EECS 3101 Lecture Notes - Lecture 35: Futures Contract, Futures Exchange
28 Jun 2018
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EECS 3101 Lecture 35 Notes
Introduction
Trading Currency Futures
In addition, Australian firms that have exposure in Canadian dollars or Canadian firms
that have exposure in Australian dollars may use this type of futures contract to hedge
their exposure.
See www.cmegroup.com for more information about futures on cross exchange rates.
Currency futures contracts usually specify the third Wednesday in March, June,
September, or December as the settlement date.
There is also an over-the-counter currency futures market, where financial
intermediaries facilitate the trading of currency futures contracts with specific
settlement dates.
Firms or individuals can execute orders for currency futures contracts by calling
brokerage firms that serve as intermediaries.
The order to buy or sell a currency futures contract for a specific currency and a specific
settlement date is communicated to the brokerage firm, which in turn communicates
the order to the CME.
For example, some U.S. firms purchase futures contracts on Mexican pesos with a
December settlement date in order to hedge their future payables.
At the same time, other U.S. firms sell futures contracts on Mexican pesos with a
December settlement date in order to hedge their future receivables.
The vast majorities of the futures contracts orders submitted to the CME are executed
by Globe x, a computerized platform that matches buy and sell orders for each
standardized contract.
Globe x operates 23 hours of each weekday (it is closed from 4 p.m. to 5 p.m.).
EXAMPLE
Assume that, as of February 10, a futures contract on 62,500 British pounds with a
March settlement date is priced at $1.50 per pound.
Document Summary
In addition, australian firms that have exposure in canadian dollars or canadian firms that have exposure in australian dollars may use this type of futures contract to hedge their exposure. December settlement date in order to hedge their future payables. Assume that, as of february 10, a futures contract on 62,500 british pounds with a. March settlement date is priced at . 50 per pound. Australian firms that have exposure in canadian dollars or canadian firms that have exposure in australian dollars may use this type of futures contract to hedge their exposure. See www. cmegroup. com for more information about futures on cross exchange rates. Currency futures contracts usually specify the third wednesday in march, june, There is also an over-the-counter currency futures market, where financial intermediaries facilitate the trading of currency futures contracts with specific settlement dates. Firms or individuals can execute orders for currency futures contracts by calling brokerage firms that serve as intermediaries.
