Types of exchange transactions (varieties): features and features (mechanism) of the conclusion. Futures exchange transaction linked
The subject of a futures transaction is a futures contract - a document that defines the rights and obligations to receive or transfer property (including money, currency values and securities) or information, indicating the procedure for such receipt or transfer. However, it is not a security). A futures contract cannot simply be canceled, or, in exchange terminology, liquidated. If it is concluded, it can be liquidated either by concluding an opposite transaction with an equal amount of goods, or by delivering the stipulated goods within the time period stipulated by the contract.
The rules of trading under futures contracts open up opportunities: the seller retains the right to choose - to deliver products or buy out a futures contract before the delivery time of the goods; buyer - to accept the goods or resell the fixed-term contract before the delivery date.
The main features of futures trading are:
the fictitious nature of transactions, in which the sale is made, but the exchange of goods is almost completely absent. The purpose of transactions is not the use value, but the exchange value of the commodity;
predominantly indirect connection with the market for a real product (through hedging, and not through the supply of goods);
complete unification of the use value of a commodity, potentially represented by an exchange contract, directly equated to money and exchanged for them at any moment. (In the case of delivery under a futures contract, the seller has the right to deliver goods of any quality and origin within the limits established by the rules of the exchange);
complete unification of the conditions regarding the quantity of goods allowed for delivery, the place and timing of delivery;
the anonymity of transactions and the substitutability of counterparties for them, since they are not concluded between specific sellers and buyers, but between them or even between their brokers and the clearing house - a special organization at the exchange that assumes the role of a guarantor of the fulfillment of obligations of the parties when buying or selling them exchange contracts. At the same time, the exchange itself does not act as one of the parties in the contract or on the side of one of the partners. Klevansky V. Futures contracts: the mechanism of bidding. Economics and Life, 1994, No. 27, p.7.
The subject of a futures transaction is a futures contract - a document that defines the rights and obligations to receive or transfer property (including money, currency values and securities) or information, indicating the procedure for such receipt or transfer. However, it is not a security.
In futures transactions, the full freedom of the parties is preserved only in relation to the price, and limited - in relation to the choice of the delivery time of the goods. All other conditions are strictly regulated and do not depend on the will of the parties involved in the transaction. In this regard, the futures exchange is sometimes called the “price market” (i.e., exchange values), in contrast to commodity markets (the totality and unity of use and exchange values), where the buyer and seller can agree on almost any terms of the contract. And the evolution from transactions with real goods to transactions with fictitious ones is compared with the progress from the circulation of money with real value to paper money circulation.
Some of the benefits of futures contracts include:
- 1) improved planning;
- 2) benefit;
- 3) reliability;
- 4) confidentiality;
- 5) speed;
- 6) flexibility;
- 7) liquidity;
arbitrage opportunity.
1. Better planning.
Consider the example of a country that produces a product for export. Let's say cocoa. How will she plan her marketing strategy? She can:
- a) find a buyer every month or every quarter when the product is ready;
- b) sell the entire quantity of the product to the first buyer who is announced, at the price he will offer;
- c) turn to the "futures" markets, using the fixed price mechanism provided by the exchange, and sell your product at the most convenient time to the best buyer.
Simplicity and attractiveness futures contracts It also consists in the fact that the cocoa manufacturer, by entering into such a trade and protecting himself from the risk of incurring losses on his product, enables the chocolate manufacturer to purchase this cocoa, with delivery in the future and, thus, insure himself against interruptions in the supply of raw materials.
2. Benefit.
Any trading operation requires the presence of trading partners. But it's not always easy to find right moment suitable buyer and seller.
"Future" markets allow you to avoid this unpleasant situation and make buying and selling without a specifically named partner. Moreover, "futures" markets allow you to get or pay the best price at the moment. With a futures contract, both the seller and the buyer have time to buy or sell the commodity in the future for the best possible benefit for themselves, without committing themselves to a specific partner.
3. Reliability.
Most exchanges have clearing houses through which sellers and buyers make all settlement operations. This is a very important point, although the exchange is not a direct participant in the trading operation, it fixes and confirms any purchase and sale.
When a commodity is bought and sold on the stock exchange, the clearing house has the appropriate security for this transaction from the seller and the buyer. A clearing house contract is in many ways more reliable than a contract with any particular partner, including government agencies.
4. Privacy.
Another important feature of "future" markets is anonymity, if it is desirable for the seller or buyer.
For many of the largest manufacturers and buyers, whose sales and purchases have a powerful impact on the global market, the ability to sell or buy a product in confidence is very important. In such cases, exchange contracts are indispensable.
5. Speed.
Most exchanges, especially those dealing in commodities, can allow contracts and commodities to be sold quickly without price changes. This makes trading very fast.
How does this happen? For example, someone wants to buy 10,000 tons of sugar. He can do this by buying 200 futures contracts at 50t per contract. Such a transaction can be completed in a few minutes. Further, all 200 contracts are guaranteed, and now the buyer has time to negotiate for better terms.
6. Flexibility.
Futures contracts have a huge potential to carry out countless options for operations with their help. After all, both the seller and the buyer have the opportunity to both deliver (accept) the real goods and resell the exchange contract before the delivery date, which opens up prospects for a wide and diverse variability.
7. Liquidity.
Generally speaking, "futures" markets have a huge potential for a variety of transactions associated with the rapid "overflow" of capital and goods, that is, liquidity. One of the indicators of liquidity is the total volume of trading on exchanges. The volume of trading on futures exchanges with commodities alone exceeds 2.5 trillion. Doll.
8. Possibility of arbitrage operations.
Thanks to the flexibility of the market and the well-defined standards of these contracts, there are ample opportunities. They allow manufacturers, buyers, stock traders to conduct business with the necessary flexibility of operations and the maneuverability of firms' policies in changing market conditions. Alekseev Yu.I. Stocks and bods market. Moscow, 1992. S.-128-130
To maximize the speed of the conclusion of futures transactions, facilitate the liquidation of contracts and simplify the settlement of them, there are completely standardized forms of futures contracts. Each futures contract contains the quantity of goods established by the rules of the exchange
When concluding a futures contract, only two main conditions are agreed upon: price and position (delivery time). All other conditions are standard and determined by the exchange rules (except for contracts for non-ferrous metals, which also indicate the amount of goods - most often 100 tons).
The delivery time for a futures contract is set by determining the duration of the position. All futures contracts, unlike contracts for real goods, must be immediately registered with the clearing house located at each exchange. After the registration of the futures contract, the members of the exchange - the seller and the buyer - no longer act in relation to each other as parties who have signed the contract. They only deal with the clearing house of the exchange. Each party may unilaterally liquidate the futures contract at any time by entering into an offset transaction for the same amount of goods. The liquidation of a futures contract involves paying the clearing house or receiving from it the difference between the price of the contract on the day of its conclusion and the current price.
After the conclusion of the futures contract and its registration in the clearing house, the seller and the buyer interact only with the clearing house. At the same time, each of them has the right to liquidate this contract unilaterally by concluding an offset transaction on any day before the delivery date. The goods are paid for at their market price at the time of liquidation of the transaction. If the seller intends to deliver the real goods, then he is obliged to notify the clearing house about this no later than 5-7 days before the time of delivery by sending her a notice, called a “notice” in the USA, a “tender” - in the UK. The clearing house notifies the buyer, who (if he so desires) receives a warrant for the goods. The latter is paid by check, draft or urgent transfer.
The desire of the seller and the buyer to make a profit determines the tactics of behavior and the nature of the actions of the participants in the exchange game. The seller makes every effort to lower the price of the contract by the liquidation period. To do this, he throws out for sale a large number of contracts, which exceeds the prevailing demand and thereby knocks down prices. Sellers playing for a fall are called "bears" in exchange terminology (bear - bear; speculator playing for a fall; to bear the market - to play in the market for a fall).
A futures contract cannot simply be canceled, or, in exchange terminology, liquidated. If it is concluded, it can be liquidated either by concluding an opposite transaction with an equal amount of goods, or by delivering the stipulated goods within the time period stipulated by the contract. In the vast majority of cases, compensation takes place, and only 1-3% of contracts deliver physical goods. Delivery of goods on futures exchanges is allowed in certain months, called positions. If the futures contract has not been liquidated before its expiration by concluding an offset contract, then the seller can deliver the real product, and the buyer can accept it on the terms determined by the rules of this exchange. In this case, the seller must, no later than 5 exchange days before the onset of the urgent position, send through a broker to the clearing house of the exchange a notice (called "notice" in the USA, "tender" in England) about his desire to hand over the real goods. The next day, the Clearing House selects the buyer who bought the contract first, and sends him a notice of delivery through his broker, at the same time informing the seller's broker who the goods are intended for. The buyer, who wishes to accept the real goods under the contract, receives a warehouse receipt against a check drawn in favor of the seller. Delivery of real goods ends a limited number of futures transactions (less than 2%). Galanova V., Securities market.- M.: Finance and statistics, 1998.-p.22-23
One of the goals pursued by participants in transactions when concluding transactions on the stock exchange is insurance against possible price changes (hedging).
Such transactions are carried out both with real goods and with futures contracts, but in speculative transactions with futures contracts, no direct settlements are made between the seller and the buyer. As already noted, for each of them, the opposite side of the transaction is the clearing house of the exchange. It pays the winning party and accordingly receives from the losing party the difference between the value of the contract on the day of its conclusion and the value of the contract at the time of execution. A futures transaction can be liquidated (not necessarily at the end of the contract, but at any time) by paying the difference between the sale price of the contract and the current price at the time of its liquidation. This is called the repurchase of previously sold or the sale of previously purchased contracts. Chaldaev KM, risks in the securities market, Financial Business magazine, No. 1, 1998, p. 60-62 Speculators who play on the derivatives exchange on rising prices are called "bulls", and speculators who play on a fall are called "bears".
Futures transactions are usually used for hedging insurance against possible losses in case of changes in market prices when concluding transactions for real goods. Hedging is also used by firms that buy or sell goods for a period of time on the exchange of real goods or over the counter. Hedging operations consist in the fact that the company, selling a real product on the exchange or outside it with delivery in the future, taking into account the price level existing at the time of the transaction, simultaneously performs a reverse operation on the derivatives exchange, that is, it buys futures contracts for the same period and for the same amount of goods. A firm that buys a real commodity for delivery in the future simultaneously sells futures contracts on the exchange. After the delivery or, respectively, acceptance of the goods in a transaction with real goods, the sale or redemption of futures contracts is carried out. Thus, futures transactions insure transactions for the purchase of real goods from possible losses due to changes in market prices for this product. The principle of insurance here is based on the fact that if in a transaction one party loses as a seller of real goods, then it wins as a buyer of futures for the same amount of goods, and vice versa. Therefore, the buyer of the real good hedges with a sell, and the seller of the real good hedges with a buy.
For example, a reseller (intermediary, dealer, agent) buys large quantities of seasonal goods (grain, cocoa beans, rubber, etc.) in a certain, usually relatively short period in order to then ensure the full and timely delivery of goods according to the orders of their consumers. Without resorting to hedging, he may incur losses in the event of a subsequent possible decrease in the prices of his goods in stock. To avoid this or reduce the risk to a minimum, he, simultaneously with the purchase of real goods (whether on the exchange or directly in the producing countries), makes a hedging sale, that is, he concludes a deal on the exchange for the sale of futures contracts providing for the delivery of the same amount of goods. When a merchant resells his product to a consumer, let's say at a lower price than he bought, he suffers a loss on the transaction with the real product. But at the same time, he buys back previously sold futures contracts at a lower price, as a result of which he makes a profit. Direct consumers of exchange goods (cocoa beans, rubber, etc.) often also resort to hedging by selling when they buy these goods for a period.
A buy hedge (a "long" hedge) is the purchase of futures contracts for the purpose of insuring the selling price of an equal amount of a real commodity, which the trader does not own, for delivery in the future. The purpose of this transaction is to avoid any possible loss that may result from a price increase on an item already sold at a fixed price but not yet purchased ("uncovered"). Gerchikova I. "International Commodity Exchanges" - Questions of Economics - 1991 - N7. S.-18
In accordance with the Law of the Russian Federation of February 20, 1992 "On Commodity Exchanges and Exchange Trading", futures transactions are transactions associated with the mutual transfer of rights and obligations in relation to standard contracts for the supply of exchange goods. At the same time, such transactions, unlike transactions for real goods, do not provide for the obligation of the parties to deliver or accept real goods (within the period stipulated by the contract), but involve the purchase and sale of rights to goods (paper transactions)<*>.
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Now futures exchanges (futures exchange) prevail and operate in almost all Western countries. They allow you to sell goods faster, reduce the risk of losses from adverse price changes, accelerate the return of advanced capital in cash in an amount as close as possible to the originally advanced capital, plus the corresponding profit. In this case, there is a kind of division of functions between the bank and the exchange: the bank lends only that part commodity value, which, in his opinion, will be reimbursed regardless of market fluctuations, and the futures exchange covers the difference between a bank loan and the selling price of the goods. Futures trading provides savings in reserve funds that the entrepreneur keeps in case of unfavorable conditions.
A futures contract is a standard obligation for a certain quantity of a certain commodity, delivered by the seller to the buyer at a certain time at a certain place.<*>.
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The legal definition of commodity futures transactions is provided by Art. 8 of the Law of the Russian Federation "On Commodity Exchanges and Exchange Trading", which defines a futures as an instrument of exchange trading, and calls a transaction related to the mutual transfer of rights and obligations in relation to standard contracts for the supply of exchange goods a futures<*>. At the same time, the legislation on commodity exchanges emphasizes that the futures itself is not a contract for the sale of goods, but is an independent contract preceding the contract (standard contract) for the sale of goods.<**>.
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<**>See: Derivatives market in the system of Russian legislation // http://invest.rin.ru/cgi-in/method/search_method.pl?num=308&action=full&Pagein=2&p_n=13.
The definition of a futures contract given in the Commodity Exchange Law does not mention the existence of a "standard contract for the supply of an exchange commodity" at the time the futures contract is entered into. In the event that at the time of the conclusion of the futures contract a contract for the supply of an exchange commodity exists, obligations have arisen from it, the parties to these obligations have been determined, the essential terms of the contract of sale (for example, regarding its subject matter) are known, such a "future" contract is, according to according to G.V. Melnichuk, ordinary cession<*>.
<*>See: Melnichuk G.V. Transactions in derivatives markets // Legislation. 1999. N 10. S. 22.
However, both on the Russian and on the international exchange and over-the-counter markets, contracts of this kind are not widespread.
The definition of futures was given in clause 1.2 of the "Regulations on the conditions for making futures transactions in the securities market", approved by the Decree of the Federal Securities Commission of Russia N 33 of August 14, 1998.<*>, which was canceled by the Decree of the Federal Commission for the Securities Market of April 17, 2002 N 9 / ps<**>.
<*>See: Decree of the Federal Commission on the Securities Market of August 14, 1998 N 33 // Bulletin of the Federal Commission on the Securities Market of September 24, 1998 N 7.
<**>See: Decree of the Federal Commission for the Securities Market dated April 17, 2002 N 9 / ps "On the abolition of the Decree of the Federal Commission for the Securities Market of Russia dated August 14, 1998 N 33 "On approval of the Regulations on the conditions for making futures transactions in the securities market" // Bulletin Federal Commission for the Securities Market, 2002, N 4.
In accordance with these Regulations, a futures is a type of futures transaction, a contract for the sale and purchase of an underlying asset (an agreement to receive Money based on the change in the price of the underlying asset) with the fulfillment of obligations on a specified date in the future, the terms of which are determined by the specification of the trade organizer<*>.
<*>In this case, the underlying asset may be equity securities, stock indices, as well as other types of underlying asset permitted by the Federal Financial Markets Service.
In the Regulations on the Organization of Trading on the Securities Market, futures agreements (contracts) are understood to mean agreements that provide for the obligation of both parties to pay money depending on changes in prices for securities, as well as the obligation of one of the parties to sell the corresponding securities to the other party at a certain date in the future (hereinafter referred to as deliverable futures agreements (contracts)), or agreements (contracts) providing solely for the obligation of both parties to pay cash depending on changes in prices for securities or on changes in the values of stock indices (hereinafter referred to as settlement futures agreements (contracts ))<*>.
<*>See: Order Federal Service on Financial Markets of December 15, 2004 N 04-1245/pz-n "On Approval of the Regulations on the Organization of Trade in the Securities Market" // Bulletin of the Federal Financial Markets Service (FFMS of Russia). 2005. N 1.
