Tag Archives: Futures Contract

Europe’s First Bitcoin Futures, Based on ETC Group’s BTCetc Physical Bitcoin, to List on Eurex in September

  • First futures contract on a Crypto ETP in Europe launching 13 September 2021
  • BTCE is the world’s most heavily traded Crypto ETP
  • Eurex is the largest derivatives exchange in Europe

ETC Group ( www.etc-group.com ), Europe’s leading specialist provider of innovative, digital asset-backed securities, announces that Eurex, Europe’s largest derivatives exchange, will list Bitcoin ETN Futures on 13 September 2021 based on its flagship product BTCetc. This will be the first time futures contracts are available for investors on a Crypto ETP in Europe.

Bitcoin ETN Futures is based on ETC Group’s BTCetc™ – ETC Group Physical Bitcoin (ticker: BTCE), which launched on Deutsche Börse XETRA in June 2020. Since then it has been listed on multiple European exchanges, and is currently the world’s most heavily traded crypto ETP, with the narrowest spreads1. The new futures contract will be traded in Euros and physically delivered in BTCE, which is 100% backed by bitcoin and can be readily redeemed by any investor for the underlying bitcoin.

Bradley Duke, CEO of ETC Group said: “The announcement that Eurex will list a futures contract based on BTCE is a game changer, it firmly establishes BTCE as the benchmark Bitcoin ETP and go-to product for Bitcoin price discovery. We see the selection of BTCE by Europe’s largest derivatives exchange as recognition of the quality of the product and its world beating liquidity. Also, because BTCE is fully-fungible with the underlying bitcoin, it means physical settlement of the futures contract is enabled through BTCE’s standard creation/redemption mechanism.”

Randolf Roth, Member of the Eurex Executive Board said “Given the growing institutional demand for secure exposure to Bitcoin, we are delighted to begin listing these Bitcoin ETN futures on our regulated trading and clearing infrastructure at Eurex. This move will allow a greater number of market participants to trade and hedge Bitcoin, with this new future being treated in the same way as any other derivatives contract in terms of central clearing, netting, and risk management.”

This set-up allows investors to track the price development of Bitcoin in a fully regulated on-exchange environment and based on a transparent price discovery of the underlying BTCE. Structured in a similar way as physical Gold ETCs, with an equivalent physical redemption mechanism in place, BTCE’s primary listing trades on Deutsche Börse’s ETN trading segment since 18th June 2020. Bitcoin ETN futures are centrally cleared like any other derivatives traded on Eurex. Eurex’s standard clearing, netting, and risk management processes thereby come into effect, mitigating counterparty risk, and reducing operational costs for market participants.

Cryptocurrencies are highly volatile, and your capital is at risk.
Disclaimer: https://bit.ly/etcdisc

ETC Group ( www.etc-group.com ) is specialized in developing innovative digital asset-backed securities such as BTCetc (BTCE) and ETHetc (ZETH) which are currently listed on Deutsche Börse, Euronext, SIX, AQUIS UK and Wiener Börse. ETC Group is backed by a number of major London-based financial institutions. Shareholders include firms such as XTX Ventures, the venture capital arm of electronic market-making firm XTX Markets. ETC Group’s securities are marketed by HANetf.

Federal Court Orders Interdealer Broker to Pay $7 Million for Deceptive Trading Practices in the FX Options Markets

The Commodity Futures Trading Commission today announced the U.S. District Court for the Southern District of New York entered a consent order against defendants TFS-ICAP LLC and TFS-ICAP Ltd., interdealer brokers located in New York and London, requiring them to pay a $7 million civil monetary penalty for representing to clients bids and offers that had not been made, and for communicating to clients trades that had not occurred. In the order, TFS-ICAP admits that its employees engaged in the misconduct, known as “flying” prices and “printing” trades, that violated the Commodity Exchange Act (CEA), as charged. 

The order also finds that TFS-ICAP, its former CEO Ian Dibb, and its former Emerging Markets desks head Jeremy Woolfenden failed to supervise diligently TFS-ICAP broker conduct. The order resolves the CFTC enforcement action filed on September 28, 2018. [See CFTC Press Release No. 7816-18] Defendants Dibb and Woolfenden are each subject to a $500,000 civil monetary penalty for their individual supervisory failures and have both agreed to not apply for registration or claim exemptions from registration with the CFTC in any capacity, or engage in any activity requiring such registration or exemption from registration with the CFTC, for five years.

