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Insightful and thought-provoking content related to today’s emerging financial technology. CME Group transformed global finance when it introduced the world’s first financial futures — FX futures — in 1972. Today, CME Group is the largest market for FX futures in the world. The FX contracts listed at CME Group go through a physical delivery process four times a year on the third Wednesday of March, June, September and December, with the exception of the Mexican peso and the South African rand, which are traded on all twelve calendar months. The Brazilian real also is traded on all twelve calendar months but is not physically delivered — it is cash-settled. The last day of trading for all FX futures — with three exceptions — is the second business day immediately preceding the third Wednesday of the contract month.
For Canadian dollars, futures trading shall terminate on the business day immediately preceding the third Wednesday of the contract month. Brazilian real futures terminate trading at 2:00 p. Chicago time on the last business day of the month for the Central Bank of Brazil immediately preceding the contract month. Following is a brief description of the CME Group FX futures delivery process that explains the roles of CME Clearing and market participants, the duties and obligations of CME Group FX futures buyers and sellers, and the process of delivery. CME Clearing recognizes its clearing members as the parties to a trade, whether those clearing members are acting for themselves, the accounts of other members, or their customers. When a trade takes place between two clearing members, it is executed through the Exchange’s facilities.
The Clearing House becomes the buyer to every seller and the seller to every buyer, with a clearing member assuming the opposite side of the transaction. In FX futures trading, the completion of the currency delivery process depends upon the establishment by CME Clearing of banking facilities in both the United States and the indigenous country for each traded currency. The Exchange contracts an Agent Bank to act on its behalf and establishes two accounts with the Agent Bank, a U. Likewise, the transfer of the foreign currency occurs in the indigenous country.
The buyer must arrange with a bank to deliver U. IMM delivery account at the respective Agent Bank. The exact dollar amount is determined by the contracts’ final settlement price. The buyer must arrange with a bank in the currency’s country of origin to receive the currency on the contract value date. The long position holder must inform his Clearing Firm of the bank and the account details necessary to send the currency to the account. Chicago time, clearing firms submit to the Clearing House an inventory of deliverable positions. They must include their potential Order-to-Pay bank if necessary.
Chicago time, clearing firms acting on behalf of their customers submit a Buyer’s Delivery Commitment form for each customer. This form details the number of contracts that the clearing firm will accept delivery of the Payment bank from which U. Chicago time, the buyer must either transfer dollars to the Agent Bank associated with that currency or have his bank issue an “Order-to-Pay” to the Agent Bank. The Order-to-Pay must take the form of a promise to pay in “same day” funds by 10:00 a. CME Clearing then transmits this information to their subsidiary or their agent bank in the currency’s country of origin to arrange the transfer to the buyer’s account on the value date.
Chicago time, all Orders-to-Pay must be fulfilled by the transfer of “same day” funds into the IMM delivery account at the appropriate Agent Bank, if necessary. The IMM delivery bank in the country of issue transfers the contracted currency to all buyers. This occurs whether or not all shorts have delivered the contracted currency to the IMM account. The seller must arrange with a delivery bank to deliver the contracted currency in its country of issue at the appropriate Agent Bank. The seller also must arrange with a bank to receive dollars in the U.