A Guide to the Language of the Futures Industry The CFTC Glossary is intended to assist the public in understanding first price sealed bid auction expected payoff forex of the specialized words and phrases used in the futures industry since many of these terms are not found in standard reference works. The CFTC Glossary is not inclusive, and if you cannot find the term you are looking for or have any other comments, please let us know. Definitions are not intended to state or suggest the views of the Commission concerning the legal significance or meaning of any word or term and no definition is intended to state or suggest the Commission’s views concerning any trading strategy or economic theory.
To elect not to exercise or offset a long option position. Non-competitive trading entered into by a trader, usually to assist another with illegal trades, such as a sale at a below market price intended to create a short-term trading loss for tax purposes that is later reversed. A contract in which the seller agrees to deliver a specified quantity of a commodity or other asset to the buyer at a pre-determined price on a series of specified accumulation dates over a specified period of time. Investment Advisers Act of 1940, that is not a third-party subaccount and that executes 200 or more swaps per month. The physical or cash commodity, as distinguished from a futures contract. An agricultural commodity is defined in Commission regulation 1.
1a of the Commodity Exchange Act, including such things as wheat, cotton, corn, the soybean complex, livestock, etc. Off-exchange options on agricultural commodities that are transacted directly between commercial market participants for hedging or risk management purposes. Any person that is in the business of soliciting or entering option transactions involving an enumerated agricultural commodity that are not conducted or executed on or subject to the rules of an exchange. An option that can be exercised at any time prior to or on the expiration date.
Refers to any market structure in which the identity of the parties placing bids and asks is not disclosed, making it more difficult for one trader to effectively discriminate against another. An order book generally uses anonymous bidding. Any bank, stockyard, mill, storehouse, plant, elevator, or other depository that is authorized by an exchange for the delivery of commodities tendered on futures contracts. A strategy involving the simultaneous purchase and sale of identical or equivalent commodity futures contracts or other instruments across two or more markets in order to benefit from a discrepancy in their price relationship. In a theoretical efficient market, there is a lack of opportunity for profitable arbitrage.
A process for settling disputes between parties that is less structured than court proceedings. The National Futures Association arbitration program provides a forum for resolving futures-related disputes between NFA members or between NFA members and customers. A futures price that has been affected by a manipulation and is thus higher or lower than it would have been if it reflected the forces of supply and demand. An exotic option whose payoff depends on the average price of the underlying asset during some portion of the life of the option. The price level of an offer, as in bid-ask spread. A contract that allows the holder to convey his rights to a third party.