Security Futures Training - Module 3: Security Futures

Security Futures

 

Definitions

  • Futures on single stocks
  • Futures on narrow-based stock indexes
    • Index changes from narrow to broad-based

Exchanges trading security futures
Listing requirements
Restrictions on trading security futures on foreign markets

 

Contract Terms and Conditions for Security Futures Contracts

 

Buying security futures
Selling security futures

  • No short sale requirement

Contract size
Hours of trading
Contract months/trading cycle
Last trading date
Expiration dates
Minimum price variation
Reporting requirements

  • Large trader reporting levels

Position and position accountability limits
Physical delivery
Cash settlement
Strategies

  • Arbitrage
  • Dividend-capture

 

Other Characteristics of Security Futures

 

Fungibilty (or lack thereof)
Trading halts

  • Regulatory halts
  • Circuit breakers

Treatment of corporate actions

  • Integral stock splits
  • Non-integral stock splits
  • Mergers
  • Takeovers
  • Spin-offs

Tax treatment
Block trading requirements