ASSIGNMENT 1

Present day: 20/12/2022

Deadline content: 4/12/2022

Deadline ppt: 6/12/2022 (8-9:00 PM)

TOPIC: FUTURES: REGULATIONS AND TRADING RULES

AMONG TOP FUTURES MARKETS
https://therobusttrader.com/largest-futures-exchanges-in-the-world/ (tìm top 5 futures markets
trong link thầy cho này)

I. Definition & list top 5 futures markets

A futures market also known as the futures exchange, is a central marketplace where people
can trade futures contracts and options on futures contracts.

- A futures contract is a standardized contract to buy or sell a specified quantity of an

asset on a future date at a predetermined price.
- Top 5 futures markets:
+ CME Group (US)
+ National Stock Exchange of India (India)
+ Intercontinental Exchange (US)
+ CBOE Holdings (US)
+ Eurex (Europe)

II. The regulations & trading rules among top 5 futures markets

1. CME Group market (US)

● Regulated by the U.S. Commodity Futures Trading Commission (CFTC) (1974)

● Offers futures products from foreign currencies, Stock Index Products, interest rate,
treasury products, commodities, energy, metals.
● Who can trade: everyone (hedgers & speculators)
● Criteria
- Trading day: Sunday evening -> late Friday afternoon
- Trading hours: 8:30 a.m - 2:25 p.m CT
- Price: all prices are known to everyone
- Contract size: standardized size, do not change
- Tick size = 1 quarter of an index point
- Contract value: contract size * current price
- Settlement procedure: daily settlement procedure enforced by the exchange
- Trading is open, fair, anonymous & high liquidity
- Price limit:
 - Order fee:

(CME Interest Rate Product Fee Schedules as of November 1, 2022)

● Types of order:
Market order: can place a market order -> buy/sell (best available price) quickly
1) the name of the contract
2) the number of contracts
3) whether you are buying/selling
Stop order: (stop loss order) an order that becomes a market order when a
particular price level is reached
Limit order:
- Buyer -> maximum price to pay & seller -> minimum price to accept
- Remains on the book until the order is executed/canceled/expires

2. National Stock Exchange of India

● NSE commenced trading in derivatives with the launch of index futures in 2000
● Underlying instrument: Nifty 50 Index
 ● Type of order:
- Regular lot order
- Stop loss order
- Immediate or cancel
- Spread order
● Criteria:
- Trading days: all days (except Saturdays, Sundays, Exchange holidays)
- Trading hours: 9:55 am - 3:30 pm
- Price steps: Nifty 50 futures contracts is Re.0.05
- Price bands: no day minimum/maximum price ranges applicable
- Minimum lot size: 75 units
- Contract size: may not be less than Rs. 5 lakhs
- Trading cycle: maximum of 3-month
- Contract expiration period: not exceed 12 months
- Expiry day: last Thursday of the expiry month
- Margin rule: have a minimum SPAN + Exposure margin in the account
- Margin penalty:

3. Intercontinental Exchange (US)

ICE is an American company formed in 2000, company’s primary focus was on energy
products, however over time has broadened to include some commodities, foreign cash
exchanges, and equity index futures.
Operates global financial exchanges and clearing houses and provides mortgage technology,
data, and listing services.

- ICE Futures U.S. is a Designated Contract Market pursuant to the Commodity

Exchange Act and regulated by the CFTC
- Trading hours: Open 24 hours (excluding maintenance window)
- Trading days: Trading Floor shall be open for business daily, except on Saturdays,
Sundays and Exchange Holidays
- Daily Settlement Prices of each product will be determined within a specified
timeframe in 1 day, On the Last Trading Day for each Exchange Futures
Contract, the Trading Session will end at a specific time

· for all other Exchange Futures Contracts, unless otherwise specified in Rules setting forth
the terms and conditions for such contract, at the same time as the regular Trading Session.
- Type of order:
Calendar Spread orders
 Intercommodity Spread orders
Limit orders
Market orders
Options Spread orders
Stop orders:
- Stop-limit orders
- Stop Order with Protection
Trade at Index Close orders (TIC)
Trade at Morning Marker Price orders (TAMM)
Trade at settlement orders (TAS)
Intermarket Spread orders
Reserve Quantity orders
Good After Logout orders (GAL)
Good ‘Til Canceled orders (GTC)
Good ‘Til Date orders (GTD)
Good ‘Til Date & Time orders (GTD&T)

(*)Weighted Volume Ratio is a figure for weighted message per executed contract and it is
counted by the fomular:

Each message is weighted as :

4. CBOE Holdings (US)

Founded in 1973, the CBOE (Chicago Board Options Exchange) is the world’s largest
options exchange with contracts focusing on individual equities, indexes, and interest rates.
CBOE is a platform for serious and professional market participants. Here, place an order
with a much larger amount than on regular exchanges.

This exchange is mainly for market makers trading on their own, as well as the brokers that
execute orders on behalf of the investors.

The exchange allows to trade options on the most popular indices and stocks in the world.
Most of the transactions (90-95%) are digital, The rest of the transactions are carried out
through the work of brokers on the trading floor.

