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98-483: NYSE Euronext offers a broad and growing array of financial products and services in cash equities, futures , options , exchange-traded products (ETPs), bonds , market data, and commercial technology. Spanning multiple asset classes and six countries, the company's exchanges include the New York Stock Exchange, Liffe, Euronext and NYSE Arca. With more than 8,000 listed issues (which includes 90% of

196-417: A futures contract (sometimes called futures ) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset transacted is usually a commodity or financial instrument . The predetermined price of the contract is known as the forward price or delivery price . The specified time in

294-604: A "more open business model" for markets. On December 22, 2011, Deutsche Boerse won U.S. antitrust approval to buy NYSE Euronext, on condition that a Deutsche Boerse subsidiary, the International Securities Exchange, divest its 31.5 percent interest in Direct Edge . NYSE Euronext and Deutsche Boerse AG delayed the deadline for completing their merger until March 31, 2012, so the exchange operators could try to persuade European regulators to approve

392-402: A buyer and seller of a futures contract or an options seller to ensure the performance of the term of the contract. Margin in commodities is not a payment of equity or down payment on the commodity itself, but rather it is a security deposit. Return on margin (ROM) is often used to judge performance because it represents the gain or loss compared to the exchange's perceived risk as reflected in

490-404: A commodity or the owner of an asset or assets subject to certain influences such as an interest rate. For example, in traditional commodity markets , farmers often sell futures contracts for the crops and livestock they produce to guarantee a certain price, making it easier for them to plan. Similarly, livestock producers often purchase futures to cover their feed costs, so that they can plan on

588-415: A daily basis, however, in times of high volatility, a broker can make a margin call intra-day. Margin calls are usually expected to be paid and received on the same day. If not, the broker has the right to close sufficient positions to meet the amount called by way of margin. After the position is closed out the client is liable for any resulting deficit in the client's account. Some U.S. exchanges also use

686-472: A fixed cost for feed. In modern (financial) markets, "producers" of interest rate swaps or equity derivative products will use financial futures or equity index futures to reduce or remove the risk on the swap . Joaqu%C3%ADn Almunia Joaquín Almunia Amann (born 17 June 1948) is a Spanish politician and formerly, prominent member of the European Commission . During his tenure in

784-546: A hybrid model combining both auction-based and electronic trading capabilities that is designed to provide a stable, liquid and less volatile market. This feature provides the opportunity for price and/or size improvement. In 2010, NYSE Euronext announced the sale of a significant equity interest in NYSE Amex Options to seven external investors: Bank of America Merrill Lynch , Barclays Capital , Citadel Securities, Citi , Goldman Sachs, TD Ameritrade , and UBS. Under

882-603: A majority interest in NYSE Blue, and APX, Inc. (a leading provider of regulatory infrastructure and services for environmental and sustainable energy markets) will contribute its business in return for a minority interest in the venture. The transaction closed on February 18, 2011. The Information Services and Technology Solutions segment refers to NYSE Euronext's commercial technology transactions, data, and infrastructure businesses. NYSE Euronext operates NYSE Technologies, Free Market, and also owns NYFIX, Inc. NYSE Technologies

980-484: A national license as an exchange operator. NYSE Euronext completed its acquisition of the American Stock Exchange (Amex) on October 1, 2008. The transaction extended NYSE Euronext's leadership in U.S. option, cash equities, and exchange-traded funds (ETFs), making it the third largest U.S. equity options marketplace based on number of contracts traded. Since the merger, Amex has been integrated into

1078-603: A near-monopoly in European financial derivatives worldwide... These markets are at the heart of the financial system and it is crucial for the whole European economy that they remain competitive". On February 2, 2012, the NYSE Euronext and Deutsche Börse agreed with strong opposition by the EU for the planned merger, to scrap the merger. On December 20, 2012, the boards of directors of both Intercontinental Exchange (ICE) and

