S3 - 1.1 Flashcards
is an Exchange Membership held by a business or an individual?
Held by individuals associated with firm doing bizz in the exchange
FCM
Futures Commission Merchants
Who are the only ones who can trade on the exchange floor?
FCMs
What does a Floor broker do?
What are 2 other names for Floor Brokers?
Fill orders for firms (called FCMs / Commission Houses)
Do Floor Brokers trade their own inventory?
both their own and match customer orders
Is trading one’s own inventory = Trade for one’s own acct?
Floor Broker trade for their own acct, both from own inventory and matching client orders
Who is also called a “local”?
Floor brokers
3 Trading strategies used by Floor brokers
1) Position traders, 2) Day traders and 3) Scalpers
Position traders (Floor broker strategy)
Hold positions the longest (days - weeks)
Day traders (Floor broker strategy)
Open and close the same day
Scalpers (Floor broker strategy)
In and out in minutes; ready to bid to buy (buy at the Bid) Ask to sell (sell at the Ask)
Settlement price
Closing trade of the day
Closing Range
Prices of futures transactions taking place near closing
What merged to become the CME Group?
CME (Chicago Mercantile Options and Futures Exchange) + CBT (Chicago Board of Trade) + NYMEX (NY Mercantile Exchange - including COMEX division)
IMM
International Monetary Market
What gets done in the IMM?
Trades currency futures + Interest rate futures
Who are Clearing Houses associated with?
Associated with FCMs
What is a Clearing House?
Guarantee futures trades; They are the Counterparty on all trades
Clearing House main functions?
1) Matching orders, 2) Collect margin reports (from clearing firms), 3) Monitor risk, 4) Oversee delivery procedures, 5) Report trade Volume and Open Interest
Is Clearing House an FCM
Clearing Houses are FCMs
Can any firm Clear trades (match trades)?
No - Only a Clearing House can clear trades
How do non Exchange members clear trades?
Through a Clearing House
Is there a Capital Requirement for a firm to be a Clearing House?
Yes - There are Minimum Capital Requirements
Does a Clearing house need to know the margin positions for every customer?
No - Clearing House ONLY needs to know margin positions for the Corresponding Firm
