1. What are futures?
Futures (Futures) are completely different from spot goods. Spot goods (commodities) are actually tradable goods. Futures are not mainly goods, but are based on certain mass products such as cotton, soybeans, oil, etc. and financial assets such as stocks and bonds. The underlying standardized tradable contract. Therefore, the subject matter can be a certain commodity (such as gold, crude oil, agricultural products), or it can be a financial instrument. The date of delivery of futures can be a week later, a month later, three months later, or even a year later. A contract or agreement to buy or sell futures is called a futures contract. The places where futures are bought and sold are called futures exchanges.
There are currently four futures exchanges in China
Three commodity futures exchanges: Shanghai Futures Exchange/Dalian Commodity Exchange/Zhengzhou Commodity Exchange
A financial futures exchange: China Financial Futures Exchange
2. What is foreign exchange?
Foreign exchange is a creditor's right held by the monetary administration (central bank, currency management agency, foreign exchange stabilization fund, and Ministry of Finance) in the form of bank deposits, treasury bills of the Ministry of Finance, and long-term and short-term government securities that can be used when the balance of payments is in deficit. Including foreign currency, foreign currency deposits, foreign currency securities (government bonds, treasury bills, corporate bonds, stocks, etc.), foreign currency payment certificates (notes, bank deposit certificates, postal savings certificates, etc.).
The foreign exchange we often say at present belongs to the category of spot, and the accurate name should be foreign exchange spot contract transaction, commonly known as "foreign exchange margin transaction".
At present, due to domestic foreign exchange control, the foreign exchange market has not been fully opened.
3. What is the difference between foreign exchange and futures
1. Trading time
Foreign exchange market: basically 24 hours a day
Futures market: domestic futures are divided into daily trading and night trading. The end time of each species is different.
2. Leverage
Foreign exchange market: leverage is mostly 100-400 times (some will be enlarged to 1000-3000 times, the risk is greater)
Futures market: The leverage is about 10 times, and the margin ratio of each product is slightly different.
3. Delivery system
Foreign exchange: no due delivery.
Futures: There is a delivery system at maturity, so futures have contracts of different months, such as the MA1805 contract, which is the methanol futures contract delivered in May 2018. Also because futures have contracts of different months, the price/trading volume/open interest of each month's contract is different. We call the contract with the largest trading volume and open interest of this variety as the main contract. At different times, the main contracts of each variety will change. Linking these main contracts in different months in different time periods is called the main contract.
Except for corporate households, individual households have no delivery authority and cannot enter the delivery month (except for some varieties in the previous period), such as the Methanol 1801 contract, individual investors need to voluntarily close their positions at the end of December 2017, and cannot hold positions to enter the delivery of this contract January 2018, otherwise the position will be forcibly closed by the exchange.
4. Different trading venues.
Foreign exchange spot is generally traded through interbank or market makers, so there is often a buy-sell spread in the middle, which is the cost charged by banks and market makers; while foreign exchange futures are traded through exchanges, such as the US CME exchange, Trading the largest number of foreign exchange futures contracts in the world, it is a matchmaking transaction, and the transaction method is similar to stocks, so there is no buy-sell spread.
5. Contract restrictions are different.
Generally speaking, the contract value of foreign exchange spot is 100,000 US dollars as a standard lot, and the formal transaction is also carried out in units of lots. The contract has no certain delivery period and can be held for a long time, but inter-bank interest must be paid; foreign exchange futures trading The contract basis is the standard contract under the IMM settlement system. Generally speaking, the monthly contracts of 3, 6, 9, and 12 are the main contracts of the year, but there are also monthly contracts basically every month. The transaction period is normally the third Tuesday of the contract month as the final delivery day. If the position has not been closed before, you must Go through delivery procedures for delivery. Foreign exchange futures positions do not require any interest.
6. Different investors.
It is undeniable that the trading volume of foreign exchange spot is also very large, but more of the transactions between banks and market makers and among speculators; and foreign exchange futures are different. Those who engage in foreign exchange futures trading need hedging for The main part, this happens more among foreign trade industries and companies, while individual speculators only account for about 5% of the foreign exchange futures market. From this point of view, the investment nature of the foreign exchange futures market is much heavier than that of the foreign exchange spot market.
7. Safety and reliability are different.
It is undeniable that foreign exchange futures belong to the futures industry in various countries, and are strictly supervised by the regulatory authorities of various countries, so the transaction security is high; while the laws and regulations for the supervision of foreign exchange spot trading have not yet been perfected, and currently no country has It is supervised by a very complete regulatory mechanism, which generally adopts the regulatory regulations of foreign exchange futures after the incident to take into account the supervision. In terms of reliability, foreign exchange futures has a special exchange to organize transactions, so it is relatively reliable; while foreign exchange spot is a tacit understanding and spontaneous behavior between banks in various countries. Once political factors or other factors are affected, the quotation will inevitably be affected. This is also cause for concern.
Add