There are two types of futures contracts: one that ends with the delivery of a real commodity (deliverable futures contracts) and one that is settled in cash (settled futures contracts). The month in which delivery or settlement occurs is strictly defined. For example, the June contract assumes delivery or settlement in June.
It should be noted that even in the case of a supply contract, a very small part of them actually ends in delivery. Not many speculators have the intention of making or taking delivery of a commodity. Rather, the vast majority of speculators in the futures market would prefer to take profit or loss by liquidating their positions before the delivery date. The liquidation of a position under a pre-purchased contract is carried out by its sale, and, conversely, the liquidation of a position under a pre-sold contract is carried out by its purchase. The gain or loss in both cases is determined by the difference between the purchase price and the sale price. Even hedgers usually don't deliver. Most find it more profitable to liquidate their futures positions and use the money in the cash market.
Operations with futures are made on commodity, stock or currency exchanges and are a kind of civil law transactions<*>.
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Futures transactions are made between the exchange and exchange trading participants (clearing firms), which act both for their own account and for the account of clients. Clients can be legal entities and individuals in whose interests futures transactions are concluded and executed.
In accordance with Art. 8 of the Law of the Russian Federation of February 20, 1992 N 2383-1 "On Commodity Exchanges and Exchange Trading", a futures transaction is a mutual transfer of rights and obligations in relation to standard contracts for the supply of exchange goods<*>. At the same time, such transactions, unlike transactions for real goods, do not provide for the obligation of the parties to deliver or accept real goods (within the period stipulated by the contract), but involve the purchase and sale of rights to goods (paper transactions)<**>. In other words, a futures is a purchase and sale of the terms of future contracts (these conditions may include: the price of a product, its quantity, etc.) with a fixed term (for example, December of the current year). This transaction involves the payment of a sum of money for the goods after a certain period of time after the conclusion of the transaction at the price established in the contract. In order to improve the legal regulation of exchange trading, the applicant proposes to legislate the concept of a futures contract, which can be stated as follows: a futures contract is a bilateral agreement between participants in exchange trading, according to which one party (seller) undertakes to transfer rights and obligations to the other party (buyer) in relation to future contracts for the supply of an exchange commodity, and the other party (the buyer) undertakes to pay the price specified in the contract by a certain date.
<*>See: Law of the Russian Federation of February 20, 1992 N 2383-1 "On Commodity Exchanges and Exchange Trade" // Gazette of the Congress of People's Deputies of the Russian Federation and the Supreme Council of the Russian Federation of May 7, 1992 N 18. Art. 961.
<**>See: Gerchikova I. International Commodity Exchanges // Questions of Economics. 1991. N 7. S. 5.
For example, in the spring, when it is still unknown what the harvest will be, and, consequently, the cost of the grain of the new crop on the exchange is unknown, futures contracts are concluded. These contracts fix the price at which, say, a producer of agricultural products undertakes to sell his counterparty (the person who entered into a futures contract) the grain he has grown, regardless of the prices that will be in effect on the market in the fall. It is obvious that grain prices in the fall may differ greatly from those prices that were predicted in the spring by the parties to the futures transaction. A drought may occur, which will cause the price to rise, or, conversely, due to a good harvest, the price of grain will fall.
Usually futures contracts play the role of securities (although they are not formally) and are used either for stock speculation or for insurance against unforeseen price changes.<*>.
<*>See: Mikhailova G.N., Chikisheva O.V. Futures, Variation Margin and income tax// Russian tax courier. 1999. No. 12.
The procedure for making futures transactions on stock or currency exchanges or in the stock and currency sections of commodity, commodity stock and universal exchanges is currently regulated by the Regulations on the activities of organizing trading on the securities market (approved by Order of the Federal Financial Markets Service dated December 15, 2004 Mr. N 04-1245/pz-n).
Exchanges independently develop futures contracts that are standardized in all respects except price.
An individual wishing to take part in futures transactions with futures concludes an agreement for brokerage services with an organization participating in exchange trading. In order for the broker to perform operations with futures in the interests of the client, an individual deposits a certain amount of money to the account of the broker organization. These funds are accounted separately from the broker's own funds. Part of the funds transferred by an individual, as futures transactions are concluded in his interests, are transferred to the exchange (this is called opening a position to buy (sell) futures).
The funds transferred to the exchange, which are the so-called deposit margin, are accounted for on the exchange in the context of each client by type of futures. According to the rules for making futures transactions, before the day of execution of the futures, both parties to the transaction - the seller and the buyer - are obliged to pay each other a variation margin. In the Regulations on the organization of trading in the securities market, the variation margin is the amount paid depending on changes in prices for securities<*>.
<*>See: Order of the Federal Service for Financial Markets dated December 15, 2004 N 04-1245/pz-n "On Approval of the Regulations on the Organization of Trading in the Securities Market" // Russian newspaper dated January 19, 2005 N 7.
The variation margin is paid from the cash component of the guarantee deposit fee (deposit margin).
For a futures contract concluded at the last auction, the variation margin is calculated as the product of the standard volume of the underlying asset and the sum of the difference between the quoted price of the last auction and the price at which the futures transaction was concluded.
For a futures with an open position at the beginning of trading, the variation margin is determined as the product of the standard volume and the sum of the difference in the quotation price of this futures at the last and penultimate auctions.
Deliverable futures, i.e. futures for the delivery of the underlying asset on a specified date in the future, are settled (closed) by concluding a contract for the sale of the underlying asset or, in most cases, by concluding an opposite futures transaction (i.e., a buy transaction is closed by concluding a sell transaction , and vice versa).
Settlement futures are executed by means of cash settlements depending on the change in the price of the underlying asset or by concluding an opposite transaction.
On the day of fulfillment of the terms of a futures transaction (closing of a position), the amount of income or loss on such a transaction as a whole is determined, received by each counterparty for the entire period of the transaction, that is, the total amount of positive and negative variation margin received and paid under this transaction is taken into account.
If futures transactions were made in the interests of a client - an individual, then the amount of income received, accounted for on an analytical client account, is transferred by the exchange to his account with a brokerage organization. In the event that a futures of any kind is closed with a loss, the funds remaining from the deposit margin are returned to the client's cash account with the brokerage organization.
From the foregoing, it follows that individuals, when entering into agreements for brokerage services in the futures market, can either receive income or remain a loser, even without returning the initially deposited funds.
For futures transactions, it is necessary to determine the result of the transaction as a whole. In this case, the positive variation margin must be reduced by the negative variation margin.
Futures transactions are usually used for hedging insurance against possible losses in case of changes in market prices when concluding transactions for real goods. Hedging is also used by firms that buy or sell goods for a period of time on the exchange of real goods or over the counter. Hedging operations consist in the fact that the company, selling a real product on the exchange or outside it with delivery in the future, taking into account the price level existing at the time of the transaction, simultaneously performs a reverse operation on the derivatives exchange, that is, it buys futures contracts for the same period and for the same amount of goods. A firm that buys a real commodity for delivery in the future simultaneously sells futures contracts on the exchange. After the delivery or, respectively, acceptance of the goods in a transaction with real goods, the sale or redemption of futures contracts is carried out. Thus, futures transactions insure transactions for the purchase of real goods from possible losses due to changes in market prices for this product. The principle of insurance here is based on the fact that if in a transaction one party loses as a seller of real goods, then it wins as a buyer of futures for the same amount of goods, and vice versa. Therefore, the buyer of the real good hedges with a sell, and the seller of the real good hedges with a buy.
For example, a reseller (intermediary, dealer, agent) buys large quantities of seasonal goods (grain, cocoa beans, rubber, etc.) in a certain, usually relatively short period of time in order to then ensure the full and timely delivery of goods according to the orders of their consumers . Without resorting to hedging, he may incur losses in the event of a subsequent possible decrease in the prices of his goods in stock.
To avoid this or reduce the risk to a minimum, he, simultaneously with the purchase of real goods, performs hedging by selling, that is, he concludes a deal on the exchange for the sale of futures contracts providing for the delivery of the same amount of goods. When a merchant resells his product to a consumer, let's say at a lower price than he bought, he suffers a loss on the transaction with the real product. But at the same time, he buys back previously sold futures contracts at a lower price, as a result of which he makes a profit. Hedging by selling is often used by direct consumers of commodities when they buy these commodities for a period.
A buy hedge (a "long" hedge) is the purchase of futures contracts for the purpose of insuring the selling price of an equal amount of a real commodity, which the trader does not own, for delivery in the future. The purpose of this transaction is to avoid any potential loss that may result from a price increase on an item already sold at a fixed price but not yet purchased ("uncovered")<*>.
<*>See: Gerchikova I. International Commodity Exchanges // Questions of Economics. 1991. No. 7. S. 18.
As E.P. Gubin and P.G. Lakhno, in a futures contract, the degree of standardization is higher than in an exchange contract for a real product<*>. Thus, the quantity of each batch of goods and the method of setting the price (only at the time of the conclusion of the transaction), discounts and surcharges for the quantity and grade of goods, terms of delivery (as a rule, from the warehouse of the exchange), terms and conditions of payment, container and packaging, labeling are strictly fixed. etc. In the futures contract, the only variable remains - the price, in respect of which the parties agree. This, plus the structure of the exchange transaction, which allows the replacement of persons in the obligation, makes it possible to widely use transactions with futures contracts to set prices or insure the risks associated with their change. A feature of the structure of an exchange futures transaction is that no futures contract can be recognized and implemented by the exchange if one of the parties to the transaction is not a member of the exchange. The fact is that a member of the exchange sends his contracts to the settlement fee, which, after their approval, becomes a party to the contract instead of a member of the exchange, i.e. an entity that bears all obligations under the contract and performs the function of the seller in relation to the buyer and the buyer in relation to the seller.
<*>See: Entrepreneurial Law of the Russian Federation / Ed. E.P. Gubina, P.G. Lakhno // Lawyer. 2003.
However, the clearing house is not liable to the buyer and seller under the contract after the delivery notice has been issued and accepted.
Consider whether futures can be considered securities. This is due to the fact that the legislation of some Western countries equates futures transactions with securities (it should be noted that this applies to derivative securities).
So, according to Art. 143 of the Civil Code of the Russian Federation, securities can be classified as securities, which, firstly, are directly named as such in the Code, and secondly, are classified as securities by securities laws or in the manner prescribed by them.
Among the securities listed in Art. 143 of the Civil Code of the Russian Federation, there are no futures. And in accordance with Art. 2 of the Federal Law "On the Securities Market", any security that simultaneously meets the following requirements is recognized as an equity security:
- has property rights (although the Federal Law adds "and non-property", the latter should be omitted, since this interpretation of a security contradicts Article 142 of the Civil Code of the Russian Federation);
- placed by issues;
- all securities within one issue have equal volumes and terms of exercising the rights certified by the security, regardless of the time of purchase of the security<*>.
Let's consider whether the futures has the listed characteristics and whether it can be recognized as a security.
The execution of a futures transaction means that each of the parties receives a property right - the right to receive a potential variation margin if the price of a unit of the underlying asset at a specified point in time turns out to be higher or lower than its price fixed when making a futures transaction<*>.
<*>See: Derivatives market in the system of Russian legislation // http://invest.rin.ru/cgi-bin/method/search_method.pl?num=308&action=full&pagein=2&p_n=13.
The second condition for recognizing a futures as a security is also met, since the organizer of trading notifies the trading participants in advance of all the necessary conditions under which transactions will be made with a certain underlying asset, including:
- unit of the underlying asset;
- the volume of the underlying asset;
- settlement price (cost per unit of the underlying asset), its name, for example, "cut-off price";
- exchange fee for one contract;
- the maturity date of the securities, if they are the underlying asset;
- the date of the first trading session for this underlying asset;
- date (or term) of execution (determination of the settlement price of execution);
- order of execution (transfer of variation margin at the same time or within a certain period of time).
According to M. Agarkov, a legal relationship cannot be expressed in a security, in which both parties mutually acquire rights and obligations, since the party that does not own the paper cannot exercise its right<*>.
<*>See: Agarkov M.M. Obligation under Soviet civil law. M., 1940. S. 114.
Thus, neither the creditor nor the debtor of the security can be determined at the time of issuing the futures.
Meanwhile, Art. 2 of the Federal Law "On the Securities Market" establishes the concept of "issuer" as a legal entity or executive authorities or bodies local government, bearing on their own behalf obligations to the owners of securities to exercise the rights secured by them.
According to paragraph 1 of Art. 142 of the Civil Code of the Russian Federation, a security is a document certifying property rights. And since there is a right, there must be a corresponding obligation, otherwise there can be no obligation (based on its essence, a futures could claim the status of only a liability security). Consequently, the indication of the debtor (issuer) is a mandatory attribute of the security, the absence of which entails its nullity in accordance with the rule of paragraph 2 of Art. 144 of the Civil Code of the Russian Federation.
There is another argument against recognizing futures as a security. "Placement by issues" imposes some restrictions on the number of securities. In the process of exchange trading, an arbitrarily many transactions with futures can be made if there are sufficient funds or other property that ensures the fulfillment by trading participants of the obligations assumed and assumed as a result of making futures transactions. Although theoretically there is a quantitative limit on futures transactions both for each of the trading participants and in general for a particular trading session or trading day, however, according to the definition contained in the Federal Law "On the Securities Market", the placement of emissive securities means their alienation by the issuer - the first owner by concluding civil law transactions. The uncertainty of the issuer, established earlier, makes it impossible to apply the said provision of the Federal Law in practice.
And, finally, the third fundamental characteristic of an emissive security is absolutely inapplicable, since each futures contract provides the winning participants with a different amount of property rights. Since the participants in a specific futures contract fix the settlement price on their own, the size of the variation margin for each specific futures contract will be different.
The recognition of a futures as a security would lead to the impossibility of carrying out futures transactions for those securities, the results of the issue of which have not yet been registered, otherwise such actions would lead to a violation of the rule of Art. 19 of the Federal Law "On the Securities Market", which establishes a ban on the issue of securities that are derivatives of equity securities, the results of the issue of which have not been registered<*>.
<*>See: letter of the RF SCAP dated July 30, 1996 N 16-151/AK "On forward, futures and option exchange transactions" // Express-Law. 1996. No. 38.
The foregoing allows us to conclude that futures transactions in the form in which they currently exist do not apply to securities.
Widerulerapplying toFORTSfuturesAndoptionsattractsAttentiontothismarketmanynewpotentialparticipants. After all, it is hereatthemeatpossibilitytradeinaccessibleon other exchangesassets: indexRTS, gold, oil, interestrates. However, these instruments are somewhat more complicated than stocks and bonds, but also potentially more profitable.Let's start with a simpler one - futures.
For most people, even those who have been working in the financial market for a long time, the words futures, options, derivatives are associated with something extremely distant, incomprehensible and little connected with their daily activities. Meanwhile, almost everyone, one way or another, came across derivative instruments.
The simplest example: many of us are accustomed to following the dynamics of the world oil market at the prices of benchmark grades - Brent or WTI (Light Crude). But not everyone knows that when they talk about the growth / fall of quotations for raw materials in London or New York, then we are talking on oil futures prices.
Forwhatneededfutures
The meaning of the futures is extremely simple - two parties enter into a deal (contract) on the stock exchange, agreeing on the purchase and sale of a certain product after a certain period of time at an agreed fixed price. Such a commodity is called the underlying asset. At the same time, the main parameter of the futures contract, which the parties agree on, is precisely the price of its execution. When entering into a transaction, market participants can pursue one of two goals.
For some, the goal is to determine a mutually acceptable price at which the actual delivery of the underlying asset will be carried out on the date of the contract. By agreeing on a price in advance, the parties insure themselves against a possible adverse change in the market price by the specified date. In this case, none of the participants seeks to profit from the futures transaction itself, but is interested in its execution in such a way that pre-planned indicators are observed. Obviously, when concluding futures contracts, such logic is followed, for example, by manufacturing enterprises that buy or sell commodities and energy resources.
For another type of derivatives market participants, the goal is to earn on the movement of the price of the underlying asset over the period from the moment a transaction is concluded to its closing. The player who managed to predict the price correctly, on the day of the execution of the futures contract, gets the opportunity to buy or sell the underlying asset at a better price, which means making a speculative profit. It is obvious that the other side of the transaction will be forced to make it at a price that is unfavorable for itself and, accordingly, will incur losses.
It is clear that in the event of an unfavorable development of events for one of the participants, he may be tempted to evade the fulfillment of obligations. This is unacceptable for a more successful player, since his profit is formed precisely from the funds paid to the losers. Since at the time of the conclusion of the futures contract, both participants expect to win, they are simultaneously interested in insuring the transaction against the dishonest behavior of the losing party.