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1176-402: A no-arbitrage setting when we take expectations with respect to the risk-neutral probability . In other words: a futures price is a martingale with respect to the risk-neutral probability. With this pricing rule, a speculator is expected to break even when the futures market fairly prices the deliverable commodity. The situation where the price of a commodity for future delivery is higher than

1274-411: A percentage of the value of the futures contract, must be maintained throughout the life of the contract to guarantee the agreement, as over this time the price of the contract can vary as a function of supply and demand, causing one side of the exchange to lose money at the expense of the other. To mitigate the risk of default, the product is marked to market on a daily basis where the difference between

1372-541: A progressive think tank called Laboratorio de Alternativas ( Fundación Alternativas ). He first joined the Prodi Commission on 26 April 2004 as a successor to Pedro Solbes (who had resigned to join the new Zapatero government ) and was reappointed by Barroso in November 2004. As EU Commissioner for Competition, Almunia was in charge of state aid and antitrust investigations relating to Google and to

1470-444: A relationship can be summarized as: The convenience yield is not easily observable or measured, so y is often calculated, when r and u are known, as the extraneous yield paid by investors selling at spot to arbitrage the futures price. Dividend or income yields q are more easily observed or estimated, and can be incorporated in the same way: In a perfect market, the relationship between futures and spot prices depends only on

1568-420: A series of bad harvests. The Chicago Board of Trade (CBOT) listed the first-ever standardized 'exchange traded' forward contracts in 1864, which were called futures contracts. This contract was based on grain trading, and started a trend that saw contracts created on a number of different standardized futures contracts based on commodities , as well as a number of futures exchanges set up in countries around

1666-460: A shallow and illiquid market, or in a market in which large quantities of the deliverable asset have been deliberately withheld from market participants (an illegal action known as cornering the market ), the market clearing price for the futures may still represent the balance between supply and demand but the relationship between this price and the expected future price of the asset can break down. The expectation-based relationship will also hold in

1764-442: A single market. Issuers who meet European Union regulatory standards are qualified for listing on the regulated markets operated by Euronext. The company's exchanges list a wide variety of securities, including domestic and international equity securities, convertible bonds, warrants, trackers and debt securities, including corporate and government bonds. All of Euronext's markets are operated by its subsidiaries, each of which holds

1862-550: A technology platform and market structure designed to enhance the speed and quality of trade execution for its customers, as well as to attract additional sources of liquidity. Its structure allows market makers to access its markets remotely and integrates floor-based participants as well. The Cash Trading and Listings segment includes the New York Stock Exchange, Euronext, NYSE Amex, NYSE Arca, NYSE Alternext, NYSE Arca Europe, SmartPool, BlueNext , and NYSE Blue, as well as related cash trading market data. The New York Stock Exchange

1960-464: A wide range of interest-rate , equity , index , commodity and currency derivative products. This platform has been designed to handle significant order flows and transaction volumes. Orders can be matched either on a price/time or pro rata basis, configurable by contract, with transacted prices and volumes and the aggregate size of all bids and offers at each price level updated on a real-time basis. Users can continually notified of all active orders in

2058-769: Is an exchange-regulated market with a lighter regulatory regime. It is not a regulated market as defined by the Markets in Financial Instruments Directive (MiFID), but rather is regulated by NYSE Euronext through a body of rules applicable to intermediaries and listed companies. NYSE Arca Europe is a pan-European multilateral trading facility (MTF) that extends the trading scope of Euronext's regulated markets by adding blue-chip stocks from 14 European countries: Austria , Czech Republic , Denmark , Finland , France , Germany , Hungary , Ireland , Italy , Norway , Spain , Sweden , Switzerland , and

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2156-436: Is held by six external investors: Citadel Securities , DRW Investments, Getco , Goldman Sachs , Morgan Stanley and UBS . Under this ownership structure, NYSE Euronext remains the largest shareholder in the entity and consolidates its financial reporting. NYSE Euronext manages the day-to-day operations of NYSE Liffe US, which operates under the supervision of a separate board of directors. The NYSE Amex Options business uses

