Contracts

Currency futures operate on a strictly defined contract system. All specifications are clearly written out in each contract before it is purchased. Contract terms vary slightly depending on the market from which it is purchased. Because most markets have a high minimum dollar value, a new type of market and contract has become popular, known as the E-mini or E-micro contract that can be purchased in sizes one-tenth that of standard contracts. Currency future contract specifications include the following items:

• Market – This is the specific market used for the exchange.
• Ticker Symbol – Each market and each type of contract offered has a different ticker symbol.
• Type – The type is the primary and secondary currencies used in the exchange. The first currency is the primary currency. Many markets use a single primary currency in all of their contracts, so the contract type lists only the secondary currency.
• Size – The contract size is most often listed in terms of the secondary currency. Some standard contract sizes are 100,000 USD, 1 million JPY, 150,000 EUR. Smaller sizes may be available from some markets, such as 10,000 AUD. E-mini or E-micro contracts are for 1,000 to 10,000 AUD.
• Minimum Price Intervals – This is also known as the tick rate. It represents the minimum amount of change reflected in each tick. It is usually expressed as a fraction of the contract size. For example, a contract size of 10,000 AUD with a tick rate of .0001 would mean changes are reflected at $1 intervals.
• Contract Month – This is the final settlement month. Final contract dates are the third Wednesday in the months of March, June, September, and December.
• Trading Hours – Trading hours are the actual times of day and days of the week the market is open for trading.
• Daily Settlement Price – A contract can be settled at any time before it ends at the market’s daily settlement price.
• Final Settlement Rate – This rate is expressed as a value against the primary currency.
• Settlement Rules – Each market issues specific rules governing how and when contracts can be settled.
• Accountability Rules – Individuals holding large numbers of contracts settling in their favour may be required to present information on the nature and strategy of their trading.