“Brokers and other intermediaries play a critical role in our markets. The CFTC will act to ensure that these entities communicate and report honest and accurate pricing information to protect the integrity of the markets,” said CFTC Acting Director of Enforcement Vince McGonagle. “We are also committed to holding corporate managers who have regulatory supervisory responsibilities accountable to ensure policies and procedures are in place that would have prohibited, and could have deterred, unlawful conduct from occurring.”

Case Background

The order finds that between January 2014 and August 2015, TFS-ICAP brokers represented to U.S.-based bank clients that there were bids or offers for an FX option at a particular level when, in fact, no trading institution had bid or offered the option at that level. The order also finds that TFS-ICAP brokers on the Emerging Markets desks in both London and New York communicated to one or more U.S.-based bank clients that trades had occurred when a trade had not, in fact, occurred. In the FX options industry these practices are referred to as “flying” prices and “printing” trades. TFS-ICAP admits this conduct violated provisions of the CEA and CFTC regulations, which prohibit fraudulent and deceptive practices, and posting non-bona fide prices.

With respect to the conduct of Dibb, a CFTC registrant, the order finds that he was ultimately responsible for ensuring that TFS-ICAP broker conduct was in compliance with the law. Mr. Woolfenden, who is also a CFTC registrant, had supervisory responsibility over all TFS-ICAP brokers on the Emerging Markets desks in New York and London. Both Dibb and Woolfenden were responsible for maintaining and enforcing a reasonable system of internal supervision.

The CFTC appreciates the assistance of the UK Financial Conduct Authority, which on November 23, 2020 announced sanctions against TFS-ICAP Ltd. The CFTC also appreciates the assistance of the Office of the Attorney General for the State of New York.

The Division of Enforcement staff responsible for this case are Sam Wasserman, Elizabeth May, Christopher Giglio, K. Brent Tomer, Lenel Hickson, Jr., and Manal M. Sultan.

F

Factor sensitivity
The impact on a portfolio of assets of movements in the underlying risk parameter of an individual asset.

Factor portfolio
A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of zero on any other factors.

Factoring
Sale of a firm’s accounts receivable to a financial institution known as a factor.

Fading a big dog
Buying (selling) when a big dog is selling (buying).

Fair
The fair price is usually either the theoretical price an instrument should fetch or the no-arbitrage price.The fair price of a future or forward contract is the price at which arbitrage between the derivative and the underlying asset just breaks even. The fair value of an option is what should be the price of that option in an efficient market with reference to theoretical option models.

Fairway Bond or Note
Another name for Accrual Note, Corridor Note, or Range Note. It accrues interest if and only if the index rate stays within a range (analogous to a golf ball staying on the fairway).

Fannie Mae
Federal National Mortgage Association. The largest player in the secondary mortgage market.

Federal Reserve System
The central bank of the U.S., established in 1913, and governed by the Federal Reserve Board located in Washington, D.C. The system includes 12 Federal Reserve Banks and is authorized to regulate monetary policy in the U.S. as well as to supervise Federal Reserve member banks, bank holding companies, international operations of U.S.banks, and U.S.operations of foreign banks.

Financial engineering
Combining or dividing existing instruments to create new financial products.

Fiona
Frankfurt Interbank Overnight Average

Fisher effect
A theory that nominal interest rates in two or more countries should be equal to the required real rate of return to investors plus compensation for the expected amount of inflation in each country.

Flat trades
(1) A bond in default trades flat; that is, the price quoted covers both principal and unpaid, accrued interest. (2) Any security that trades without accrued interest or at a price that includes accrued interest is said to trade flat.

Flattening of the yield curve
A change in the yield curve where the spread between the yield on a long-term and short-term Treasury has decreased. Compare steepening of the yield curve and butterfly shift.




Flex Option
An exchange-traded options that does not have the standard terms of listed options. The customer and the market maker can negotiate various terms, such as strike price and expiration date.

