Futures Trading 101

Posts Tagged ‘futures brokers’

Finding futures brokers is not particularly difficult, unless you live in a country where there is no major commodities exchange accessible to you.  The matter of fact is, the exchange that you need to contact depends on what underlying asset you are looking to set a futures contract on.

First, let us take a look at what items are being traded on the markets.

• Foreign Exchange Market.  Involves currencies from all over the world, though in reality the bulk of trading revolves around just a few currencies.
• Money Market.  Trading on assets involved in short-term borrowing and lending, such as commercial paper, Treasury bills, certificates of deposit, and so on.
• Bond Market.  For trading on debt securities, usually in the form of bonds.
• Equity Market.  For futures contracts that are at least partially derived from stocks.
• Commodities Market.  Various goods are bought and sold in this market, and futures contracts are quite common on these.  Everything from oil to poultry to cotton can be traded.  Even environmental commodities like carbon offsets, Renewable Energy certificates, and energy efficiency credits are traded.

The exchanges that perform futures trading are:

• CME (Chicago Mercantile Exchange) Group.  Trading on currencies, Interest Rates, US Bonds, Corn, Soybeans, Soy Products, Wheat, Pork, Corn, Cattle, Butter, Milk, Indices (based on the Dow Jones Industrial Average, NASDAQ, S&P, and others), Gold, and Silver.
• Dubai Mercantile Exchange.
• IntercontinentalExchange (ICE Futures Europe).  Energy trading, specifically crude oil, heating oil, natural gas, and unleaded gas.
• IntercontinentalExchange (ICE Futures U.S.).  Cocoa, coffee, cotton, orange juice, sugar.
• KRX (Korea Exchange).
• London Metal Exchange.  Copper, Aluminium, Lead, Zinc, Nickel, Tin, and Steel.
• New York Mercantile Exchange
• NYSE (New York Stock Exchange) Euronext.  Trading on grains, meats, and index futures (EURIBOR, FTSE 100, CAC 40, AEX).
• OSE (Osaka Securities Exchange).  Nikkei and RNP futures.
• ROFEX (Rosario Futures Exchange, in Argentina)
• SAFEX (South African Futures Exchange).
• SGX (Singapore Exchange).
• Sydney Futures Exchange
• TFX (Tokyo Financial Exchange).  Euroyen futures, OverNight CallRate futures, SpotNext RepoRate futures.
• TOCOM (Tokyo Commodity Exchange)
• TSE (Tokyo Stock Exchange).  JGB and TOPIX futures.

For more complete lists of tradable commodities, visit the websites of the individual exchanges.

In order to set up futures contracts, you need to find futures brokers.  These brokers act both as intermediaries and counterparties – kind of like impartial referees adjudging the two contracted parties.  You can usually find these brokers in or around these exchanges, or at least find their contact information there.

Brokers can get you in touch with interested parties, whether you come as a buyer or a seller.  A good broker will also help you avoid getting the worst out of a deal, though majority of the responsibility lies with you.