Futures Exchanges
Trade in futures contracts Futures Exchanges is based on the following rules:
the seller of the contract is always played on the lowest price of the contract, i.e. he will profit only in case, if he buys the contract at a lower price than it sold;
the buyer of the contract always plays on increases in the price of the contract, i.e. he will profit only in case, if he sells a contract at a higher price than he bought.
In turn, financial calculations in futures trading come from two main balance equations:
if wins contract buyer, then be sure to loses the seller of the contract, and Vice versa;
the amount of the winnings from one of the members of Clearing chamber and their clients) is equal to the sum of losses from other members of the Clearing house (and their clients).
Stages of calculations on the purchase and sale of futures contracts Futures Exchanges include day (moment) the conclusion of the contract; the period during which the contract remains åçàêðûòûì or unfulfilled, and the day (moment) closing of the contract or its performance. Let's consider what financial procedures are in the described stages.
I stage
the day of conclusion of the contract (open position);
registration of the contract in Settlement chamber;
payment of a guarantee fee (initial margin) for the contract;
the payment of the fee for registration of the contract.
II stage
day (period) to maintain open positions;
settlements on a variable margin;
calculations based on the initial margin, if a Clearinghouse changed their rates.
III stage
the closing day of the contract by performing the reverse, or offset, the transaction or the date of execution of the contract (the day of expiration of the term of his action);
profit (loss) in a closed position;
the payment of the fee for registration of the inverse of the transaction;
calculation of the amount of money paid to the Clearing house of the member of Clearing chamber (the client) or paid by the Clearing house of the member of Clearing chamber (the client);
transfer (receipt) of the exchange the asset underlying the futures contract.
As can be seen from the above stages, the functions of the Clearing house are the following:
calculation of the initial margin;
the determination of the amounts of profits and losses on closed positions;
accounting of open positions and calculations variable margin.
The rate of initial margin is typically a few percent (1-10%) and varies depending on the type of futures contract and the current market environment Futures Exchanges. Usually the rate of the initial margin corresponds to the maximum possible change in the market price of the futures contract for one of the trading day.
Initial margin - the amount of money, which lists the member of the Clearing house from his account to the account of the Clearing-house for each open position.
The variable margin - the amount of money, which lists the member of the Clearing house from his account to the account of the Clearing house (or in the account of the amount of initial margin) in the presence of an open position in case, if the price of the futures contract changes, unfavorable for his direction.
