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