Commodity futures trading

Commodity futures trading

A stock-exchange deal is an exchange-registered obligation concluded by stock-exchange bidders in relation to commodity in case of bidding. The scheme for registration and execution of stock-exchange deals is established by the exchange.

The execution of deals on the exchange works as filing a special application a bidder. In case of two multi directional orders (one for purchase - one for sale) satisfy mutual conditions, then a deal is concluded on their basis. The guarantor of the fulfillment of obligations under each deal is the exchange.

Now learn more about a special kind of stock-exchange deals, which is called “commodity futures”.


Commodity futures

Such futures are urgent stock- exchange deals, when the moment of fulfillment of obligations under a deal does not always coincide with the hour of the bidding execution. For urgent deals, settlements are organized after a certain hour in the middle or at the end of the month at rates fixed at the hour of the deal.

Commodity futures deals are divided into a few types:

  • simple (firm);
  • on-call;
  • put-and-call;
  • report;
  • conditional;
  • prolongation entrepots.



Features of commodity futures bidding deal types

  • Anon-call trade deal, where the value is fixed in the course of the deal execution, specifying in the deal the terms of fixation and methods for determining the value. The buyer gets the right to choose the moment of fixing the value, but the deal specifies the source of value information to be applicated, i.e. value is targeted.
  • A prolongation entrepot is an urgent deal, in which the buyer or vendor of an equity, depending on the movement of its value, may extend the operation or delay the final settlement. Meanwhile, they count on a favorable change in the rate after the maturity of the deal, which will allow them to compensate for the loss, if at the time of the maturity, the transaction turns out to be profitless.
  • A report transaction is a sale of equities to the bank at the rate of the day with the condition of their purchase after some period at an increased rate.
  • A put-and-call transaction is an urgent transaction, in which the vendor and the buyer determine the cost of each equity, indicating the possible percentage of deviations in both directions.
  • A simple (firm) transaction is an urgent transaction, in which its participants undertake to deliver and purchase equities within a specified period. Condition of a firm transaction is not subject to change.
  • A conditional deal is a deal, in which one of the parts has the advantage to refuse to fulfill its obligations by paying a premium to another. The goal is to limit losses from fluctuations of rates during urgent exchange deals. Depending on parts and how parts have the right to change condition of a deal, experts distinguish: bonuses for the call or for the put, straddles.
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