2254-415: Is made and the account owner must replenish the margin account. On the delivery date, the amount exchanged is not the specified price on the contract but the spot value , since any gain or loss has already been previously settled by marking to market. To minimize counterparty risk to traders, trades executed on regulated futures exchanges are guaranteed by a clearing house . The clearing house becomes

2352-419: Is marked to market daily. If the margin drops below the margin maintenance requirement established by the exchange listing the futures, a margin call will be issued to bring the account back up to the required level. Maintenance margin A set minimum margin per outstanding futures contract that a customer must maintain in their margin account. Margin-equity ratio is a term used by speculators , representing

2450-538: Is not expected to be blocked. ICE said that after the deal closed it would sell the Euronext portion of the company, including stock exchanges in Amsterdam, Brussels, Lisbon and Paris. The deal went through and Euronext is a sister division to NYSE and part of ICE. ICE CEO Jeffrey Sprecher would continue in that position at the combined company, while NYSE CEO Duncan Niederauer would serve as president. The future of

2548-515: Is registered as a national securities exchange under the Exchange Act . In addition to common stock, preferred stock and warrants , the NYSE lists debt and corporate structured products, such as capital securities, mandatory convertibles, and repackaged securities. Euronext is the first integrated cross-border exchange, combining the stock exchanges of Amsterdam, Paris, Brussels and Lisbon into

2646-417: Is set by the exchange. If a position involves an exchange-traded product, the amount or percentage of the initial margin is set by the exchange concerned. In case of loss or if the value of the initial margin is being eroded, the broker will make a margin call in order to restore the amount of initial margin available. Often referred to as "variation margin", margin called, for this reason, is usually done on

2744-493: Is the European leader in the field. It seeks to establish a leading position in trading in environment-related instruments, and has also launched a futures market with physical delivery of allowances and credits. In September 2010, NYSE Euronext announced plans to create NYSE Blue, a new global company that will focus on environmental and sustainable energy markets. NYSE Euronext contributed its ownership in BlueNext in return for

2842-727: Is the commercial technology division of NYSE Euronext. NYSE Technologies operates five business: The Free Markets of Brussels and Paris, organized by NYSE Euronext, are not regulated markets in the sense of the EU Directive. The criteria for admission to these markets are much simpler, and listing costs are low. They provide a channel for disseminating buy and sell orders, with trades executed by NYSE Euronext member firms. The securities traded on these markets have not gone through any admission procedures and issuers are not subject to any disclosure requirements. The Free Markets serve companies that are too young or too small to be listed on one of

2940-628: The 1996 elections , the PSOE Convention ( Congreso federal ) appointed Almunia as the party leader (Secretary-General), a position he held from 1997 to 2000. In 1998, fellow party member and former minister Josep Borrell decided to run against Almunia, in the first national primary election ever held in the PSOE since the Second Republic , intended to determine who the party would nominate as its prime ministerial candidate vis-à-vis

3038-464: The 2000 general election . Borrell ran as the underdog, campaigning as the candidate of the socialist base against the party establishment, which largely supported Almunia, including former Prime Minister González. Unexpectedly, Borrell won the primary election, commanding 114,254 of the member's votes (54.99%), versus the 92,860 (44.67%) obtained by Almunia. Thus began an uneasy relationship and power-sharing —the "bicefalia" ( duumvirate )— between

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3136-595: The Chicago Mercantile Exchange (CME) and these instruments became hugely successful and quickly overtook commodities futures in terms of trading volume and global accessibility to the markets. This innovation led to the introduction of many new futures exchanges worldwide, such as the London International Financial Futures Exchange in 1982 (now Euronext. liffe), Deutsche Terminbörse (now Eurex ) and