The issue of counterparty risks is directly faced not only by speculators, but also by companies that insure (hedge) against unfavorable price changes. In principle, it would be enough for representatives of real business to seal the contract with a strong handshake and the seal of the company. Such a bilateral OTC transaction is called a forward contract. However, the greed of one of the parties may turn out to be irresistible: why suffer a loss under the contract if your forecast was not justified and, for example, you could sell the goods at a higher price than stipulated in the forward. In this case, the second party to the transaction will have to initiate lengthy litigation.
ClearingCentre
The best solution to the problem of guarantees is to involve an independent arbitrator, whose main role is to ensure that the parties fulfill their obligations, no matter how great the losses of one of the participants will be. It is this function that the exchange clearing center (CC) performs in the futures market. A futures contract is concluded in the exchange system, and the clearing center ensures that on the settlement day each of the trading participants fulfills its obligations. Acting as a guarantor of the execution of contracts, the clearing center ensures that a successful speculator or hedger (insurant) receives the money earned, regardless of the behavior of the other participant in the transaction.
From a legal point of view, when making a deal on the exchange, traders do not enter into a contract with each other - for each of them, the other party to the transaction is the clearing center: for the buyer, the seller and, conversely, for the seller, the buyer (see Fig. 1). In the event of claims arising in connection with the non-execution of the futures contract by the opposite party, the exchange player will demand compensation for lost profits from the clearing center as from the central party for transactions for all market participants (there are special funds in the CC for this).
Clearing house arbitrage also protects trading participants from a theoretical stalemate in which both parties fail to fulfill their contractual obligations. De jure and de facto, when concluding a futures deal on the stock exchange, a trader is not associated with a specific counterparty. The clearing center acts as the main connecting element in the market, where an equal volume of long and short positions makes it possible to depersonalize the market for each of the participants and guarantee the fulfillment of obligations by both parties.
In addition, it is the lack of binding to a specific counterparty that allows a market participant to exit a position by entering into an offset deal with any player (and not just with the one against which the position was opened). For example, you have a buy futures open. To close a long position, you need to sell a futures contract. If you sell it to a new participant: your obligations are canceled and the clearing house remains short against the long position of the new participant. At the same time, there are no changes on the account of the participant who sold the contract at the time when you just opened the position - he has a short futures against the long position of the clearing center.
Warrantysecurity
Such a system of guarantees, of course, is beneficial to market participants, but is associated with great risks for the clearing house. After all, if the losing party refuses to pay the debt, the CC has no other way but to pay the profit to the winning trader from its own funds and start legal prosecution of the debt bidder. Such a development of events, of course, is not desirable, so the clearing house is forced to insure the corresponding risk at the time of the conclusion of the futures contract. For this purpose, the so-called collateral (GA) is charged from each of the bidders at the time of buying and selling a futures contract. In fact, it represents a security deposit that will be lost by a participant who refuses to pay the debt. For this reason, margin is also often referred to as deposit margin (the third term is initial margin, as it is charged when a position is opened).
In the event of a default by the losing party, it is at the expense of the deposit margin that the profit will be paid to the other participant in the transaction.
Margin performs another important function - determining the allowable volume of the transaction. Obviously, when concluding an agreement on the sale and purchase of the underlying asset in the future, no transfer of funds between counterparties occurs until the moment the contract is executed. However, there is a need to “control” the volume of transactions so that no unsecured obligations arise on the market. The insurance that the participants who have concluded futures contracts intend to execute them, and that they have the necessary funds and assets for this, is a guarantee, which, depending on the instrument, ranges from 2 to 30% of the contract value.
In this way, having 10 thousand rubles in the account, a trading participant will not be able to speculate in stock futures worth, for example, 1 million rubles, but will actually be able to make margin transactions with a leverage of up to 1 to 6.7 (see Table 1), which significantly exceeds its investment opportunities in the stock market. However, an increase in financial leverage naturally entails a proportional increase in risks, which must be clearly understood. It should also be noted that the minimum base rate of GO can be increased by the decision of the exchange, for example, with an increase in the volatility of the futures.
Table.1 Warranty in FORTS
(minimum basic size of GO as a percentage of the value of the futures contract and the corresponding leverage) |
||||
underlying asset |
Pre-crisis parameters* |
Current parameters in a crisis |
||
Stock market section |
||||
RTS Index | ||||
Industry index for oil and gas | ||||
Industry indices for telecommunications and trade and consumer goods | ||||
Ordinary shares of OAO Gazprom, NK Lukoil, OAO Sebrbank of Russia | ||||
OAO OGK-3, OAO OGK-4, OAO OGK-5 | ||||
Ordinary shares of MMC Norilsk Nickel, OAO NK Rosneft, OAO Surgutneftegaz, OAO Bank VTB | ||||
Preferred shares of OAO Transneft, OAO Sberbank of Russia | ||||
Ordinary shares of OJSC MTS, OJSC NOVATEK, OJSC Polyus Gold, OJSC Uralsvyazinform, OJSC RusHydro, OJSC Tatneft, OJSC Severstal, OJSC Rostelecom | ||||
Shares of companies in the electric power industry | ||||
Federal loan bonds OFZ-PD issue No. 25061 | ||||
Federal loan bonds OFZ-PD issue No. 26199 | ||||
Federal loan bonds of issue OFZ-AD No. 46018 | ||||
Federal loan bonds OFZ-AD issue No. 46020 | ||||
Federal loan bonds OFZ-AD issue No. 46021 | ||||
Bonds of OAO Gazprom, OAO FGC UES, OAO Russian Railways, as well as bonds of the City bonded (internal) loan of Moscow and Moscow regional internal bonded loans | ||||
Commodity Market Section |
||||
Gold (refined bullion), sugar | ||||
Silver (refined bullion), diesel fuel, platinum (refined bullion), palladium (refined bullion) | ||||
URALS oil, BRENT oil | ||||
Section money market |
||||
US dollar to ruble exchange rate, euro to ruble exchange rate, euro to US dollar exchange rate | ||||
Average rate of interbank overnight loan MosIBOR*, | ||||
MosPrime 3-month loan rate* |
* For futures on interest rates other methods for determining the size of the leverage are used (a separate article will be devoted to these tools in the future).
variationalmargin, orhowformedprofit
Own risk management is the prerogative of the bidder. However, the risks associated with the fulfillment of its obligations to other traders, as mentioned above, are monitored by the clearing center. It is obvious that the size of the guarantee deposited by the player when concluding a futures contract is directly related to the volatility of the underlying instrument. So, when trading stock futures, you will have to make a security deposit of 15-20% of the contract value.
When entering into futures linked to significantly less volatile assets (for example, government bonds, the US dollar or short-term interest rates), the required amount of collateral may be 2-4% of the contract value. However, the problem is that the price of each futures contract is constantly changing, just like any other exchange instrument. As a result, the clearing center of the exchange faces the task of maintaining the collateral deposited by the participants in the transaction in an amount corresponding to the risk of open positions. This correspondence is achieved by the clearing house by daily calculation of the so-called variation margin.
The variation margin is defined as the difference between the settlement price of a futures contract in the current trading session and its settlement price the previous day. It is accrued to those whose position turned out to be profitable today, and debited from the accounts of those whose forecast did not come true. With the help of this margin fund, one of the participants in the transaction extracts speculative profit even before the contract expires (and, by the way, has the right to use it at its discretion at this time, for example, to open new positions). The other participant bears financial losses. And if it turns out that there are not enough free funds on his account to cover the loss (the participant guaranteed the futures contract in the amount of his entire account), the variation margin is deducted from the guarantee margin. In this case, the exchange clearing center, in order to restore the required amount of the security deposit, will require additional money (make a margin call).
In the above example (see How the variation margin flows ..) with futures for the shares of MMC Norilsk Nickel, both participants entered into a deal, blocking 100% of cash in the GO for these purposes. This is a simplified and uncomfortable situation for both parties, since the transfer of the variation margin will oblige one of them to urgently replenish the account the very next day. For this reason, most players manage their portfolios in such a way that they have enough free cash to at least compensate for random fluctuations in the variation margin.
Execution (supply) Andearlyoutputfrompositions
According to the method of execution, futures are divided into two types - delivery and settlement. When executing supply contracts, each of the participants must have the appropriate resources. The clearing center determines pairs of buyers and sellers who must conduct transactions with the underlying asset between themselves. If the buyer does not have all the required amount of funds or the seller does not have a sufficient amount of the underlying asset, the clearing center has the right to fine the participant who refused to execute the futures for the amount of collateral. This penalty passes to the opposite party as compensation for the fact that the contract is not performed.
For deliverable futures in FORTS five days before their execution, the GI increases by 1.5 times to make the alternative of not entering the delivery completely unprofitable compared to the possible losses from the price movement in an unfavorable direction. For example, for stock futures, margin increases from 15% to 22.5%. These contracts are unlikely to accumulate such a huge loss in one trading day.
Therefore, players who are not interested in real delivery often prefer to get rid of obligations under the contract before the deadline for its execution. To do this, it is enough to make a so-called offset deal, within the framework of which a contract is concluded, equal in volume to the one concluded earlier, but opposite to it in the direction of the position. In this way, most participants in the futures market close positions. For example, on the New York Mercantile Exchange (NYMEX), no more than 1% of the average volume of open positions on futures for WTI oil (Light Crude) reaches delivery.
With settled futures, for which the delivery of the underlying asset does not occur, everything is much simpler. They are executed through financial settlements - as well as during the life of the contract, bidders are charged a variation margin. Therefore, under such contracts, the collateral is not increased on the eve of execution. The only difference from the usual procedure for calculating the variation margin is that the final settlement price is determined based not on the current value of the futures, but on the price of the cash (spot) market. For example, for futures on the RTS index, this is the average value of the index for the last hour of trading on the last trading day for a specific futures, for futures on gold and silver, the value of the London Fixing (London Fixing is one of the main benchmarks for the entire world market of precious metals).
All futures for shares and bonds circulating in FORTS are deliverable. Contracts for stock indexes and interest rates, which by their nature cannot be executed by delivery, of course, are settlement contracts. Commodity asset futures are both settled (for gold, silver, Urals and Brent oil) and deliverable - a futures for diesel fuel with delivery in Moscow, for sugar.
Pricingfutures
Futures prices follow the price of the underlying asset on the spot market. Let's consider this issue using the example of contracts for Gazprom shares (the volume of one futures contract is 100 shares). As can be seen in Figure 2, the futures price almost always exceeds the spot price by a certain amount, which is usually called the basis. This is due to the fact that in the formula for calculating the fair price of the futures per share big role plays the risk-free interest rate:
F=N*S*(1+r1) - N*div*(1+r2),
where N is the volume of the futures contract (number of shares), F is the price of the futures; S is the spot price of the share; r1 – interest rate for the period from the date of conclusion of a transaction under a futures contract until its execution; div is the amount of dividends on the underlying share; r2 – interest rate for the period from the date of closing the register of shareholders (“cut-off”) until the execution of the futures contract.
The formula is given taking into account the impact of dividend payments. However, if dividends are not paid during the circulation period of the futures, then they do not need to be taken into account when determining the price. Usually dividends are taken into account only for June contracts, but in Lately due to the low dividend yield of shares of Russian issuers, the impact of these payments on the value of futures is extremely low. And the role of the risk-free interest rate, on the contrary, remains very large. As you can see on the chart, the size of the basis gradually decreases as the date of the futures expiration approaches. This is explained by the fact that the basis depends on the interest rate and the period until the end of the contract circulation - every day the value of the interest rate decreases. And by the day of execution, the prices of the futures and the underlying asset, as a rule, converge.
"Fair" prices in the futures market are set under the action of participants conducting arbitrage operations (usually large banks and investment companies act in their role). For example, if the price of a futures differs from the price of a stock by more than the risk-free rate, arbitrageurs will sell futures contracts and buy shares in the spot market. To quickly carry out the operation, the bank will need a loan to purchase securities (it will be paid at the expense of income from arbitrage transactions - that is why the interest rate is included in the futures price formula).
The position of the arbitrageur is neutral with respect to the direction of the market movement, since it does not depend on the exchange rate fluctuations of either the stock or the futures. On the day the contract is executed, the bank will simply deliver the purchased shares on the futures, after which it will pay off the loan. The final profit of the arbitrageur will be equal to the difference between the prices of buying shares and selling futures minus interest on the loan.
If the futures are too cheap, then a bank that has an underlying asset in its portfolio has a chance to earn a risk-free profit. He just needs to sell shares and buy futures instead. The arbitrageur will place the freed funds (price of sold shares minus collateral) on the interbank lending market at a risk-free interest rate and thereby make a profit.
However, in some situations, the basis can "get rid" of the interest rate and become either too large (contango), or vice versa go into the negative area (backwardation - if the futures price is lower than the value of the underlying asset). These imbalances occur when the market expects a strong move up or down. In such situations, the futures may outpace the underlying asset in terms of growth / fall, since the costs of operations in the derivatives market are lower than in the spot market. With a massive onslaught from only one side (either buyers or sellers), even the actions of arbitrageurs will not be enough to bring the futures price to a “fair” one.
Conclusion
Five years ago, the instrumentation of the futures and options market in Russia was limited, in fact, only to contracts for shares, so the derivatives market was forced to compete for clientele with the stock market. There were two main arguments for choosing futures: an increase in financial leverage (leverage) and a reduction in associated costs. Options have a lot more competitive advantages: the ability to profit from a sideways trend, volatility trading, maximum leverage and much more, but options also require a lot more preparation.
The situation with futures changed dramatically when there were contracts for stock indices, commodities, currencies and interest rates. They have no analogues in other segments financial market, while trading in such instruments is of interest to a large circle of participants.
Derivatives market - a segment of the financial market where futures contracts (derivatives) are concluded
Derivative instrument (derivative, from English derivative) is a financial instrument, the price of which depends on a certain underlying asset (underlying asset). The most famous are futures and options - futures contracts (contracts), which define the conditions for concluding a transaction with the underlying asset at a certain point in time in the future, such as price, volume, term and procedure for mutual settlements. Until the expiration date (circulation), futures and options themselves act as financial instruments that have their own price - they can be resold (assigned) to other market participants. The main exchange platform for derivatives in Russia is the Futures and Options market on the RTS (FORTS).
A futures contract (from the English future - future) is a standard exchange contract, according to which the parties to the transaction undertake to buy or sell the underlying asset on a certain (set by the exchange) date in the future at a price agreed upon at the time of conclusion of the contract. Usually on the exchange futures are in circulation with several expiration dates, mainly tied to the middle last month quarters: September, December, March and June. However, liquidity and the main turnover, as a rule, are concentrated in contracts with the nearest settlement date (the settlement month is indicated in the futures code).
Open position (Open Interest)
When buying or selling a futures, traders have an obligation to buy or sell the underlying asset (such as a stock) at a specified price or, as they say in professional jargon, "buy or sell positions are opened." The position remains open until the contract is executed or until the trader enters into a deal opposite to this position (Offset Deal).
Long position (Long)
A trader entering into a futures contract to buy the underlying asset (buying a futures) opens a long position. This position obliges the owner of the contract to buy an asset at a specified price at a certain point in time (on the day the futures are settled).
Short position (Short)
Occurs when concluding a futures contract for the sale of the underlying asset (when selling contracts), if no buy positions (long positions) were previously opened. With the help of futures, you can open a short position without having the underlying asset available. A trader can: a) acquire the underlying asset shortly before the execution of the futures; b) early close a short futures position with an offset transaction, fixing its financial result.
The essence of the futures on the example of gold
The jeweler will need 100 troy ounces of gold in three to four months to make jewelry (1 ounce = 31.10348 grams). Let's say it's August and one ounce is worth $650, and the jeweler is afraid of rising to $700. He has no free $65,000 to buy the precious metal in reserve. The way out is to conclude on the exchange 100 futures contracts for the purchase of gold with execution in mid-December (the volume of one contract is equal to one ounce).
Those. the jeweler will need all the necessary funds only by the end of the year. And until that time, he will only need to keep on the exchange a guarantee (collateral), the amount of which will be $6,500 - 10% of the cost of 100 futures (for more details on the guarantee, see Table 1). Who will sell futures to the jeweler? This may be a stock speculator or a gold mining company that plans to sell a batch of precious metal in December, but fears a fall in prices. For her, this is a great opportunity to pre-fix the level of income from the sale of goods not yet produced.
