Security Futures Training - Module 3: Security Futures

Module 3: Security Futures explains the characteristics and elements of security futures.

Content Outline

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