3234-607: The Dow Jones Industrial Average and 80% of the S&;P 500 , trading on NYSE Euronext's equity markets represents more than one-third of the world's cash equities volume. The company also manages the leading European derivatives exchange by value of trading. NYSE Euronext is part of the S&;P 500 index and the only exchange operator in the S&P 100 index . NYSE Euronext is a Delaware corporation, though

3332-597: The London interbank offered rate from the British Bankers Association . The new administrator is NYSE Euronext Rates Administration Limited, a London-based, UK registered company, regulated by the UK's Financial Conduct Authority . NYSE Euronext maintains an active marketing campaign, both for its own brand, as well as for its listed companies. The Global Marketing and Branding department is responsible for

3430-544: The Spanish Socialist Workers' Party , standing in and losing the 2000 Spanish general election against the then incumbent Spanish prime minister , José María Aznar . Born in Bilbao on 17 June 1948 to a bourgeois family, son to an engineer (father) of Valencian origin and a cultivated mother, daughter of a German physician of Jewish ancestry. His grandfather Isaac Amann was one of the promoters of

3528-497: The Tokyo Commodity Exchange (TOCOM). Today, there are more than 90 futures and futures options exchanges worldwide trading to include: Most futures contract codes are five characters. The first two characters identify the contract type, the third character identifies the month and the last two characters identify the year. On CME Group markets, third (month) futures contract codes are: Contracts expire after

3626-675: The futures exchange article. Trading on commodities began in Japan in the 18th century with the trading of rice and silk, and similarly in Holland with tulip bulbs. Trading in the US began in the mid 19th century when central grain markets were established and a marketplace was created for farmers to bring their commodities and sell them either for immediate delivery (also called spot or cash market) or for forward delivery. These forward contracts were private contracts between buyers and sellers and became

3724-409: The 112,557,259 shares are tendered in the first round. The NYSE Group and Euronext merger on April 4, 2007, signaled the creation of the world's largest and most liquid exchange group—NYSE Euronext. NYSE Euronext, through its wholly owned subsidiary NYSE Technologies, Inc. acquired NYFIX, Inc. (Nasdaq: NYFX) for $ 144 million in November 2009. NYSE Euronext incorporated NYFIX's trading software into

3822-749: The Bilbao–Getxo railway. Almunia attended the Jesuit School of Indautxu in Bilbao. He graduated with degrees in economics and law in 1971 and 1972, respectively, from the also Jesuit University of Deusto in Bilbao, and completed follow-up studies at the École pratique des hautes études in Paris, from 1970 to 1971. He also completed a program at the Harvard Kennedy School at Harvard University for senior managers in government in 1991. He

3920-485: The IMM added interest rate futures on US treasury bills , and in 1982 they added stock market index futures . Although futures contracts are oriented towards a future time point, their main purpose is to mitigate the risk of default by either party in the intervening period. In this vein, the futures exchange requires both parties to put up initial cash, or a performance bond, known as the margin . Margins, sometimes set as

4018-513: The NYSE Euronext approved an $ 8 billion acquisition of NYSE Euronext. Under the terms shareholders of NYSE would receive either $ 33.12 in cash for each share or .2581 IntercontinentalExchange Inc. shares, or a combination of $ 11.27 in cash per share plus .1703 shares of stock. The acquisition is subject to regulator approval, though since the operations of ICE and NYSE have little in common—ICE is largely devoted to trading commodities, as opposed to NYSE's business of trading stocks and securities—the deal

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4116-662: The NYSE Group: NYSE Arca and NYSE Arca Europe, which launched after the acquisition of Euronext. In April 2006, NYSE Group and Euronext signed a merger agreement, subject to shareholder vote and regulatory approval. Euronext shareholders gave approval to the transaction on December 19, 2006, and shareholders from the NYSE Group followed suit one day later. In April 2007 the Euronext shareholders tendering shares can receive NYSE shares and cash amounting to $ 11,141 million from NYSE Euronext for their assets. About 94% of

