The Organizational Structure of the Foreign Exchange Futures Market

foreign exchangefuturesThe market refers to an organized market for buying and selling futures contracts according to certain rules and regulations, generally composed ofForeign exchange futuresThe composition of the exchange, futures clearing house, exchange members, brokers and general customers.

（1） Futures Exchange

Most of the exchanges in the world that can engage in currency futures trading today are non-profit organizations registered with local governments in the form of joint-stock companies. The purpose of their establishment is to provide venues and necessary equipment for trading, establish trading rules, trading hours, trading varieties, margin amounts, delivery months, commission amounts, and other trading conditions, while mediating disputes among members and providing information assistance to the market. The board of directors of the exchange supervises daily affairs and is subject to official supervision. For example, the London International Financial Futures Exchange in the UK is regulated by the Bank of England. At present, the major foreign exchange futures exchanges in the world include the International Monetary Market of the Chicago Mercantile Exchange, the London International Financial Futures Exchange, the Philadelphia Futures Exchange, the Central American Commodity Exchange, the Tokyo International Financial Futures Exchange, the Singapore International Financial Exchange, and the Sydney Futures Exchange. Each exchange basically has futures contracts traded in its own currency with other major currencies.

（2） Futures clearing house

The clearing house, also known as the clearing house, is to complete the settlement work through the process of buying the contract from the parties to the futures contract to become the buyer, or selling the contract to become the seller. That is, it can be considered that the buyer of futures trading is the futures contract bought from the clearing house, and the seller of the futures contract first sold the contract to the clearing house, and then the clearing house sold the contract to the buyer. In this way, if one party breaches the contract, the clearing house shall also be responsible for clearing with the other party of the transaction. The losses and risks incurred by the clearing house shall be compensated by the funds in the margin account of the defaulting party. The first duty of the clearing house is to serve as a member account to provide the borrower and borrower with a place for fund flow and transfer and a fund storage center, so that the funds can be truly flowing and transferred; The second is to fulfill the responsibility of the futures contract guarantor to ensure smooth trading.

（3） Exchange member

Exchange members refer to natural or legal persons who have membership in futures exchanges, commonly known as having "seats" on the exchange. The exchange seat itself is a valuable commodity that can be transferred and traded in the market. To become a member of a futures exchange, strict examination is required. The exchange has a dedicated membership review committee, which conducts strict examination of traders applying to become members in various aspects such as business, credit, finance, and social status. Generally speaking, the number of members of the Exchange is limited, such as the total number of members of the Chicago Board Of Trade3490People, including formal members1402People; Number of members of the Chicago Mercantile Exchange2724People, including members of the Chicago Mercantile Exchange625People, international money market membership seats812People, Index andoptionMarket membership seats1287People. Members pay membership fees to ensure the normal operation of the exchange. When there is a loss in the operation of the exchange, members must bear the obligation to increase membership fees, but when the exchange experiences a surplus, members do not return. Exchange members have the right to engage in trading activities within the exchange and have a say in the operation and operation of the exchange.

（4） Broker

A broker is a company that enters into foreign exchange futures contracts on behalf of buyers and sellers, and must be a member of a registered futures exchange. According to their different functions, they can be divided into floor brokers and floor traders.

1.On site economic agent

On exchange brokers are intermediaries for non members to participate in futures trading. Its main function is to provide customers with services to complete transaction instructions; Record customer profits and losses, and represent the actual delivery of futures contracts; Handling customer deposits; Provide decision-making information and consulting services to clients, while also charging commissions.

2.Floor Trader

On exchange traders generally only engage in foreign exchange futures trading for their own benefit, mainly to earn bid and sell spreads.