Financial future

They are traded across a wide range of currencies, including the G12 country currencies and many others.

Some representative financial futures contracts are

United States

• 90-day Eurodollar[?] *(IMM)
• 1 mo LIBOR (IMM)
• Fed Funds 30 day (CBT)

Europe

• 3 mo Euribor[?] (LIF)
• 90-day Sterling LIBOR (LIF)
• Euro Sfr (LIF)

Asia

• 3 mo Euroyen[?] (TIF)
• 90-day Bank Bill (SFE)

where

• IMM is the International Money Market of the Chicago Mercantile Exchange[?]
• CBT is the Chicago Board of Trade[?]
• LIF is the London International Financial Futures Exchange[?]
• TIF is the Tokyo International Financial Futures Exchange[?]
• SFE is the Sydney Futures Exchange[?]

As an example, consider the definition of the International Money Market (IMM) eurodollar interest rate future, the most widely and deeply traded financial futures contract.

• There are four contracts per year: March, June, September, December (plus serial months[?])
• They are listed on a 10 year cycle. Other markets only extend about 2-4 years.
• Last Trading Day is the second London business day preceding the third Wednesday of the contract month
• Delivery Day is cash settlement[?] on the third Wednesday.
• Payment is the difference between the price paid for the contract (in ticks) multiplied by the "tick value" of the contract which is $12.50 per tick
• Before the Last Trading Day the contract trades at market prices. The Final Settlement Price is the British Bankers' Association[?] (BBA) percentage rate for Three–Month Eurodollar Interbank Time Deposits, rounded to the nearest 1/10000th of a percentage point at 11:00 London time on that day, subtracted from 100. (Expressing financial futures prices as 100 minus the implied interest rate was originally intended to make the contract price resemble a bond price).

Financial futures are extensively used in the hedging[?] of interest rate swaps.

See also

• forward rate agreement