falling prices - on the contrary.
Classification of futures contracts is presented in Figure 9.4.
Futures contracts fall into two classes: commodity and financial futures.
Commodity futures are classified by the following commodity groups:
o agricultural raw materials and semi-finished products - grain, livestock, meat, vegetable oil, seeds, etc.
o timber and lumber;
o non-ferrous and precious metals - aluminum, copper, lead, zinc, nickel, tin, gold, silver, platinum, palladium;
o oil and gas raw materials - oil, gas, gasoline, mazut, etc. Financial futures are divided into four main groups: currency, stock, interest and index.
Currency futures - are futures contracts for the purchase and sale of any convertible currency. They are similar to currency forwards and differ from the latter by the place of confinement (on stock exchanges), the level of standardization (complete) and the mechanism of their guarantee (the mechanism of margin charges).
Stock futures - are futures contracts for the purchase and sale of certain types of shares. They are not widely spread.
Interest Futures - are futures contracts for interest rate changes (short-term interest rates
Chart 9.4. Types of futures contractsfutures) and buy-sell long-term bonds (long-term interest futures). Index futures are futures contracts for changing the values of stock market indices.
The primary market for futures contracts on the exchange rate (currency futures) is the banking exchange or over-the-counter market of foreign currencies that have free circulation on the world market. Currency trading is carried out on the terms of immediate delivery (spot-market) within two working days or on delivery terms in a few months (forward market). In the case of forward foreign exchange transactions, for example, after three months, the future exchange rate will reflect differences in national interest rates on bank deposits on deposits of respective currencies.is the standard exchange contract for the purchase of a certain type of currency on a particular day in the future at the rate established at the time of the contract. >
Currency futures construction:
o futures price - the exchange rate (for example, the number of units of the national currency needed to purchase 1 US dollar);
o the value (size) of one contract - the fixed amount of foreign currency (for example, $ 1000);
o the minimum change in price ("tick") corresponds to the minimum change in the exchange rate on the spot market (for example, 1 ruble);
o the minimum change in the value of the contract is equal to the product of the tick and the value of the contract (for example, 1 ruble x 1000 = 1000 rubles);
o the period on which the contract is signed - usually three months;
o delivery by contract provides for the possibility of physical delivery, unless it is closed by a reverse transaction before its expiry. The purchase of currency futures means an obligation to buy foreign currency (for example, dollars) and sell the domestic currency (rubles). The sale of currency futures means an obligation to sell foreign currency (the same dollars) and buy domestic currency (rubles);
o The exchange price is determined either by the results of trades on the last trading day, or as the basis for its determination, the exchange rate is taken based on the results of trades on the same date on the foreign exchange Exchange.
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