Fromstories
The principles of organizing futures trading that are used today on exchanges appeared in the USA in the 19th century. The Chicago Board of Trade (CBOT) was founded in 1848. At first, only real goods were traded on it, and in 1851 the first fixed-term contracts appeared. At the first stage, they were concluded according to individual conditions and were not unified. In 1865, standardized contracts were introduced on the CBOT, which became known as futures contracts. The specification of the futures specified the quantity, quality, time and place of delivery of the goods.
Initially, contracts for agricultural products were traded on the futures market - it was precisely because of the seasonality of this sector of the economy that the need arose for contracts for future deliveries. Then the principle of organizing futures trading was used for other underlying assets: metals, energy resources, currencies, securities, stock indices and interest rates.
It is worth noting that agreements on future prices for goods appeared long before modern futures: they were concluded at medieval fairs in Flanders and Champagne in the 12th century. A kind of futures existed at the beginning of the 17th century in Holland during the “tulip mania”, when entire segments of the population were obsessed with the fashion for tulips, and these flowers themselves cost a lot of money. At that time, not only tulips were traded on the exchanges, but also contracts for future harvests. At the peak of this recession-ending mania, more tulips were being sold in the form of fixed-term contracts than could grow on all of Holland's arable land.
At the beginning of the 18th century in Japan, rice coupons (cards) began to be issued and circulated on the stock exchange in Osaka - in fact, these were the first futures contracts in history. The coupons represented buyers' rights to the still-growing rice crop. The exchange had rules that determined the delivery time, variety and quantity of rice for each contract. It was rice futures, which were the subject of active speculation, that led to the emergence of the famous Japanese candlesticks and technical analysis.
Market adjustment. Market revaluation system (Mark-to-Market)
A system used on futures exchanges that aims to avoid large losses on open futures or options positions. Every day during the clearing session, the Clearing Center fixes the settlement price of futures contracts and compares it with the position opening price by the trading participant (if the position was opened during the current trading session) or with the settlement price of the previous trading session. The difference between these prices (variation margin) is deducted from the account of the participant who has a losing position and credited to the account of the participant who has a profitable position. During the clearing session, simultaneously with the transfer of the variation margin, the size of the collateral in monetary terms is also reviewed (by multiplying the settlement price by the GO rate in percent).
The market revaluation system also makes it possible to significantly simplify the procedure for calculating profit-loss on offset trades - the clearing center does not need to store information about who, when and against whom opened this or that position. It is enough to know what positions the participants had before the start of the current trading session (under a futures contract for one underlying asset with a specific settlement date, the positions of all players are taken into account at the same price - at the settlement price of the previous trading session). And for further calculations, the exchange and CC need prices and volumes of transactions of only one current trading day.
Leverage or Leverage
Shows how many times the client's own funds are less than the value of the underlying asset being bought or sold. For futures contracts, the leverage is calculated as the ratio of the size of the margin (initial margin) to the value of the contract.
In the case of futures, leverage does not arise due to the fact that the client takes a loan from a brokerage company or a bank, but due to the fact that opening a position on the exchange does not require paying 100% of the value of the underlying asset - you need to deposit a guarantee.
Margin Call or Margin Call
The requirement of the brokerage company to the client or the clearing center to the clearing member to add funds to the minimum balance to maintain an open position.
Rollover (Roll-over)
Transferring an open position to a contract with the next execution month. Allows you to use futures as a tool for holding long-term positions - both long and short. With the help of rollover, you can invest for the long term in underlying assets that are difficult to access on the cash market or are associated with higher costs (for example, gold, silver, oil).
How the variation margin flows and the margin is re-established (on the example of a futures on shares of MMC Norilsk Nickel)
Suppose two bidders entered into a futures contract for the supply of 10 shares of MMC Norilsk Nickel at a fixed price with expiration in September 2007. At the time of the agreement, the futures price was 35,000 rubles. Since the margin for this instrument is set at 20% of its value, each trader needs to have 7,000 rubles on their account to participate in the transaction (see Table 1). The Clearing Center reserves (blocks) these funds in order to guarantee the fulfillment of the obligations of the parties.
The next day, trading closed at 34,800 rubles. Thus, the price of the futures decreased, and the situation developed in a favorable way for the participant who opened a short position. The variation margin in the amount of 200 rubles, which is the difference between the settlement prices of the first and second days, is transferred to the seller, and his deposit increases to 7200 rubles. Since the funds are debited from the futures buyer's account, his deposit is reduced to 6800 rubles. From the point of view of the clearing house, this situation is unacceptable, since the collateral for each of the participants must be maintained in the amount of at least 20% of the current value of the contract, which is 6,960 rubles at a futures price of 34,800 rubles. Therefore, the clearing center will require the buyer of the futures to replenish the account in the amount of at least 160 rubles. Otherwise, his position will be forcibly closed by the broker.
On the third day, prices rise and the contract for the supply of 10 shares of MMC Norilsk Nickel costs 35,300 rubles at the end of trading. This means that the situation has changed in favor of the buyer of the futures, and he will be credited with a variation margin in the amount of 500 rubles or the difference between 35,300 and 34,800 rubles. Thus, the buyer's account will be 7300 rubles. The seller, on the contrary, will reduce his funds to 6,700 rubles, which is significantly less than the required deposit margin, which now stands at 7,060 rubles (20% of the contract price of 35,300 rubles). The clearing center will require the seller to replenish the collateral in the amount of at least 360 rubles, and the buyer, in turn, can dispose of free funds in the amount of 240 rubles (funds on the account - 7300 minus GO - 7060 rubles).
Suppose that on the fourth day both participants decide to close their positions. The transaction price was 35,200 rubles. When it is made, the variation margin is transferred for the last time: 100 rubles are debited from the buyer's account and go to the seller. At the same time, the collateral for both participants is released, and the entire amount of the remaining funds becomes free for use: they can be withdrawn from the exchange or new positions can be opened for them. The financial result of operations for the buyer was expressed in 200 rubles of profit received in the form of a variation margin (-200 + 500-100 or 35,200-35,000 rubles), and the seller suffered a loss in the same amount.
Tab. 2 Movement of funds on long and short positions in a futures contract for 1,000 shares of MMC Norilsk Nickel
Price |
Warranty (20%) |
Buyer |
Salesman |
|||||||
Account funds |
Variation margin |
Available funds |
Account funds |
Variation margin |
Available funds |
|||||
before |
after |
before |
after |
|||||||
|
| |||||||||
Delivery contract execution price
At the very beginning of the article, we stipulated that when concluding a futures contract, the parties agree in advance on the delivery price. From an economic point of view, this is how it turns out, but from the point of view of the movement of money in the accounts of market participants, the situation looks a little different. Let's consider the situation on the example of the same September futures for the shares of MMC Norilsk Nickel. Suppose, after two traders entered into a contract at the end of July at a price of 35,000 rubles, by mid-September the futures price rose to 40,000 rubles and at the close of the session on the last day of trading (September 14) stopped at this level. It is at this price that the delivery will be made - the buyer will pay the seller 40,000 rubles for 10 shares of MMC Norilsk Nickel. But during the time of holding a long position, the buyer will receive a positive variation margin in the amount of 5,000 rubles (40,000-35,000) - the clearing center will write it off from the seller's account. Therefore, the buyer will have an increase on the deposit in order to compensate for the increase in the cost of delivery compared to the price of the original transaction.
Other benefits that futures contracts offer include the following.
1. Better planning. Any manufacturer plans its marketing strategy in advance. He can find a buyer every month or quarter when the product is ready, or sell the entire quantity of the goods to the first buyer who appears at the price he offers. But a manufacturer can turn to the futures markets, using the fixed price mechanism provided by the exchange, and sell their products at the most convenient time to the best buyer. The manufacturer of products, entering into such trade and protecting himself from the risk of incurring losses on his products, enables the buyer to purchase these products with delivery in the future and, thus, insure himself against interruptions in the supply of raw materials.
2. Benefit. Any trading operation requires the presence of trading partners. But it is not always easy to find the right buyer and seller at the right time. Futures markets allow you to avoid this unpleasant situation and make buying and selling without a specifically named partner. Moreover, in the futures markets, you can get or pay the best price at the moment. With a futures contract, both the seller and the buyer have time to buy or sell the commodity in the future for the best possible profit without committing themselves to a specific partner.
3. Reliability. Most exchanges have clearing houses through which sellers and buyers conduct all settlement transactions. This is a very important point, although the exchange is not a direct participant in the trading operation, it fixes and confirms any purchase and sale. When a commodity is bought and sold on the stock exchange, the clearing house has the appropriate security for this transaction from the seller and the buyer. A clearing house contract is in many ways more reliable than a contract with any specific partner, including government agencies.
4. Privacy. Another important feature of futures markets is anonymity, if that is desired by the seller or buyer. For many of the largest manufacturers and buyers, whose sales and purchases have a powerful impact on the global market, the ability to sell or buy a product in confidence is very important. In such cases, exchange contracts are indispensable.
5. Speed. Most exchanges, especially those dealing in commodities, can afford to sell contracts and commodities quickly without price changes. This makes trading very fast. For example, someone wants to buy 10,000 tons of sugar. He can do this by buying 200 futures contracts at 50 tons per contract. Such a transaction can be completed in a few minutes. Further, all 200 contracts are guaranteed, and now the buyer has time to negotiate for more favorable terms.
6. Flexibility. Futures contracts have a huge potential to carry out countless options for operations with their help. After all, both the seller and the buyer have the opportunity both to deliver (accept) the real goods, and to resell the exchange contract before the delivery date, which opens up prospects for a wide and diverse variability.
7. Liquidity. Futures markets have a huge potential for many transactions associated with the rapid "overflow" of capital and goods, i.e. liquidity.
8. Possibility of arbitrage operations. The flexibility of the market and the well-defined standards of these contracts open up a wide range of opportunities. They allow manufacturers, buyers, exchange intermediaries to conduct business with the necessary flexibility of operations and the maneuverability of firms' policies in changing market conditions.
As already noted, a futures contract is an agreement between the seller and the buyer to deliver a certain commodity at an agreed date in the future. Each futures contract has two sides: the buyer, or the side with a long position (long), and the seller, or the side with a short position (short).
During the term of the contract, its price depends on the state of the market (natural, economic, political and other factors) for the relevant product. Buyers benefit from higher prices because they can get the product at a lower price than the current one. Sellers benefit from falling prices because they entered into a contract at a price higher than the current one.
Each futures contract has a standard, exchange-set quantity of a commodity, which is called a contract unit. The establishment of trade units in a particular contract is based on trade practice. For example, for sugar - 50 tons, rubber, copper, lead and zinc - 25 tons, coffee - 5 tons, etc. The deviation of the actual mass from the contract should not exceed 3%.
The delivery time for a futures contract is set by determining the duration of the position. For example, the standard contract of the London and other exchanges for rubber can be concluded for each separate subsequent month - a monthly position; for sugar, cocoa, copper, zinc, tin, lead - for each subsequent three-month position.
The ways in which prices are quoted for various goods are determined by customs and the physical characteristics of the goods. Thus, gold and platinum are quoted in dollars and cents per ounce. Silver is also quoted per ounce, but since it is a cheaper metal, its quotation contains additional signs: silver is quoted in dollars, cents and tenths of cents per ounce. Cereals are quoted in dollars, cents and quarter cents per bushel. Many commodities are quoted in tenths and hundredths of cents per pound (copper, aluminum, sugar, etc.).
Based on the unit of the contract and the price per unit, you can calculate the cost of the contract using the formula
Р – contract unit;
C is the price per unit.
The terms of some futures contracts on the US exchanges are given in Table. 6.1.
As can be seen from the table, futures contracts exist for many commodities and financial instruments. Some of them are very popular, while others are not. The main conditions for the success of a futures contract:
A large volume of supply and demand for a commodity, which is the basis of a futures contract;
homogeneity and interchangeability of the goods underlying the contract;
free pricing in the market of this product, without state control or monopoly;
change in product prices;
commercial interest of the contract for participants in the real market;
the difference between a futures contract and other existing contracts.
A distinctive feature of futures contracts is the presence of two ways of their settlement (liquidation): by supplying goods or concluding a reverse (offset) transaction.
Currently, about 2% of all futures transactions are completed with the actual delivery of an exchange commodity. The place of delivery of goods under a futures contract is usually the storage facilities of the corresponding type (for example, an elevator), with which the exchange has concluded supply contracts. The exchange warehouse system is a separate legal entity completely independent of the exchange, registered on the exchange and included in the list of official exchange warehouses. Such warehouses store goods coming as fulfillment of obligations under futures contracts in strict accordance with the conditions established by the exchange.
The exact description of the delivery procedure is given in the rules of each exchange, however, it is possible to highlight the points that are common to all. The delivery period usually starts two to three weeks before the expiration of the contract. It is during this period that a decision on the supply of goods should be made. The seller must determine when, during the delivery period, he will prepare a notice (notice) of his intention to make delivery and notify the clearing house of the exchange, which distributes the notices to holders of long positions. After receiving the notice by the buyer, the actual delivery is carried out after one or two days.
There are translatable and non-translatable delivery notes. When the holder of a long position receives a transferable notice of delivery - even if the contract is still trading - he must accept it. If he does not want to accept the goods, then he should close the long position, i.e., sell the futures contract and transfer the notice to a new buyer. At the same time, a limited time is given for the translation of the notice, since the goods are already in stock and ready for delivery. However, if the notice remains in the hands of the buyer beyond the time limit, then it is considered accepted and the buyer must take delivery.
If the buyer receives an untransferable notice, he can still sell the contract before the last day of trading. At the same time, the notice is not immediately transferred to the new buyer. The previous buyer must keep it until the next day and pay one day's storage costs. Since he sold his contract, he must issue a new notice and submit it to the clearing house after the close of trading on the day of the transaction. This procedure is called re-issuing a notice. Thus, the buyer has two transactions in his account: one for a futures contract, and the other for a real product. Most futures exchanges use a non-transferable notice.
The vast majority of futures contracts are liquidated by making a reverse transaction, since for sellers the terms of futures contracts are not always acceptable for real delivery, and for buyers, delivery under exchange contracts is often associated with inconvenience and additional costs and difficulties. To liquidate obligations under the contract, the participant in the transaction gives the broker an order to make a reverse transaction:
The holder of a long position gives an order to sell the same contract;
the holder of a short position gives an order to buy the contract.
The difference in the value of the contract at the time of its conclusion and at the time of liquidation is either the profit of the participant, which will go to his account, or the loss, which will be written off from his account. Calculation of profits and losses is carried out as follows. For the holder of a long position, profit occurs when prices rise, on the contrary, when prices fall, the holder of a short position profits. The difference in contract value for long and short positions is defined as the difference between the deal execution price and the current quote on the futures market, multiplied by the quantity of goods:
G \u003d (P 1 -P 0) x C,
Р 0 – transaction execution price;
Р 1 – current quote on the derivatives market;
C is the quantity of goods.
Both the profit of one participant and the loss of another can be very significant. US futures trading law requires every participant in the futures market to sign a risk notice that warns the client of the risk of futures transactions.
A transaction for the sale or purchase of a futures contract by one of the parties must be registered by the clearing house of the exchange, which is the third party to transactions for their participants - a buyer for all sellers and a seller for all buyers. Thus, buyers and sellers of futures contracts assume financial obligations not to each other, but to the clearing house.
In the futures markets, in addition to profiting from price changes, you can benefit from the spread, that is, the difference in prices when buying and selling two different futures contracts for the same commodity at the same time. Starting such an operation, the bidder takes into account the ratio of prices for two contracts to a greater extent than their absolute levels. He buys the contract, which is considered cheap, while he sells the contract, which turned out to be expensive. If the movement of prices in the market goes in the expected direction, then the exchange player profits from the change in the ratio of prices for contracts.
There are three main types of price difference transactions: intra-market, inter-market and inter-commodity.
An intra-market transaction is the simultaneous purchase of a futures contract of this type for one term and the sale of a futures contract of another term for the same commodity on the same exchange.
An intermarket transaction is the simultaneous purchase and sale of a futures contract for the same commodity for the same period on different exchanges.
An intercommodity transaction is the simultaneous purchase and sale of a futures contract of the same term in different but related futures markets.
A special type of intercommodity transactions is based on the difference in prices for a raw material commodity and its processed products. The most common are the spread on soybeans and their derivatives (crash spread) and the spread on the oil and petroleum products market (crack spread).
Futures contracts are also used in a very important exchange operation carried out on the exchange - hedging.
