Derivatives Exchanges Flashcards
What are the 3 main UK derivative exchanges?
London Metal Exchange
Ice Futures Europe
LSE Derivatives
What are the 5 main US derivative exchanges?
1) CBOE
2) CME
3) Chicago Board of Trade (CBOT)
4) NYMEX
5) ICE Futures US
What are the 2 main European derivative exchanges?
1) Eurex
2) Euronext
What are Euronext Exchanges?
A combination of seven European exchanges and a clearing house.
Electronic trading in futures, options, fx etc.
What are the 5 main APAC derivative exchanges?
1) China Financial Futures Exchange
2) Shanghai Stock Exchange
3) National Stock Exchange on India
4) Bombay Stock Exchange
5) Multi Commodity Exchange (India)
What are the 2 main Japanese derivative exchanges?
1) Osaka Securities Exchange
2) Tokyo Stock Exchange
What are the 2 main EM derivative exchanges?
1) B3
2) South African Futures Exchange
What is a wholesale trading facility?
A wholesale trading facility enables participants to enter trades outside of the regular orderbook. Instead, trades are placed directly into the system.
What are the benefits of whole sale trading facilities?
combines the flexibility of customised trading the benefits of standardised clearing and settlement.
What are two things that WTFs allow to happen?
1) Exchange for Physical (EFP)
2) Exchange for swap (EFS)
What does exchange for physical mean?
EFP allows you to exchange your futures contracts for the actual underlying asset itself.
What are 3 benefits of EFP?
1) Counterparty credit exposure can be reduced when replacing a physical settlement with a futures position.
2) Reduces margin requirements. By netting OTC positions against offsetting futures positions
3) 24 hour trading – positions can be negotiated around the clock.
What is exchange for swap?
involves a dealer taking on the bank’s futures position into its own account and swapping the commodity’s return for an agreed funding rate
Swapping physical exposure and swapping for a swap
How do exchanges guarentee transparency?
Disseminate prices through a feed to members.
Also make data available to vendors (Refinitiv & Bloomberg)
How are buying and selling prices reported?
The bid and ask price are shown denominated by A and B. While futures have a unique code for each month:
What are the unique codes for each month?
How does trade reporting differ between OTC and exchange traded derivatives?
Exchanges mandate that firms have to report their trades within time limits.
OTC are only subject to internal timing reports
OTC contracts not mandated by an exchange
When must block trades be reported to the exchange?
Block trades must be reported to the exchange within a specified time of verbal agreement being reached.
What is open interest?
are the number of contracts outstanding at any one time on an official exchange.
Why is reporting / managing open interest important?
It is important that clients manage the open interest on their account properly to avoid unwanted delivery situations
What three kinds of accounts can trades be allocated to?
1) House
2) Segregated
3) Non-segregated
What is the segregated account?
traded registered on behalf of a segregated client. Most major exchanges / regulators mandate that member firms always put client assets into segregated accounts.
What is the house account?
for all prop trades of the clearing member
What is the non-segregated account?
client trades not segregated and therefore not protected in the event of the firm’s default
