FuturesContracts:ClearinghouseHow to make sure that the buyer andseller will meet their obligations?The clearing corporation operates like alarge insurance company,is thecounterparty to both sides of a transactionThis arrangements reduces the riskbuyers and sellers face
Futures Contracts: Clearing house ❖How to make sure that the buyer and seller will meet their obligations? ❖The clearing corporation operates like a large insurance company, is the counterparty to both sides of a transaction. ❖This arrangements reduces the risk buyers and sellers face
CurrencyFuturesMarkets*The Chicago Mercantile Exchange (CME) is byfarthelargest.Others include:The Philadelphia Board of Trade (PBOT)The MidAmerica commodities ExchangeThe Tokyo International Financial Futures ExchangeTheLondonInternational Financial FuturesExchange
Currency Futures Markets ❖The Chicago Mercantile Exchange (CME) is by far the largest. ❖Others include: ▪ The Philadelphia Board of Trade (PBOT) ▪ The MidAmerica commodities Exchange ▪ The Tokyo International Financial Futures Exchange ▪ The London International Financial Futures Exchange
The Chicago MercantileExchangeExpiry cycle: March, June, September,December.Delivery date 3rd Wednesday of deliverymonth.Last trading day is the second businessday preceding the delivery day*CME hours 7:20 a.m. to 2:00 p.m. CST.*CME currency futures contract quotations(exhibit 7.3)
The Chicago Mercantile Exchange ❖Expiry cycle: March, June, September, December. ❖Delivery date 3rd Wednesday of delivery month. ❖Last trading day is the second business day preceding the delivery day. ❖CME hours 7:20 a.m. to 2:00 p.m. CST. ❖CME currency futures contract quotations. (exhibit 7.3)
Reading a Futures QuoteHiLoLifetimeLifetimeSettleChangeOpenOpenHighLowInterest9325927692829309+.00271.2085.863674,639SeptHighest and lowestprices overtheDaily ChangeClosing pricelifetimeof theLowest price that daycontract.Highest price that dayOpening priceNumber of open contraetsExpiry month
Reading a Futures Quote Open Hi Lo Settle Change Lifetime High Lifetime Low Open Interest Sept .9282 .9325 .9276 .9309 +.0027 1.2085 .8636 74,639 Expiry month Opening price Highest price that day Lowest price that day Closing price Daily Change Highest and lowest prices over the lifetime of the contract. Number of open contracts
Open Interest refers to the number ofcontracts outstanding for a particulardelivery monthOpen interest is a good proxy for demandfora contract.Some refer to open interest as the depthof the market. The breadth of the marketwould be how many different contracts(expiry month, currency) are outstandingrl
❖Open Interest refers to the number of contracts outstanding for a particular delivery month. ❖Open interest is a good proxy for demand for a contract. ❖Some refer to open interest as the depth of the market. The breadth of the market would be how many different contracts (expiry month, currency) are outstanding