Content |
The hedging mechanism will be discussed in detail in the next chapter.
2.2. Futures contracts
2.2. Futures contracts on the stock exchange
2.2.1. general characteristics
Futures transaction (future) - a transaction concluded on the stock exchange for a standardized amount/amount of an underlying asset or a financial instrument of a certain quality with standardized terms of transaction execution. When a transaction is made, the seller of the contract undertakes to sell, and the buyer - to buy the underlying asset or financial instrument at a certain time in the future at a price fixed at the time of the transaction. We can say that the standardized forward on the exchange becomes a futures contract.
Unlike a forward, the exchange takes over the development of futures trading rules. The object of a futures transaction is not an exchange commodity, but an exchange contract, which provides for the sale and purchase of a strictly agreed amount of goods of a certain grade with minimum allowable deviations. The terms of the futures contract are standard. All futures contracts have a contract specification, which is a legal document that fixes the amount of the underlying asset, its quality or properties, delivery times, contract validity periods, quotation rules, etc. The presence of this document when trading futures contracts is mandatory. It enables market participants to establish a uniform understanding of the details of the contract.
Since, for the purposes of standardization, the size of contracts for a particular asset has a certain value, when concluding a futures transaction, it is indicated how many contracts of the asset it applies to.
In addition to the number of contracts, the parties to the transaction also agree on the price of the contracts.
The futures price is the price that is fixed at the conclusion of a futures contract. It reflects investors' expectations regarding the future market price (spot price) for the respective asset. The difference between the spot price and the futures price for a given asset is called the "basis". Depending on whether the futures price is higher or lower than the spot price, the basis can be positive or negative. With one price of a futures contract for a certain period, there are many cash prices for the underlying product, depending on its quality, the place of delivery. Therefore, there can be many bases for one good at one time.
(In general, futures and forward contracts are twin brothers with very
close pricing mechanism).
There are quite a few factors that affect the size of the basis, but the main ones are supply and demand for a certain period, volumes of carry-over stocks, forecast for production in the current year, supply and demand for similar products, exports and imports of goods, availability of storage facilities, transportation costs, insurance costs, seasonality and a number of other factors.
The contract specification also sets a price step (tic) - the minimum allowable fluctuation in the price of a unit of the underlying asset. Tick sizing is a purely administrative measure that avoids a huge number of price values. So, if the current quote is equal to X rubles, and the tick is 0.1 rubles, then the price fluctuation limit for the underlying asset will be from X+0.1 to X-0.1 rubles.
Futures contracts are highly liquid, there is a wide secondary market for them, since their conditions are the same for all investors. At the same time, the standard nature of the terms of the contract may be inconvenient for counterparties. For example, they require the delivery of some commodity in a different quantity, in a different place and at a different time than is provided for by the futures contract for this product. In addition, the exchange may not have a futures contract for an asset at all, in which counterparties are interested. In this regard, the conclusion of a transaction, as a rule, is not aimed at the actual delivery (reception) of an asset, but at hedging the positions of counterparties or speculation, i.e. game on the price difference.
In most cases, closing a position on futures contracts is carried out not by the delivery of an asset, but by making an offset transaction, i.e. by paying (receiving) the difference between the price indicated in the contract at the time of its conclusion and the price at which the same product or financial instrument can be purchased at the moment.
An offset trade is an opposite trade, i.e. the seller must buy and the buyer must sell the contract. The vast majority of investors' positions in futures contracts are liquidated by them in the course of contracts using offset transactions, and only less than 1% of contracts in world practice end in real delivery. Although transactions culminating in the delivery of goods account for an extremely small part of the exchange/over-the-counter turnover, the possibility of delivery of goods and the delivery itself perform an important economic function - they provide a connection between the futures market and the market for real goods.
Leverage as a result of a small investment can, even with small fluctuations, provide excess profits, but does not exclude losses. If the market develops in the opposite direction as expected, the leverage is negative. A small deposit is no longer enough to balance the difference between the original and the current rate. Therefore, there are demands for an additional contribution, or the contract is sold at a loss.
In transactions with futures contracts, the risk is unpredictable. So, when taking a long position, the risk, i.e. the amount of losses is not limited, since the price of the futures may fall to zero. But the possibility of making a profit is not limited, because the prices of the underlying asset can rise indefinitely. Similar to forward contracts, if the futures price rises further, the buyer of the contract wins and the seller loses. In contrast, when the futures price falls, the seller of the contract wins and the buyer loses.
The main difference between a forward and a futures contract (apart from the fact that a futures contract is standardized and traded in organized markets, while a forward contract is traded in the OTC market) is the need to regularly (often daily) monitor the market value of your futures position. This means that if the value of the contract goes negative, then the short position must compensate for the difference in cash. If the difference is positive, then a long position should compensate for it.
In practice, it looks like this. The Clearing House at the end of each trading day recalculates (clears) the positions of investors. The investor's position is calculated on the basis of the quoted price - the price that is determined on the basis of transactions made during this session. Each exchange itself determines the methodology for calculating the quoted price - by closing price, by arithmetic average, etc.
The loss of one person is transferred by the clearing house from his margin account to the account of the winning investor. Thus, at the end of each trading day, the parties to the contract gain or suffer losses. If the investor's margin account accumulates an amount that is greater than the lower margin level, then he can take advantage of this excess by withdrawing it from the account. At the same time, if, as a result of a loss, the amount in the account falls below the established minimum, the broker notifies him of the need to make an additional deposit. This margin is called variable or variation. Unlike the deposit, which is paid at the conclusion of each exchange contract and returned after its liquidation by the opposite operation or goes to pay for the delivery of goods, the margin is paid only when prices change unfavorably. If the investor does not deposit the required amount, then the broker liquidates his positions using an offset transaction.
A number of exchanges, especially in the US, have adopted a two-tier margin system.
Another level of margin is introduced - the maintenance margin, which is usually set at 3/4 of the initial margin. When initially taking a position, a member of the exchange must pay the initial margin in the usual way. However, margin calls can only arise when the amount on the margin account is below the maintenance margin - only in this case the member of the exchange must restore the balance to the level of the initial margin. Thus, the exchange does not insist that the amount in the margin account be maintained at the level of the initial margin, but allows this amount to fluctuate from the maintenance to the initial margin. This procedure greatly reduces the number of margin payments that exchange members have to make (especially in the case of fluctuations in futures prices), and therefore reduces organizational costs.
During times of great market volatility or when the nature of the accounts is particularly risky, the clearinghouse may require a member firm to make an additional contribution at any time during the course of the auction in order to obtain additional security in the event of adverse price changes. This requirement for additional contributions is called additional security.
In order to prevent excessive speculation in futures contracts and strengthen the system of guarantees for their execution, the exchange sets a limit for the deviation of the current day's futures price from the previous day's quoted price for each type of contract. Orders submitted at higher or lower prices will not be executed.
Also, the exchange determines the limit of the open position, i.e. the maximum amount for which a participant in exchange trading can buy or sell goods at the current market price. The value of open positions of each exchange trading participant is calculated in the clearing house by balancing mutually repayable transactions for the purchase and sale of goods.
In addition to the deposit and margin, the financial stability of the clearing houses is also ensured by the guarantee fund and the surplus fund.
The Guarantee Fund is formed from the mandatory contributions of members of the Clearing House. Its size depends on the size of the firm and the volume of its operations. The guarantee fund is kept in the bank and cannot be withdrawn without the special permission of the directors of the clearing house. A contribution to the guarantee fund may cover the losses not only of the member who made it, but also of all other members of the clearing house. The surplus fund is formed from the proceeds from the fee from each transaction and interest on the funds of the clearing house, net of operating expenses. If these funds are not enough to cover losses on the obligations of members of the clearing house, then the members of the clearing house are required to pay the missing amount from their personal funds (as a rule, this amount is not limited).
Liquidation of transactions for a period is carried out through the clearing house on the day set by the exchange for settlement of transactions for a given period by offsetting all mutual obligations of counterparties. The liquidation price for a term transaction is set by the clearing house on the basis of the quotation of the exchange day (period) preceding the day of liquidation, and in the absence of such - on the basis of the quotation published on the last day (period) preceding the day of liquidation, for which the quotation was made.
If the buyer demands to deliver a real product under a fixed-term contract and the seller does not have it, this delivery is carried out by the exchange within a certain number of days, buying the product at any price at the expense of the seller (such a condition is accepted by decision of the founders of the exchange). Also, under a futures contract, the goods can be delivered without the consent of the buyer. If the seller wishes to hand over the goods within the prescribed period before the delivery date fixed in the contract, he shall notify the clearing house of this. In the notice, he indicates the location of the goods intended for delivery, indicating its quality characteristics according to stock standards. Most exchanges have adopted a delivery procedure that has allowed their contracts to be more aligned with local real market conditions.
Fig.2.1 Classification of exchange transactions.
Exchange transactions, their types and essence.
In the process of exchange trading, exchange transactions are concluded. The terms of these transactions affect the interests of both bidders and their customers (sellers and buyers). The Law of the Russian Federation “On Commodity Exchanges and Exchange Trade” defines an exchange transaction.
"An exchange transaction is a registered exchange contract (agreement) concluded by participants in exchange trading in relation to exchange goods during exchange trading."
Each exchange has special rules:
Preparation and conclusion of transactions,
Registration of the concluded transaction and its implementation,
settlements on transactions and responsibility for their implementation,
Dispute resolution.
The concluded transaction is subject to mandatory registration on the stock exchange. According to the results of concluded transactions, information on the name of the goods, its quantity, total cost and cost per unit is subject to mandatory disclosure.
Exchange transactions can be classified according to various criteria, for example, according to the object of exchange trading, which can be presented both as a real product and rights to a product or to conclude it. Depending on the conditions and content, exchange transactions can be with real goods and without real goods. . The classification of exchange transactions is shown in Figure 2.1.
Transactions with real goods concluded for the purpose of buying and selling a specific product. They are divided into transactions with cash goods, as a result of which there is a direct purchase and sale of goods. Such deals. In exchange trading, they are called SPOT (spot) or cash (cash) As well as transactions in which the delivery of goods after a certain time, usually up to 4 months, but a transaction for a period of 6 months is also common. These are forward transactions. When dealing with cash goods the execution of the transaction begins at the time of the conclusion of the contract of sale. Therefore, the exchange game to increase or decrease prices is impossible. Accordingly, such a transaction is the most reliable. The conditions for concluding transactions can be different: according to samples and standards, based on a preliminary inspection or without inspection of the goods, according to exchange expertise, etc. Delivery is carried out within 1-5 days, while the goods may be:
· on the territory of the stock exchange in its warehouses. In this case, its owner receives a certificate (warrant) for the delivered goods, which is subsequently transferred to the buyer against payment.
· during the auction on the way;
· to be expected to arrive on the day of the exchange meeting;
be shipped or ready for shipment.
But in any case, all this must be confirmed by relevant documents.
Forward transactions Forward transactions are future purchase and sale transactions at prices valid at the time of the transaction, with the delivery of the purchased goods and their payment in the future. Unlike futures, forward transactions are concluded on the over-the-counter market, their volume is not standardized, and the participants in the transaction aim not only to insure the risks of price changes, but also expect to receive the commodity itself - the subject of the transaction. Therefore, in the forward market, there is a significant share of transactions for which a real delivery is made, and the speculative potential of these transactions is low. Forward transactions on the exchange are concluded for future goods at exchange prices at the time of the transaction, or at reference prices at the time of opening (closing) of the exchange, but can be concluded by agreement and at prices at the time of the transaction. The advantage of such transactions is to reduce the risk for the seller from lower prices, and for the buyer from higher prices and lower storage costs. The disadvantage of such transactions is the lack of guarantors and, therefore, the contract can be violated by any party and the lack of standardization of such contracts and, as a result, the duration of approvals during their conclusion. To reduce the degree of risk, forward contracts may be concluded with additional conditions such as: pledge deal (to buy or sell) and transactions with a premium (simple, double, complex, multiple.)
barter deals These are transactions of direct exchange of goods for goods without the participation of money. The proportions of the exchange are determined by the agreement of the two exchanging parties. The main reasons for concluding barter transactions are the instability of money circulation, high inflation rates, undermining confidence in monetary unit, lack of currency. Barter exchange is possible if the needs of the two participants in the transaction coincide, which is often achieved through a complex, multi-stage exchange. For stock exchanges, such transactions are uncharacteristic, as they contradict exchange trading (there is no normal trading mechanism). The number of warehouses is growing. The spread of prices for the same product increases, etc.
A conditional deal is a deal, in the course of which the broker, on the basis of a contract-order, for a fee, is obliged on behalf and at the expense of the client to sell one product and buy another. Between the sale and purchase there is a fairly large gap in time. In addition, such an order may not be executed by the broker. In this case, the broker does not receive any commission.
The successful operation of commodity exchanges is directly dependent on brokerage houses. Brokers receive income mainly not from membership on the exchange, but from their own intermediary activities. A special place in the system of exchange contracts is occupied by futures, deal options and indices.
Futures transactions are a type of forward transactions. The most widespread futures contracts are for food, energy products and securities. The conclusion of transactions for a period was the result of the development of exchange trading, since selling and buying missing, and often even goods not produced is possible only in the case of standardization of goods, the development of common criteria for evaluating the goods, acceptable to both the seller and the buyer. Such transactions, as a rule, are concluded not for the purpose of buying and selling real goods, but in order to receive income from price changes during the period of the contract, or for the purpose of insurance (hedging) transactions with real goods. Consequently, the subject of trading on the stock exchange is the price, and the terms buying and selling are conditional. To limit the number of those wishing to conclude transactions and to ensure the bidding process, both sellers and buyers are charged an advance payment of 8-15% of the transaction amount. To participate in trading, the client must open a special account on the exchange, to which he is obliged to transfer the amount necessary for trading - a constant margin is about 3%.
Futures deals are concluded through the sale and purchase of standardized contracts, in which all parameters are stipulated, for price exception. On a futures exchange, where forward contracts are often not priced, contracts are traded at the prices in effect at the time of the trade and hence the current quote becomes the fixed price for such trades. This is what allows sellers and buyers of real goods to use the mechanism of exchange operations to insure against unfavorable price fluctuations. Futures trading allows you to find a suitable seller (buyer) at a convenient time, quickly place a purchase (sale) and thereby insure against supply disruptions. In addition, exchange futures transactions provide confidentiality and anonymity, at the request of the client. Futures transactions provide ample opportunities for the exchange game, which in terms of its volume significantly exceeds futures transactions for the purpose of hedging. For example, silver futures transactions exceed its world production by more than 50 times; for soybeans - in 20 times; for cocoa beans 10 once; for copper - 8 times; natural rubber - 5 times; corn - 3 times; sugar and coffee - 2.5 times.
All transactions are processed through clearing (settlement) chamber, which is the third party to the transaction. It is to the clearing house that the participants in the transaction have obligations. Thus, the clearing house acts as a guarantor of transactions, while ensuring the anonymity and anonymity of transactions. Before the due date of the contract, any of the participants may enter into an offset (reverse) transaction with the acceptance of opposite obligations, the Client may buy (sell) the same number of contracts for the same period. And thereby free yourself from obligations, but on a reimbursable basis.
Option trade- this is a special exchange transaction containing a condition according to which one of the participants (option holder) acquires the right to buy or sell a certain value at a fixed price within a specified period of time, paying the other participant (option subscriber) a cash premium for the obligation to provide security if necessary exercising this right. The option holder can either exercise the contract, or not exercise, or sell it to another person. The concept of an option can thus be defined as the right, but not the obligation, to buy or sell a particular value (commodity or futures contract) on specific terms in exchange for the payment of a premium.
The object of an option can be either a real commodity or securities or futures contracts. According to the implementation technique, there are three types of options:
An option with the right to buy or to buy (call option);
An option with the right to sell or sell (put option);
Double option (double option, put-and-call option).
The difference in the contract value for both long and short positions is determined by multiplying the quantity of goods by the difference in the transaction execution price and its current quotation on the futures market,
G \u003d C (P l -P 0).
where P0- transaction execution price;
P 1 - current quote on the futures market;
FROM- quantity of goods.
The price at which the buyer of a put option has the right to buy a futures contract and the buyer of a put option to sell a futures contract is called the strike price.
The size of the premium, ceteris paribus, depends on the expiration date of the option: the longer it is, the higher the premium. In this case, the seller of the option is exposed to more risk, and for the buyer of the option, a longer expiration time has a greater insurance value than with a short option life.
An important concept is the term of the option, which is strictly fixed.