CFE is owned by Cboe Global Markets, and trades on CFE are cleared by The Options
Clearing Corporation (OCC).

- Trading hours:
Divided into sessions and have specific holiday schedule pre-plan.

- The CFE Process :

+ Pre-Open session (Limit Orders and Quotes in simple instruments are accepted for
Queuing. Spread orders are also accepted)
+ Each product transitions from a Closed session where the Trading Status is
Suspended, into a Pre-Open session where the state is Queuing. There is no
queuing period between 3:15 p.m. CT and 3:30 p.m. CT, Monday through Friday, for
VX, VXM, and AMERIBOR futures

5. Eurex exchange (Europe)

● The Eurex was created in 1998 when Deutsche Borse AG & SIX Swiss Exchange
partnered to develop an electronic trading system that would take over the traditional
open outcry and pit system.
● It is the largest futures exchange in Germany
● Some of the most popular futures contracts that trade on this exchange are based on
German bonds, Swiss bonds, European stocks, and European stock indexes. Apart
from facilitating trades, the exchange also provides contract settlement and clearing
services
● Rules: it follows rules that regulate the organization of the futures exchange approved
under German law with its registered office in Frankfurt/Main.

● Rule for participants:

- Conduct of derivatives trading in a commercial manner

- Evidence that the respective applicant is subject to proper banking or exchange
regulation in its country of origin
- Can execute their own & their customers' orders & is responsible for exercises and
position management functions online.
- Maintain a system-side overview of the payment & delivery obligations that result
from their trading activities
- May enter into agreements with different Clearing Members on a per market basis
(e.g. Eurex Exchange, Eurex Repo, etc)
- Compliance with mandatory technical requirements for connection to the Eurex
system (connection alternatives)
- Admission and registration of at least one Trading Participant (Trader admission)
- Registration of at least one qualified back office staff member (QBO – see
QBO/QCS Information Memorandum below)
- Minimum equity capital of EUR 50,000, unless the applicant is a bank or is MiFID
II regulated
- Additionally, for Eurex Exchange, an exchange participant can set up relationships
with a maximum of five different Clearing Members. This offering is referred to as
multiple clearing relationships (MCR) and enables exchange participants to clear
different MCR-product groups with different Clearing Members. Exchange
participants continue to have the flexibility to use the "give-up/take-up"
functionality to transfer trades within one specific platform to another participant.

● Trading phrases: 07:30 - 22:00 CET

 - Pre-Trading 07:30 CET: orders and quotes can still be entered, changed,
deactivated and deleted in the Eurex Deutschland system before trading begins
- Trading: again divided into the auction phase and the ongoing transaction. During
the auction phase, Eurex may reenter, modify, deactivate and delete orders and
quotes. The auction always ends with the end of the clearing process.
- Post-Trading: when the closing time is over, the closing price will be set.
However, during this phase, Eurex may enter, modify and delete orders again.
● Clearing hours: start at the beginning of the Pre-Trading period & end at the end of
the Post-Trading period. In deviation from such provision, the clearing hours of all
products which are continuously traded until 22:00 end at 22:30.
● Trading schedule: You can find exact trading hours on the website, depending on the
product
● Transaction prices: depend on the broker
● Regulatory fees: no fee
● Exchange transactions: no -> game is always the same. So a contact order or an
exchange derivative also costs an X amount of fees
● Types of order:
- Market order
- Stop order (futures contracts)
- Restricted limit order (IOC: immediate/cancel)
- Unrestricted limit order
+ GFD: good for day
+ GTC: good till canceled
+ GTD: good till date
- Futures combination
- Strategies
● Main types of futures:
- DAX Futures
- EURO STOXX 50 futures
- Euro Bund Futures

III. Summary
Future exchanges are central marketplaces where investors can trade standardized futures
contracts. They provide the necessary liquidity by bringing buyers and sellers together. In
addition to this, most futures exchanges also provide clearing and settlement services which
help to reduce the risk of counterparty defaults.

NOTE: The futures market trading serves two primary purposes – speculation (enabling
investors to make a profit) and hedging (allowing traders to minimize losses).

FACT: Futures market exchanges earn revenue from actual futures trading and the
processing of trades, as well as charging traders and firms membership or access fees to do
business.

As we mentioned above, we have listed 5 of the largest futures exchanges in the world and
highlighted some regulations and trading rules to help you appreciate their peculiarities. It’s
good to study them if you intend to trade futures.

References
https://therobusttrader.com/largest-futures-exchanges-in-the-world/
https://www.cmegroup.com/education/files/a-traders-guide-to-futures.pdf
https://www.nseindia.com/regulation
https://www.nseindia.com/products-services/equity-derivatives-individual-securities
https://www.trusted-broker-reviews.com/vi/chung-khoan-san-giao-dich-eurex/#support-and-
customer-service
https://www.eurex.com/ex-en/trade/trading-hours/trading-phases
https://www.eurex.com/ex-en/trade/trading-hours/thx