Floor
A strip of Floorlets.

Floor broker
A local who trades for customer accounts, on commission.

Floorlet
An Interest Rate Option to receive fixed in an FRA. Its payoff is proportional that to that of a Put Option on a floating rate of interest.

Floortion
An option on a Floor.

Floor trader
A local who trades for his own account, trying to buy low and sell high.

Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with operating control residing in the parent corporation.

Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.

Foreign exchange
Currency from another country.

Foreign exchange controls
Various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.

Foreign exchange dealer
A firm or individual that buys foreign exchange from one party and then sells it to another party. The dealer makes the difference between the buying and selling prices, or spread.

Foreign exchange risk
The risk that a long or short position in a foreign currency might have to be closed out at a loss due to an adverse movement in the currency rates.

Foreign exchange swap
An agreement to exchange stipulated amounts of one currency for another currency at one or more future dates.

Forward Contract
A contract to exchange (buy or sell) an underlying instrument for a fixed forward price at a specific, future delivery date. In certain cases – but not always – the Forward Price exceeds the spot price by the cost of carrying the underlying asset from the spot delivery date to the forward delivery date. The cost of carry is an increasing function of the rate of interest and storage costs, and a decreasing function of the rate of dividends, interest, or other cash flows from the underlying instrument. Cf. Futures Contract.

Forward cover
Purchase or sale of forward foreign currency in order to offset a known future cash flow.

Forward Curve
The Forward Curve at a specific future date, based on today’s Forward Curve.
Forward delivery
A transaction in which the settlement will occur on a specified date in the future at a price agreed upon on the trade date.

Forward differential
Annualized percentage difference between spot and forward rates.

Forward discount
A currency trades at a forward discount when its forward price is lower than its spot price.

Forward exchange rate
Exchange rate fixed today for exchanging currency at some future date.

Forward Fed funds
Fed funds traded for future delivery.

Forward forward contract
In Eurocurrencies, a contract under which a deposit of fixed maturity is agreed to at a fixed price for future delivery.

Forward interest rate
Interest rate fixed today on a loan to be made at some future date.

Forward looking multiple
A truncated expression for a P/E ratio that is based on forward (expected) earnings rather than on trailing earnings.

Forward market
A market in which participants agree to trade some commodity, security, or foreign exchange at a fixed price for future delivery.

Forward premium
A currency trades at a forward premium when its forward price is higher than its spot price.

Forward rate
A projection of future interest rates calculated from either the spot rates or the yield curve.

Forward Curve
The Forward Curve at a specific future date, based on today’s Forward Curve.

Forward Rate Agreement
A contract calling for one counterparty to receive the fixed FRA rate and pay the floating rate (e.g., LIBOR) for a particular accrual period in the future, and for the other counterparty to do the reverse. Settlement is at the beginning of the accrual period, when the markets resolve the uncertainty about the floating rate, mainly because that reduces the credit risk associated with the contract. Cf. Swaplet.

Freddie Mac
Federal Home Loan Mortgage Association. The second largest player in the secondary mortgage market.

Front months
Futures contracts with delivery dates in the nearer future.

Fundamental analysis
Security analysis that seeks to detect misvalued securities by an analysis of the firm’s business prospects. Research analysis often focuses on earnings, dividend prospects, expectations for future interest rates, and risk evaluation of the firm.

Fundamental beta
The product of a statistical model to predict the fundamental risk of a security using not only price data but other market-related and financial data.

Fundamental descriptors
In the model for calculating fundamental beta, ratios in risk indexes other than market variability, which rely on financial data other than price data.

Funded debt
Debt maturing after more than one year.




Funding ratio
The ratio of a pension plan’s assets to its liabilities.

Futures Contract
An exchange-traded contract that on its last trading day settles into a Forward Contract (q.v.). The Futures Price and the corresponding Forward Price differ systematically in a world where interest rates are stochastic, and the difference depends on the correlation between the underlying spot price and the price of the zero coupon bond that matures on the last trading day.

Futures contract multiple
A constant, set by an exchange, which when multiplied by the futures price gives the dollar value of a stock index futures contract.

Futures Option
A listed option that settles into a Futures Contract

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