In the article of the senior auditor of the Control and Audit Department of the Main Directorate of the Ministry of Internal Affairs of Russia for Moscow, R.Kh. Ainetdinov considers the problem of the legal nature of futures transactions. The author analyzes the normative and doctrinal definitions of this most complex financial instrument, analyzes a large number of opinions of civilists and economists regarding certain aspects of the futures. Particular attention in the study is paid to the definition of the subject of futures transactions, a detailed study of their economic nature, goals and rules of conclusion.
In the context of the global economic crisis, any issues related to financial instruments, in one way or another capable of having a positive impact on economic situation, are of great interest. These certainly include futures, the developed market of which is an indicator of the world's leading powers. In Russia, this market is only in the process of formation. To accelerate this process, adequate legislative regulation is required, and its development is impossible without determining the legal nature of futures transactions.
Futures are often referred to as derivative securities.<1>. Let's take a look at how justified this opinion is.
<1>Belov V.A. Securities in Russian civil law: Proc. allowance: In 2 vols. 2nd ed., revised. and additional M., 2007. T. II. pp. 489 - 497; Sukhoruchkin P.A. Option as a derivative security // Law and Economics. 1998. N 5. S. 14; Tolchinsky M.A. Legal regulation exchange transactions in the stock market: Dis. ... cand. legal Sciences. M., 2007. S. 121.
To begin with, let's examine the existing normative definitions of the futures. Until recently, the Law of the Russian Federation of February 20, 1992 N 2383-1 (as amended on July 19, 2011) "On commodity exchanges and exchange trading"<2>(hereinafter referred to as the Law on Commodity Exchanges) stipulated in Article 8 that a futures transaction is a transaction associated with the mutual transfer of rights and obligations in relation to standard contracts for the supply of exchange goods. After the amendments provided for by the Federal Law of November 25, 2009 N 281-FZ "On Amendments to Parts One and Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation"<3>, Article 8 of the Law on Commodity Exchanges has completely changed its content. It no longer lists the types of transactions that can be made during exchange trading; now paragraph 1 of this article only states: "... in the course of exchange trading organized by the commodity exchange, transactions of purchase and sale of exchange goods, the underlying asset of which is exchange goods, may be made."
<2>Gazette of the SND and the Armed Forces of the Russian Federation. 1992. N 18. Art. 961; SZ RF. 2011. N 30 (part I). Art. 4596.
<3>SZ RF. 2009. N 48. Art. 5731.
An attempt to clarify the ambiguous definition formulated in the original version of the Law on Commodity Exchanges was undertaken by the Commission on Commodity Exchanges of the State Committee of the Russian Federation on Antimonopoly Policy. In a letter dated July 30, 1996 N 16-151 / AK "On forward, futures and option exchange transactions"<4>(hereinafter referred to as the Letter on Exchange Transactions), she explains: the subject of a futures transaction is standard (futures) contracts, which are documents defining the rights and obligations to receive (transfer) property (including money, currency values and securities) or information with an indication of the order of such receipt (transfer). The letter emphasizes that futures contracts are not securities.
<4>Financial newspaper. 1996. No. 33.
Thus, a futures transaction and a futures contract are different concepts: the first is associated with the transfer of rights and obligations in relation to the second. It turns out that a futures transaction is a contract for the sale of a futures contract. The latter, on the basis of the definition and despite the direct indication (due, as it seems to us, not to the essence of the futures contract in the form in which the developers of the Letter on Exchange Transactions understand it, but to the fact that in Russian legislation there is no rule relating a futures contract to securities, i.e. the formal side of the issue) that a futures contract is not a security, very much resembles it. Of course, if you do not pay attention to the possibility of determining the rights and obligations to receive (transfer) information. This part of the definition is clearly not true. We are not aware of any type of futures whose object could be information.
In our opinion, largely due to the concept enshrined in the Commodity Exchange Law and the Letter on Exchange Transactions, a futures contract is considered by many authors to be a security. A similar opinion is shared by the developers of the Guidelines for evaluating the effectiveness of investment projects, approved by the Ministry of Economy of the Russian Federation, the Ministry of Finance of the Russian Federation, the State Committee of the Russian Federation for Construction, Architectural and Housing Policy on June 21, 1999 N VK 477<5>. In paragraph 4 of clause 2.6 and paragraph 2 of clause 5.2 of Sec. 4.5 of Appendix 4 to the said document, futures are directly classified as securities. In paragraph 3 of clause 5.2 of this section, it is indicated: a futures contract allows you to fix the terms of a transaction until it is executed in the future, and each of the parties to such a transaction can transfer its obligations to any market agent who agrees to this.
<5>Internet version of the ConsultantPlus system. URL: http://base.consultant.ru/cons/cgi/online.cgi?req=doc;base=LAW;n=28224;div=LAW;mb=LAW;opt=1;ts=7F091A1B40C1A09973E1D05DA7FE91A7.
However, we propose to consider other regulatory legal acts containing references to the futures. So, according to paragraph 1.2 of the Regulations on the conditions for making futures transactions in the securities market, which have become invalid, approved by the Decree of the Federal Securities Commission of Russia dated August 14, 1998 N 33<6>, a futures contract is a type of futures transaction, a contract for the sale and purchase of an underlying asset (or an agreement to receive funds based on a change in the price of the underlying asset), which provides for the fulfillment of obligations on a specified date in the future. The terms of such an agreement should be determined by the Specification of the trade organizer.
<6>Bulletin of the FCSM of Russia. 1998. N 7. The document was canceled by the Decree of the Federal Securities Commission of Russia of April 17, 2002 N 9 / ps // Bulletin of the Federal Securities Commission of Russia. 2002. No. 4.
This Regulation unequivocally fixed the contractual nature of the futures. At the same time, unlike the Law on Commodity Exchanges and the Letter on Exchange Transactions, it does not establish some duality of this financial instrument, which manifests itself in the presence of both a futures transaction and a certain document that is very reminiscent of a security - a futures contract. The normative legal act under consideration clearly defines: the future is the essence of the contract, and does not give any reason to assume the existence of the future in any other forms, in particular as a security.
A similar position is taken by the developers of the Regulations on the types of derivative financial instruments approved by the Order of the Federal Financial Markets Service of Russia dated March 4, 2010 N 10-13 / pz-n<7>, essentially replacing the canceled Regulations on the conditions for making futures transactions in the securities market. According to paragraph 6 of this document, a futures agreement (contract) is an agreement concluded at exchange trading and providing for the obligation of the parties to periodically pay monetary amounts depending on changes in prices and (or) values of the underlying asset and (or) the occurrence of a circumstance that is the underlying asset. Here we are talking about a settled futures, this is also indicated by paragraph 8 of the Regulations under consideration. The delivery type of the studied financial instrument is mentioned in paragraph 7: a futures contract may provide for the obligation of one of its parties to transfer the underlying asset to the other party. The transfer of the latter can take place through the conclusion of contracts for the sale or delivery of the underlying asset. Such contracts can be concluded both by the parties to the futures transaction, and by persons in whose interests the futures transaction was concluded. Another type of futures contract, mentioned in the Regulations and fixing the obligation of the parties to conclude an agreement, which is also a derivative financial instrument and constituting the underlying asset, can be deliverable (if the named derivative instrument provides for the obligation to transfer, buy (sell) or deliver the underlying asset), and settlement (respectively, if there is no obligation to transfer, buy (sell) or deliver the underlying asset in the instrument). In fairness, it should be noted that the definitions under consideration (as, indeed, many others contained in the Regulation on the types of derivative financial instruments) are extremely confusing, which, unfortunately, is unlikely to contribute to a uniform interpretation, and, accordingly, to the enforcement of the provisions of the Regulation.
<7>Bulletin of normative acts of the federal organs of executive power. 2010. No. 17.
Thus, the design of the futures in the Regulations on the types of derivative financial instruments is considered exclusively in a contractual context, and this clearly knocks the ground out from under the feet of the authors who attribute the futures to securities. However, let's not rush to conclusions, but try to understand more carefully legal entity this one of the most complex instruments of the modern market.
To begin with, let's try to understand the economic side of the futures. Most often in economic literature you can find the following definition of a futures: a standard exchange contract (obligation) for the purchase or sale of an exchange asset after a certain period in the future at a price predetermined at its conclusion<8>.
<8>Anesyants S.A. Fundamentals of the functioning of the securities market: Proc. allowance. M., 2004. S. 100; Exchange business: Textbook / Ed. V.A. Galanova, A.I. Basov. M., 2003. S. 166; Securities Market: Proc. allowance / Ed. E.F. Zhukov. M., 2004. S. 37, 38.
One of the main features of the futures is its complete standardization, i. all parameters of the futures contract, except for the price, are known to the bidders in advance and do not depend on their will. The characteristics of a futures contract are developed by the exchange before the start of trading and are registered with the FFMS of Russia. A document containing such characteristics is called a specification. For example, Specification of a deliverable futures contract for ordinary shares of Sberbank of Russia OJSC, approved by the Board of Directors of CJSC "MICEX Stock Exchange" on January 22, 2010.<9>, in accordance with clause 4.2 of the Regulations on the procedure for the provision of services that facilitate the conclusion of term agreements (contracts), as well as the specifics of the clearing of term agreements (contracts) approved by Order of the Federal Financial Markets Service of Russia dated August 24, 2006 N 06-95 / pz-n<10>(as amended on January 21, 2011), includes the following conditions:
<9>Website of CJSC "MICEX". URL: http://www.micex.ru/markets/futures/stock_derivatives/documents/563.
<10>Bulletin of normative acts of the federal organs of executive power. 2006. No. 43.
- name and rules for generating the futures code;
- futures type;
- underlying asset;
- the number of shares in the lot for one futures;
- the procedure for determining the first and last trading days on which futures can be concluded;
- period of execution;
- execution method;
- futures price rounding;
- minimum price change and its valuation;
- the procedure for determining the settlement (quotation) price;
- the procedure for determining the deposit, delivery and variation margins;
- price change limit;
- market share limits;
- terms of delivery and payment for the delivery of the underlying asset;
- grounds and procedure for termination of obligations;
- liability for non-fulfillment of obligations under the futures;
- the consequences of making changes and additions to the Specification, as well as the procedure for the entry into force of the relevant changes and additions.
Futures are concluded only in the process of exchange trading. The guarantor of the execution of a futures contract is the clearing house serving the exchange (often being its structural subdivision), where this contract is traded.
As a rule, the goal of participants in futures trading is not to purchase an exchange commodity, but to play on the difference in prices. The conclusion of a futures contract on the terms of its buyer is called the purchase of a futures contract, and on the terms of the seller - its sale. The acceptance by the seller and the buyer of obligations under the futures is called opening a position. Termination of obligations under this futures contract by concluding a reverse (offset) transaction with a similar contract is called closing a position.
By purchasing a futures contract, the buyer expects to sell it at a higher price, and the seller hopes to buy a similar contract in the future, but at a lower price. However, if a participant in a futures contract wants to make or take delivery, he does not close his position until the day of delivery. In this case, the clearing house notifies him to whom he should deliver or from whom to accept the underlying asset. In world practice, only about 3 - 5% of all concluded futures end in delivery, the rest are liquidated by reverse transactions<11>. There are futures that initially provide not for the delivery of the underlying asset, but only for mutual settlements between participants in cash (settlement futures).
<11>Galanov V.A. Derivative financial instruments of the futures market: futures, options, swaps: Textbook. M., 2002. S. 95.
Futures transactions can also be used for hedging purposes, i.e. insuring the risk of loss from an increase in the price of an exchange commodity (which is undesirable for the buyer of the futures) or its decrease (which is unprofitable for the seller). Initially, futures were invented specifically for the purpose of hedging.
We consider it necessary to add to all of the above: when opening a position, the futures holder pays an initial margin (or fee) equal to several percent of the futures contract value, which is a certain guarantee of the solvency of the seller or buyer of the futures. The specified margin is taken into account when closing a position. If the position is transferred to the next day, the variable margin is calculated on it as the difference between the market prices of the purchased (sold) futures for the current and previous days. In the event of a rise in prices, the indicated difference is paid by the sellers, and the buyers receive; when prices fall, vice versa.
We consider it appropriate to touch upon the technical side of the futures transaction. So, for its conclusion, two independent applications are required. One exchange trading participant sends an order for the purchase of a futures contract, and the other - for the sale of a similar contract at the price indicated in the application.
In accordance with Article 09.03 of the Rules of the MICEX Derivatives Market Section, approved by the Board of Directors of CJSC MICEX on June 28, 2011<12>, for the exchange to accept an order, it must contain the following parameters:
<12>Website of CJSC "MICEX". URL: http://www.micex.ru/markets/futures/section/documents/558.
- direction of the order (buy or sell);
- its type (market order, which expresses an offer to buy or sell a certain number of futures contracts of a certain series at the best price; the best price for purchase (sale) orders is the minimum (maximum) price among the prices of active orders for the sale (purchase) of futures contracts of this series) or limited (an order to buy (sell) expresses an offer to buy (sell) the specified number of futures contracts of the specified series at a price not higher (lower) than specified in this application));
- application volume;
- a series of fixed-term contracts;
- conditions for the execution of the application;
- affiliation of an order (by affiliation is meant an indication in the order of the position account number, on which the positions opened during its execution should be taken into account).
All orders submitted by a trader (trading participant) are registered by the clearing house in the trading system with an indication of the time of their registration. To conclude a futures transaction, an order registered earlier than others is used. As a rule, the order for sale with the lowest price of the goods is subject to priority execution, and for the purchase - with the highest. In case of discrepancy between bids in terms of the volume of contracts, a counter bid can cover only a part of the volume of the bid, then another bid is searched for the exceeding volume.
Thus, if counter orders coincide, a futures transaction is concluded, which is recorded in the register of completed transactions. From this moment, the rights and obligations of the parties appear, which cannot be changed unilaterally.
Having outlined the economic essence of the futures, let's return to its legal side. One of the central problems of the legal regulation of a futures contract is the definition of the subject of this derivative financial instrument. In our opinion, the answer to this question will bring us closer to solving the problem of determining the legal nature of the futures. Let's turn to the problem.
So, according to some authors, futures (including delivery contracts) do not provide for the obligation of the parties to deliver or accept the real product (within the time period stipulated by the contract), but only involve the sale and purchase of rights to the product. In other words, a futures contract is seen as a sale and purchase of conditions on which future contracts must be concluded. For example, D.V. Sidorov proposes the following definition of a futures contract: "A futures contract is a bilateral agreement of exchange trading participants, according to which one party (seller) undertakes to transfer rights and obligations to the other party (buyer) in relation to future contracts for the supply of exchange goods, and the other party (buyer) undertakes to pay the price specified in the contract by a certain date.<13>.
<13>Sidorov D.V. General characteristics of a futures contract as a type of exchange transactions // Financial right. 2005. N 6. S. 13.
An interesting and fairly consistent (although certainly not indisputable) position on the issue under consideration is taken by V.S. Belykh and S.I. Vinichenko. These authors distinguish two stages of a futures transaction. At the first stage, the seller of the futures assumes the obligation to transfer the goods and acquires the right to demand payment, while the buyer of the futures has an obligation to pay for the purchased goods after the expiration of the established period at the price agreed upon at the time of the transaction and, accordingly, he has the right to demand the transfer of goods to him. At the second stage, a reverse trade or a trade to close the position is made. That is, by concluding a futures contract, counterparties can terminate their rights and obligations by making identical futures transactions, but subject to the acquisition of rights and obligations of the opposite direction. These authors especially emphasize that the second (reverse) transaction does not differ in its content from the first, only the position of the trading participant changes, therefore both transactions under consideration should qualify equally.
Reflecting on the subject of the futures, V.S. Belykh and S.I. Vinichenko come to the conclusion that it is a standard contract. "When making a futures transaction, - scientists write, - one party becomes the owner of a standard contract for the sale of an exchange commodity, and the other acquires a contract for the purchase of the same commodity"<14>. The authors clarify: if the owner of a standard contract for sale makes a reverse futures transaction and becomes the owner of an identical standard contract, but for the purchase of an exchange commodity, there will be a "repayment of the mutually directed rights and obligations of a participant in the exchange trade in buying and selling the corresponding commodity", which will result in crediting or writing off positive or, respectively, negative exchange rate difference.
<14>Belykh V.S., Vinichenko S.I. Exchange law. M., 2002. S. 143.
