# 微积分网课代修|导数代写Derivatives theory代考|QF430 FUTURES EXCHANGES AND TRADERS

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## 微积分网课代修|AP微积分代写AP calculus辅导|FUTURES EXCHANGES AND TRADERS

In some futures markets, traders meet face-to-face in a pit, such as on the International Money Market (IMM) in Chicago and on the trading floor of the Chicago Board of Trade (CBOT) and, until 1999, on the London International Financial Futures Exchange (LIFFE), which has now merged and become the electronic trading platform, ‘NYSE-Euronext’. Traders in the pit indicate prices and deal sizes using hand signals and the system is known as open outcry.

All exchanges settle trades using computers but now more exchanges are moving away from open outcry and actual trades are conducted electronically. Some of these systems are ‘order driven’ whereby the buyers and sellers are ‘matched’ via a computer as, for example, on NYSE-Euronext. Futures trading is ‘global’. For example GLOBEX (which is owned by the CBOT and Reuters plc) provides an after-hours electronic futures trading system – ‘after-hours’ being from a US prospective. Note, however, that GLOBEX does not automatically match buyers and sellers and then automate the trades. It merely provides price information to traders.

On the IMM, floor traders can be either commission brokers called futures commission merchants (FCM) or ‘locals’. FCMs merely act as middlemen, buying and selling on behalf of clients and they make profits from their commission charges. Locals trade on their own account and hold a book (i.e. take positions in various contracts). Dual trading is also allowed.

## 微积分网课代修|AP微积分代写AP calculus辅导|Futures Trading

Public orders must be placed through a broker who will then contact a floor broker on the exchange. Trades are monitored by the clearing house (e.g. CME Clearing) and all floor traders must have an account with a member clearing firm. If your floor broker purchases a futures contract on your behalf, then you will have to pay the initial margin to the floor broker, who will then pay this into her clearing firm $\mathrm{ABC}$. The seller may be a local or a broker acting on behalf of a customer ‘off the floor’. The seller of the futures also deposits the initial margin with her clearing firm XYZ. Both clearing firms ABC and XYZ each aggregate up their net positions from their customers and place a margin payment with the clearing house, who then guarantees both sides of the contract.