Summing up some of their scientific research, scientists point out that a standard futures contract is not only a derivative, but even an ordinary security. The authors attribute it to "quasi-securities" securities, which, in their opinion, by their presence form a special content of legal relations between participants in exchange trading. Unfortunately, in no way is it disclosed what they invest in the concept of "quasi-valuable" securities.
As a result, V.S. Belykh and S.I. Vinichenko come to the conclusion: futures transactions "do not fall under the models of obligations relations known to the domestic legal system", are not named in Civil Code RF contract and give the following interesting definition: "This is a legal relationship in which one party (seller) undertakes to fulfill obligations and exercise rights from a standard sales contract, and the other (purchaser) undertakes to fulfill obligations and exercise rights from a standard purchase contract to persons named by the exchange as the relevant counterparties for each of the parties, provided that these persons have counter rights and obligations from similar standard contracts"<15>.
<15>There. S. 146.
The above definition, in our opinion, is one of the best in the specialized literature. The great merit of the authors lies in the fact that they drew attention to the organizational side of the futures transaction (the participation of the exchange), which, as will be shown below, is an essential feature of the financial instrument under study.
Consider the position of T.V. Soifer on the issue under study. She distinguishes two types of futures transactions, noting their different legal content: initial (standard contracts) and derivatives (futures transactions as such). T.V. Soifer points out: the subject of the purchase and sale of the original transaction is an exchange commodity, while the subject of a derivative futures transaction is a standard contract, i.e. the original transaction itself. Thus, the basis of a futures transaction is the transfer of rights and obligations under a standard contract in relation to an exchange commodity: the buyer (seller) under a futures transaction assumes the obligations of the buyer (seller) under a standard contract<16>.
<16>Soifer T.V. Transactions in stock trading: Dis. ... cand. legal Sciences. M., 1996. S. 112 - 114.
S.E. Dolgaev also argues that futures involve the sale and purchase of standard contracts. "Here (in a futures transaction. - Note. ed.) it is not the goods or securities that are acquired, but the right to purchase them ... The subject of each such transaction is the rights, and the object, it seems, is not the securities themselves, but the so-called "standard contracts"<17>. According to the author, the delivery futures consists of two interrelated and successive transactions:
<17>Dolgaev S.E. Legal regulation of the circulation of securities: Dis. ... cand. legal Sciences. Samara, 2002, p. 158.
- buying the right to buy or sell valuables (S.E. Dolgaev forgets that a futures contract is not only the right to buy or sell an exchange commodity, but also an obligation to pay for or transfer this same commodity; as a result of this approach, the line between futures and options is blurred, and the construction "right to right" is being criticized more than once in the pages of legal literature);
- purchase and sale of commodities.
In the dissertation research M.A. Tolchinsky, we again meet the point of view, according to which the subject of a futures transaction is the notorious standard contract. The author believes that the polar opinion, according to which the subject of the futures is an exchange commodity, does not correspond to the original wording of Article 8 of the Law on Commodity Exchanges. “It is the contract for the supply of a certain number of securities, the terms of which are standardized by the exchange, that is the subject of the transaction, and not securities that are directly an exchange commodity,” M.A. Tolchinsky writes, and then, apparently deciding to clarify what was meant, adds : - The subject of a futures transaction in this case is property rights in relation to securities, enshrined in a standard contract"<18>. To substantiate his construction, the scientist points out: with the opposite view, the objects of futures and forward transactions coincide, which, in all likelihood, seems to him incorrect. Meanwhile, among economists, the following opinion is practically universally recognized: the most significant difference between a future and a forward lies in the place of circulation of these instruments: the first is sold and bought on exchange markets (which is why it is standardized), the second - on over-the-counter markets (therefore, it is more individualized)<19>.
<18>Tolchinsky M.A. Futures and options as objects of the stock market // Objects of civil turnover: Sat. articles. M., 2007. S. 113, 114.
<19>Anesyants S.A. Decree. op. S. 100; Exchange business: Textbook. pp. 210, 211; Galanov V.A. Decree. op. pp. 67, 94.
A little further in his work, M.A. Tolchinsky generally states: the subject of a futures transaction is a futures as "... a security certifying the relevant rights for the supply of standard contracts for the supply of securities" <20>(Emphasis mine. - R.A.), completely confusing the reader.
<20>Tolchinsky M.A. Decree. op. S. 124.
The definition formulated by D.A. Zhukov: "A futures transaction is an exchange futures transaction with standardized essential conditions, in accordance with which there is a transfer of rights and obligations (actual transfer or mutual settlement) between the parties regarding the underlying asset in the future at a price and in a volume that are determined by the parties at the time of its (the author, in all likelihood, meant "her". - Note. ed.) conclusions"<21>. However, the scientist, oddly enough, calls the following as one of the advantages of his definition: it clearly follows that the subject of a futures transaction is the underlying asset, and not another contract. In our opinion, D.A. In this case, Zhukov is trying to pass off what he wants as real, because, in his definition, pointing to the transfer of rights and obligations regarding the underlying asset as a result of a futures transaction, he achieved the exact opposite of the effect he claims.
<21>Zhukov D.A. Legal regulation of futures transactions in the stock market: Dis. ... cand. legal Sciences. M., 2006. S. 98.
Unlike the previous author, V. Em, N. Kozlov, O. Surgucheva take a less controversial position and clearly indicate: the subject of a futures transaction is a real product. They also divide a futures transaction into two parts, the first of which is considered an ordinary sale and purchase agreement with a deferred deadline, and the second is qualified as a sale and purchase of property rights (clause 4, article 454 of the Civil Code of the Russian Federation)<22>. It is difficult to agree with the latter. Having made a reverse (secondary) transaction, a participant in exchange trading acquires not only rights, but also obligations (which, as we see, is often forgotten), since both the seller and the buyer of the futures are both authorized and obligated persons in relation to each other . And the acquisition of obligations, as you know, requires the consent of the creditor (clause 1, article 391 of the Civil Code of the Russian Federation). This condition is not observed when making reverse transactions, which indicates their other nature.
<22>Em V., Kozlova N., Surgucheva O. Future transactions on the stock exchange: economic essence and legal nature // Economy and law. 1999. N 6. S. 34 - 36.
E.A. Pavlodsky was also of the opinion that the subject of a futures transaction is an exchange commodity. "Futures (from the English future - future) delivery contracts should include agreements concluded on the exchange, according to which one party undertakes to transfer the ownership of the exchange commodity specified in the application to the other party ... in the future ..., and the other party undertakes to pay for him the agreed amount ... K general conditions include provisions on the object of a futures transaction, which can only be a standardized product ... "<23>. Unfortunately, the author's position is reduced to a simple statement of this point of view; its substantiation is absent in the study. Apparently, this is due to the fact that E.A. Pavlodsky considers such a view of the problem under consideration to be something self-evident, an axiom that does not need proof.
<23>Pavlodsky E.A. Futures and forward transactions in the organized market // Topical issues of Russian private law: Sat. articles dedicated to the 80th anniversary of the birth of Professor V.A. Dozortseva. M., 2008. S. 131, 132.
E.S. Petrosyan, analyzing the provisions of the Law on Commodity Exchanges (in its original version) and the Letter on Exchange Transactions, comes to the conclusion that it is necessary to develop a definition of a futures contract, where its subject would be indicated not a standard contract, but directly an exchange commodity, in relation to which bidders enter into a contractual relationship. However, it seems to us that this conclusion is again not embodied in the author's definition of a futures contract: "A futures contract is a standardized exchange contract, on the basis of which rights and obligations are transferred (actual delivery or mutual settlement) between the parties regarding an exchange-traded asset in future at the price and in the amount determined by the parties at the time of its conclusion"<24>. The indication in it of the transfer of rights and obligations (albeit with regard to exchange goods), in our opinion, does not contribute to the recognition of this very commodity as the subject of a futures contract, as already indicated above.
<24>Petrosyan E.S. Legal regulation of exchange transactions (on the example of a futures contract): Dis. ... cand. legal Sciences. M., 2003. S. 77.
As you can see, there is no consensus on what is the subject of a futures contract, both among scientists and practitioners. This fact is without any doubt due to the following: futures is the most complex economic and legal structure, for a deep knowledge of which more than one study will be required. However, we still propose to try to figure out where this strange and, as has been shown, quite common and tenacious, despite its certain absurdity, opinion that a certain standard contract with an unspecified legal nature is the subject of the type of derivative financial instruments under study. It seems to us that the secret lies in the following: today, the futures are considered primarily in the economic, financial refraction, and only then - as an object of legal regulation. And this, in principle, is not surprising, because this tool is an invention of economists, whose legal aspects are far from being in the forefront, and they cannot be blamed for this. Let's take a closer look at the economic view of the essence of a futures transaction.
Any contract expresses economic relations regarding "real" forms of capital. That is why he himself becomes a form of existence of capital. In other words, an agreement between market participants is capital in a contractual form (capital as a purely economic relation, regardless of its "real" form of manifestation, as well as the asset underlying the concluded agreement). Thus, a contract concluded for the purpose of generating income, under certain conditions, can itself become an "object" of market relations. However, this does not mean that transactions are concluded with him, since it is impossible to conclude, for example, a supply contract for the supply itself. What is meant here is that the conclusion of contracts becomes an end in itself, their performance is the exception rather than the rule, and their goal is not to buy or sell the underlying asset, but to profit from fluctuations in the price of that asset.
"The agreements on the rights and obligations of the parties to the original futures contract in the construction of a derivative instrument objectively create the appearance that this contract is the same market object as any other commodity for which market agreements are concluded, that the futures contract is sold and bought as a commodity or valuable paper ... In fact, the conclusion of a fixed-term contract and the subsequent possibility of liquidating obligations under it unilaterally, provided for by a special mechanism for trading and settlements ... is only a special form of transfer or circulation of market rights and obligations under a fixed-term contract without violating any conditions this contract"<25>.
<25>Galanov V.A. Decree. op. S. 45.
When concluding a futures transaction, its parties carry out the purchase and sale of the relevant asset in a predetermined quantity, a known quality, on known terms of delivery and settlements for it. Also, we must not forget that a futures contract is a futures transaction (with a deferred execution), and not a cash transaction (with immediate delivery in the shortest possible time). By concluding it, the parties do not carry out any actions on the physical, real procedure for the purchase and sale of an asset. Thus, the execution of this transaction for participants in exchange trading takes the form of a purchase and sale not of the asset itself, but of its specification, or a futures contract as an independent product. One side of the transaction, as it were, sells a futures contract, and the other side, as it were, acquires it. So it turns out that the conclusion of futures transactions for bidders takes on the appearance of buying and selling a contract as an ordinary commodity. A futures contract turns into a commodity, of course, not because of its material existence, which it lacks, but due to the similarity of its turnover with the turnover of commodity values.
So, even economists understand that the standard contract is not the object of a futures transaction and the opposite opinion is actually the result of a deeply abstracted simplistic view of the futures from the position economic theory, and no more. However, the widespread in legal circles of the idea of classifying a futures contract, which exists in the form of a document that defines property rights and obligations to receive (transfer) exchange values, to the number of objects of exchange transactions, is explained not only by the blind and unreasonable transfer of the futures structure from economic realities to legal ones. . The legislator also contributed to this by fixing the ridiculous definition of a futures transaction in the Law on Commodity Exchanges (and by changing practically only one pretext, one could get a more or less tolerable definition: futures transactions are transactions related to the mutual transfer of rights and obligations on(but not in a relationship) standard contracts for the supply of exchange goods), and the official law enforcer in the person of the Commission on Commodity Exchanges, issuing the already mentioned letter on exchange transactions, which not only supported the position indicated in the law, but also brought it to the point of absurdity, directly naming the standard ( futures) contract is the subject of a futures transaction, which, according to the authors of the letter, is not related to futures transactions. Thus, in our country, it can be said that legislative level a purely economic abstract approach to the understanding of futures was established, which was an unacceptable mistake in its legal regulation, which, in fact, set off "on the wrong track" and thus slowed down the development of legal thought in the field of exchange transactions and derivative financial instruments.
Without a doubt, the subject of a futures transaction is precisely the exchange commodity, and nothing else. The option with a standard contract leads to the need to build fantastic structures that involve the sale and purchase of a contract or some document with an indefinite legal nature, which is referred to in a letter on exchange transactions, and having nothing to do with legal, or rather, with civil law science . Regarding property rights as the subject of a futures transaction, we note the following. Firstly, in half of the cases when it is stated that the subject of the derivative instrument under consideration is property rights, the presence of the notorious standard (future) contract that secures these very rights is nevertheless implied. Secondly, it seems to us that there is no need to complicate the already rather complicated structure of a futures transaction with a certain "layer" in the form of property rights between the rights arising from the conclusion of a futures contract and the exchange commodity. Moreover, one should not forget about property obligations to buy or sell an exchange asset, which are completely out of sight, if we assume that property rights are the subject of a futures contract.
Having given an answer to the most fundamental of the questions that arise when considering the construction of a futures, let's try to decide whether this derivative financial instrument will be a security. To begin with, let's get acquainted with the opinions existing in the specialized literature on this matter.
According to M.A. Tolchinsky, futures refers to securities, moreover, derivatives, and, circulating on the stock market, represents the right to buy or sell the corresponding number of securities on conditions determined by the exchange<26>.
<26>Tolchinsky M.A. Decree. op. S. 121.
K.Yu. Ratnikov, in his study, which is at the intersection of legal and economic sciences, points out that the definition of a futures as a security contradicts its contractual nature and provides for the recognition of property interests in various types of underlying assets by securities, which is contrary to Russian law.<27>.
<27>Ratnikov K.Yu. A new way to privatize and sell Russian companies and banks abroad. American and global depositary receipts. M., 2001. S. 60.
E.S. Petrosyan shares the above opinion and notes: in a futures contract, unlike a security, there is a transfer not of rights, but of an exchange asset. The author also reminds: the owner of the security has only the rights that are contained in the paper, and does not bear any obligations; when concluding a futures contract, the parties create for themselves not only rights, but also obligations<28>.
<28>
O. Rokhina in her research also comes to a negative answer to the question we have posed. The author analyzes the settlement futures for the presence of signs of emissive securities established in Article 2 of the Federal Law of April 22, 1996 N 39-FZ (as amended on June 14, 2012) "On the Securities Market"<29>(hereinafter referred to as the Law on the RZB). She agrees that the result of the conclusion of a futures transaction is the emergence of a property right for her parties - the right to receive a variation margin in the event of an increase or decrease in the price of the underlying asset compared to the price set at the time of the transaction. According to the scientist, the presence of uniform characteristics in all futures transactions with a single specification can serve as a sufficient basis for recognizing the existence of an issue of securities, in which all securities have equal terms for exercising rights.
<29>SZ RF. 1996. N 17. Art. 1918; 2012. N 25. Art. 3269.
On this, however, the arguments in favor of recognizing the futures as a security, according to O. Rokhina, end. "A futures, - the author writes, - cannot be recognized as a security, because when making a futures transaction, since the settlement price of execution is unknown, it is not clear which of the parties will pay the variation margin, that is, who is the debtor of the security"<30>. And in a situation where the execution price prevailing on the stock exchange coincides with the price set by the parties, no one will receive a property benefit.
<30>Rokhina O. To be a futures security or not to be? // Economy and law. 1997. N 1. S. 50.
O. Rokhina does not forget that a legal relationship cannot be expressed in a security, according to which both parties acquire both rights and obligations, since the party that does not own the paper will not be able to exercise the right enshrined in it. Moreover, if we admit that both parties to the futures transaction are the owners of the security, then the resulting variation margin should be distributed between them according to the rules of common ownership, and this is complete absurdity: the execution should be carried out by one of the participants in the futures contract.
Thus, at the time of concluding a futures transaction, it is not possible to determine the creditor or debtor of the security, and the indication of the latter (the issuer) is a mandatory attribute of the security, its absence entails its nullity. O. Rokhina points out: according to the Law on the Securities Market, the placement of issue-grade securities means their alienation by the issuer to the first owners. The uncertainty of the issuer makes it impossible to apply the said provision.
And the last. Since participants in exchange trading independently set the execution price of a futures transaction, the amount of the received variation margin, and, accordingly, the amount of property rights under two identical futures contracts may differ, which does not fit into the definition of emissive securities<31>.
<31>There. pp. 51 - 53.
V.A. Belov considers O. Rokhina's position to be true, but on the condition that it refers to the time of the conclusion of the futures transaction and to a single bilateral document formalizing this transaction. But if a futures transaction is executed by two unilateral documents (one is issued by the seller of the underlying asset, hoping for a price decrease, the second - by the buyer of this asset, hoping for a price increase (of course, the documents are issued by them to each other)), on the day the futures contract is executed, one of these documents (depending on whose price expectations come true), according to V.A. Belova, will turn (if the price agreed upon by the parties does not turn out to be equal to the price prevailing on the exchange on the day of execution) into a security with the right to buy (sell) a certain amount of the underlying asset at a stipulated price (delivery futures) or receive the difference between the prevailing and the one established during the transaction prices (settled futures).
Until the day of execution, the value of these documents, one of which may subsequently become a security, lies in their securing the legal possibility "... of the legal holder to count, upon the occurrence of certain conditions, on a change in his legal status, namely, on the emergence of a certain subjective right, consistent with the content of the future (requirement to transfer the underlying asset, or pay its cost, or pay margin), and its counterparty that issued this document has a legal obligation to ensure this right"<32>.
<32>Belov V.A. Decree. op. S. 495.
Thus, from the point of view of V.A. Belov, futures as unilateral documents at different stages of their existence have a different legal essence: from the moment of issuance to the day of execution on the transaction executed by them, they certify second rights and cannot be recognized as securities, from the date of execution, at least one of the two futures loses its legal force, respectively, and economic value, while the second can become the embodiment of a subjective civil right-requirement and turns into a security.
Position V.A. Belova seems to be extremely interesting and quite original, however, in our opinion, it, having the full right to exist as a theoretical, scientific construction, does not reflect the state of affairs that has developed in practice. In the futures markets, no unilateral documents are issued that have the ability to turn into securities, and we are not talking about uncertificated securities. Futures has a purely contractual nature, and the contract underlying its design is mutual, i.e. each of its parties acquires rights and at the same time bears obligations in relation to the other party. And there is absolutely no need to complicate the already not the simplest of financial instruments by artificially adding to its structure another, also not ordinary, invention, this time of civil science - securities.
In addition to those already mentioned, other authors also write about the contractual "foundation" of the futures. E.V. Ivanova generally defines a futures transaction as a basic, mutual, compensated, free, standardized, consensual, fixed-term contract.<33>.
<33>Ivanova E.V. Derivatives. Forward, futures, option, swap. Economic and legal qualification. 2nd ed., revised. and additional M., 2007. S. 168 - 185.
M.E. Tolstukhin points to the impossibility of classifying futures as either securities or property rights, "... since a futures is not a right to buy or sell, but rights and obligations under a sale and purchase agreement or conditional rights and obligations under a transaction for a difference"<34>.
<34>Tolstukhin M.E. Futures and options as objects of the stock market // Objects of civil turnover: Sat. articles. M., 2007. S. 243.
"A futures basically contains an obligation, - write S.V. Rothko and D.A. Timoshenko, - and the equity security itself secures the right"<35>.
<35>Rothko S.V., Timoshenko D.A. Derivative financial instruments: topical issues // Economy and law. 2008. N 6. S. 104.
E.S. Petrosyan dotted all the "i" in the following rather concise manner: "In a futures contract, unlike a security, there is a transfer not of rights, but of an exchange-traded asset, in addition, the owner of the security has exclusively the rights contained in the paper, and not has no obligations.When concluding a futures contract, in contrast to the issue of a security, the parties create for themselves not only rights, but also obligations (here E.S. Petrosyan most likely meant mutual rights and obligations. - Note. ed.). Thus, the application of concepts characteristic of the institution of securities to a futures contract becomes very, very doubtful"<36>.
<36>Petrosyan E.S. Decree. op. S. 74.
A similar opinion is shared by V.A. Galanov: considering futures exclusively from an economic angle, he clearly separates it from securities. A futures contract, in his opinion, is the obligations of the parties to the exchange, which are taken and repaid ahead of schedule, and a security is the rights of its owners in relation to the issuer, it is issued, sold and bought. "A futures contract is a contract under which a special market asset is hidden - a liquid liability, and a security is a special market asset under which the contract is hidden; a futures contract is a transferable obligation, and a security is a transferable right"<37>.
<37>Galanov V.A. Decree. op. S. 68.
As evidence of the contractual nature of the futures, the following argument can be made, based in part on the fact that the instrument in question is a hedge against commercial risks. It is quite possible to imagine a situation where the buyer of a deliverable futures refuses (for example, due to the lack of available funds, suitable storage facilities, if we are talking about, say, grain, or for any other reason) to purchase the underlying asset, even if it has developed favorable economic conditions (the price set by the parties turned out to be lower than the average market price on the day of execution). At the same time, the seller (again due to some life (economic) circumstances) urgently needs to get rid of the underlying asset. In this case, the latter has the right to demand the purchase of an asset from him (albeit at a loss to himself), and the former, as we see it, is the bearer of an obligation corresponding to such a right to buy this notorious asset. According to the logic of V.A. Belov, the seller does not have the mentioned right, because he is only a person liable for the security. This state of affairs, in our opinion, contradicts the concept of hedging - the main function of the futures.
The reason for the spread of the opinion that futures is a security, and this time, in our opinion, was economic approach to the consideration of the analyzed financial instrument. First, as shown above, economists (financiers) and lawyers blindly following them came to the conclusion that the standard contract is the subject of a futures transaction. And then, in order to give a certain completeness and weight to the ridiculous construction they invented, they decided to attribute this very standard contract to securities, thinking in the same economic categories. Here again, the notorious letter about exchange transactions played its role, the authors of which, although directly indicated that the standard contract is not a security, but gave it such an ambiguous definition that, willy-nilly, the idea arose of referring it all the same to securities.
This situation once again shows the danger of superficial, hasty research with the aim not of comprehending the truth, but of fitting the solution of the tasks set to a previously known, and at first glance obvious, answer. It is precisely because of such "research" that we do not have the scientific and legislative foundation so necessary for our country during the economic and financial crisis for the painless development of the derivatives market.
So futures is not a valuable paper. What, then, is this most complex and ambiguous financial instrument with a pronounced contractual basis? In our opinion, a futures is an independent type of contract, not named in the Civil Code of the Russian Federation, but not contrary to the law. In our opinion, it is concluded not at all between participants in exchange trading, but between each of them and the exchange itself, represented by the clearing house, since in the case of a deliverable futures, counterparties are assigned to each other by the exchange only after the date of execution under the contract, In futures, a bidder in general, except for the exchange, does not deal with anyone.
Our point of view is also confirmed at the legislative level. Federal Law No. 281-FZ of November 25, 2009 supplemented the Law on the Securities Market with Article 51.4, paragraph 1 of which directly states: the conclusion of contracts that are derivative financial instruments is allowed provided that one of the parties is a clearing organization. In addition, the said Law amended Article 12 of the Law on the Securities Market, fixing that the conclusion of contracts by a clearing organization at trading is not recognized as participation in exchange trading if the relevant contracts are concluded by a clearing organization in order to create conditions for the fulfillment by trading participants of obligations under such contracts. As you can see, a fundamentally new scheme of exchange trading is being introduced at the legislative level, when the exchange (in the case of combining exchange activities with clearing) or a clearing organization is a party to the so-called futures transactions (derivative financial instruments) and at the same time does not violate the ban on combining its activities with other activities, established in paragraph 4 of Art. 11 of the Law on the RZB. And this, it seems to us, is one of the first steps towards the correct legal qualification of financial derivatives in general, and futures in particular.
In the early days of stock trading, futures contracts could be viewed as transactions entered into between the bidders themselves. However, with the development and automation of the exchange business, they turned into transactions between the exchange (clearing organization) and its participants. The absence of a counterparty (at least until the moment of direct execution in the case of deliverable futures) as such and the impossibility of not getting execution on the futures (due to the guarantee provided by the exchange) once again confirm the voiced opinion. We believe that the answer to the question why the exchange (clearing organization) is one of the parties to the futures is rooted in the history and causes of futures trading, in the need for clear standardization and guaranteed execution of futures transactions - transactions with deferred execution.
In view of what has been said, without pretending to be complete, let us define a futures (settlement) as special contract for the provision of intermediary services under which the exchange (clearing organization) and the trading participant undertake to pay each other a positive (exchange (clearing organization)) or negative (trading participant) variation margin in the event of its formation and subject to the conclusion of a similar transaction by the exchange (clearing organization), providing for a reverse obligation of the exchange (clearing organization), with another trading participant (reverse transaction). A futures contract may provide for the obligation of the exchange (clearing organization) and the trading participant on a certain date in the future to pay (deliver) the underlying asset specified in the specification at a predetermined price, again subject to the conclusion by the exchange (clearing organization) of a similar reverse transaction (deliverable futures). At the same time, the trading participant may at any time terminate his rights and obligations under the futures, also concluding a deal with the exchange (clearing organization) that is similar to the one already concluded, but in the opposite direction, and all mutually directed rights and obligations will "repay" each other according to the rules on termination of obligations offset (Article 410 of the Civil Code of the Russian Federation).
Attempts to explain a new legal phenomenon using old constructions lead not only to incorrect, but sometimes absurd results. And it is good if these results remain only on the pages of scientific literature. It is much worse when they take the form of legal norms, thereby hindering regulated social relations. A striking example of this is old edition Law on Commodity Exchanges and a Letter on Exchange Transactions issued in its development.
Bibliography
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Exchange business: Textbook / Ed. V.A. Galanova, A.I. Basov. M., 2003.
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The algorithm for processing and passing each transaction on the exchange is always clearly specified. Therefore, it is important for participants to remember what types of agreements are there, and in what sequence the market agreement passes from the stage of discussion of the main conditions to the final stage in the form of obtaining benefits.
What is an exchange transaction
Exchange transactions are pre-agreed actions of bidders that are aimed at establishing, changing or finalizing the rights and obligations of both parties regarding goods. Now there are legal, financial, organizational and ethical aspects of such agreements.
And the main tools can act as an object:
- securities;
- contracts;
- currency;
- stock assets;
- goods.
Any actions performed on the exchange are protected by a number of actions. But all transactions are checked by the broker, with the support of which trading is carried out, are controlled by the settlement and clearing system and are drawn up using related documents (in writing or in electronic form).
Reports on concluded transactions are provided every day. It is also worth considering that the algorithm for concluding any exchange transactions: types dictate the rules of the resource where they are formed.
Types of transactions on the stock exchange and their features
The agreement itself must be official registration, and its content certainly includes a mention of the object, the amount of obligations, the cost and the deadline for registration.
The conclusion of a contract between two citizens on the basis of the rules recommended by the market itself (foreign exchange, commodity, stock, etc.) is the same meaning that all types of exchange transactions have.
Cash spot transactions
Spot operation- a separate type of operation where payment occurs in the minimum time. The mentioned period includes the fastest option - transfer of money by payment through a bank, which lasts a maximum of 1-2 days.
This transaction is concluded when either party can immediately make a payment, and the second can fulfill the agreed goods within a short time frame. Many types of cash agreements are made automatically, which allows you to respond to a decline in the situation with securities.
Short trades
Agreement without coverage- the sale of shares that in fact do not belong to you and do not exist, but they can be sold by borrowing. A financial transaction is considered a speculative contract.
The broker lends and, by selling the security, hopes that it will fall in value, and then it will be possible to buy it back much cheaper. After the return, all profits remain with the player. And the broker himself takes a commission on the sale and repurchase.
But we must remember that such an operation is carried out with great risk: the operation can end not only in profit, but also in loss.
Transactions on credit
Credit agreements are also called (from 1:1 to 1:1000). Brokers also give credit here and again take a percentage. Such an exchange transaction is loved in the Forex market. It is worth taking such an analogue of a loan carefully: taking more than you have in your account, there is a great risk of losing everything easily.
Any price movement against the position and the loss will be a significant part of the stock trader's funds. In order not to lose the borrowed money, take all the funds and leave on the balance sheet the amount that was before the start of work, minus losses and commission.
Arbitration
Arbitrage scheme of transactions - single trader contract with a single market instrument, at the same time, but on different trading floors. Securities are often circulated on different exchanges: buying on one cheaper, you can then resell it on another more expensive.
The final difference in cost, although small, but due to the number and volume of transactions, there is an opportunity to earn.
Urgent deals
Fixed-term contracts are agreements that are distinguished by a clear deadline for the delivery of goods, the calculation and establishment of tariffs. They are characterized by the presence of a significant period of time between registration and fulfillment of conditions.
The longer the period between the start date and the end date, the more risk participants are exposed to. Such agreements are divided into: solid, conditional and prolongation. Operations for a period (without a true product) often contain .
Deals with a fixed price or firm
In such contracts of sale, the main role is played by price and term. Therefore, counterparties do not have the authority to change the terms, no matter how the cost of a commodity or security changes.
The buyer expects that by the time of calculation the tariff for the object will be higher than he agreed to pay, and the seller hopes for the opposite situation.
It is customary to call firm transactions where obligations are not subject to change: they must be performed in a clearly defined period and at a fixed price, since they are standardized in form. Therefore, they are acceptable when there is information about the movement of money.
Futures
- another version of a firm agreement, where not the product itself is purchased, but its price at the time of the conclusion. The cost is fixed by mutual agreement between the seller and the buyer: it may be higher or lower than the rate of the asset (stocks or bonds) on the exchange now.
In fact, this is a contract associated with the mutual transfer of rights and obligations in relation to typical contracts for the supply of an exchange commodity. Such paper implies the alienation (assignment) of the ability to sell or buy any product.
Floating value operations
Speculative transactions are those types of transactions that are performed on the basis of an increase or decrease in the price of an asset in order to expect benefits in the future. This transaction is opposed and sometimes called a deport (when the price is lowered in the future) or a report (if the benefit from the increase in the tariff and profit from the difference is implied).
Operation on the stock exchange does not take into account other risk reduction goals. Such transactions may sometimes not even take place: then the participants refuse to perform the operation and receive a bonus for refusal.
Optional
Option Agreements- These are contracts related to the assignment of rights to the future transfer of obligations in relation to an exchange commodity or a contract for its supply in order to secure financial transactions.
According to the implementation technique, there are several types: put option(put) or purchase (call), double or shelving (double), as well as complex and multiple.
More often, a purchase transaction allows the buyer to purchase any package of securities at the appropriate value during the term of the contract. And the seller is obliged to sell this package if the holder so requests.
Prolongation
A rollover contract is an operation to extend an urgent transaction. In situations where the term of the contract is already gradually expiring, and at the time of fixing the price level, if the requirements do not satisfy the buyer, he has the right to request an extension (prolongation) of the agreement.
Such a transaction is called a report, and when the seller is primarily interested in extending the transaction, the transaction is called deportation.
The mechanism for concluding transactions on the stock exchange
Now brokers provide special terminal, where you can create a request for a transaction. Such an operation is called an order, which is mandatory for execution by a broker and is divided into several types:
- market;
- limited;
- stop order;
- at the rate.
Exchange transactions control only professional members, which are distinguished by a clear specialization in various variations of activity.
The standard contracting process includes:
1. Introduction of statements into the scheme of trade. The algorithm for buying and selling securities is confirmed either by participants through a broker's note, or by brokers on the basis of signing related securities. In the body of a classic application for an operation, it is imperative to indicate the exact name and properties of the goods, the type, number of important securities, price, period and type of contract.
2. Conclusion of a contract. Now there are several models of work in the stock transaction: "seller - intermediary - client", "owner - intermediary - second intermediary - buyer", "owner - two flank intermediaries - client - central intermediary". Contracts are made between bidders on the exchange orally or in the form of an exchange of simple notes. Also, the fact of concluding a contract can be recorded in the central computer if electronic technologies are used.
3. Reconciliation of the parameters of the concluded agreement. All related discrepancies in the agreement are excluded here. Both parties should study the terms of the transaction and discuss any conflict situations that have arisen. At the same time, at this stage, the parties exchange documents with the full parameters of the requirements. If there are no discrepancies in the papers, then the procedure is considered successful.
4. Clearing (mutual settlements). It includes a set of procedures, which include the procedure for analyzing final forms for their authenticity and formalization standards, calculating finances for transfer and preparing settlement forms. There are many effective methods accounting for the amounts and numbers of securities that are subject to payment and delivery: the most reliable methods are bilateral and multilateral.
5. Deal execution. The final step involves the reciprocal fulfillment of obligations: the delivery of special securities to the buyer and the transfer of the promised money to the seller (everything is done through a system approved by the parties to the contract). Simultaneous completion will protect participants from unnecessary risks.
Planning transactions on the stock exchange- enough complicated procedure not only in theory and practice, but also from the technical side. Due to the fact that now most contracts are conducted online, this creates a lot of additional difficulties after the introduction of automation.