4214-732: The New York Stock Exchange's historic trading floor under ICE has not been announced. ICE closed the high profile and historic trading floors of its other earlier acquisitions, the International Petroleum Exchange and the New York Board of Trade in New York. The Derivatives segment consists of NYSE Euronext's derivatives trading and clearing businesses. This includes NYSE Liffe , NYSE Liffe Clearing, NYSE Liffe US, NYSE Amex Options, NYSE Arca Option, and related derivatives market data. NYSE Liffe comprises

4312-545: The United Kingdom. Arca Europe integrates this trading facility with the other business components of the company, giving customers the flexibility in trading of an MTF while maintaining the global market reach of NYSE Euronext. SmartPool Trading Limited is a UK-registered company supplying an MTF approved by the Financial Services Authority (FSA). It provides an exchange-led dark pool for

4410-427: The above variables; in practice, there are various market imperfections (transaction costs, differential borrowing, and lending rates, restrictions on short selling) that prevent complete arbitrage. Thus, the futures price in fact varies within arbitrage boundaries around the theoretical price. When the deliverable commodity is not in plentiful supply (or when it does not yet exist) rational pricing cannot be applied, as

4508-558: The amount of their trading capital that is being held as margin at any particular time. The low margin requirements of futures results in substantial leverage of the investment. However, the exchanges require a minimum amount that varies depending on the contract and the trader. The broker may set the requirement higher, but may not set it lower. A trader, of course, can set it above that, if he does not want to be subject to margin calls. Performance bond margin The amount of money deposited by both

4606-399: The announced agreement, FINRA assumed regulatory functions for NYSE Euronext's U.S. equities and options markets – the New York Stock Exchange, NYSE Arca, and NYSE Amex. NYSE Euronext, through its subsidiary NYSE Regulation, remains ultimately responsible for overseeing FINRA's performance of regulatory services for the NYSE markets. In early 2014, NYSE Euronext took over the administration of

4704-425: The arbitrage mechanism is not applicable. Here the price of the futures is determined by today's supply and demand for the underlying asset in the future. In an efficient market, supply and demand would be expected to balance out at a futures price that represents the present value of an unbiased expectation of the price of the asset at the delivery date. This relationship can be represented as :: By contrast, in

4802-408: The asset to sell at the futures price. Convenience yields are benefits of holding an asset for sale at the futures price beyond the cash received from the sale. Such benefits could include the ability to meet unexpected demand, or the ability to use the asset as an input in production. Investors pay or give up the convenience yield when selling at the spot price because they give up these benefits. Such

4900-423: The basis of market risk and contract value. Also referred to as performance bond margin. Initial margin is the equity required to initiate a futures position. This is a type of performance bond. The maximum exposure is not limited to the amount of the initial margin, however, the initial margin requirement is calculated based on the maximum estimated change in contract value within a trading day. The initial margin

4998-418: The buyer to each seller, and the seller to each buyer, so that in the event of a counterparty default the clearer assumes the risk of loss. This enables traders to transact without performing due diligence on their counterparty. Margin requirements are waived or reduced in some cases for hedgers who have physical ownership of the covered commodity or spread traders who have offsetting contracts balancing

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5096-897: The central order book, making market depth easy to monitor. NYSE Liffe also offers its customers the Bclear and Cscreen services, which bridge the listed and over-the-counter (OTC) markets. This provides a simple and cost-effective way to register and process wholesale derivatives trades through NYSE Liffe to clearing at NYSE Liffe Clearing. Following the launch of NYSE Liffe Clearing, NYSE Liffe assumed full responsibility for clearing activities on its own London market. NYSE Liffe US, NYSE Euronext's U.S. futures exchange, makes available for trading full- and mini-sized gold and silver futures, options on full-sized gold and silver futures and futures on Morgan Stanley Capital International (MSCI) Indices. A significant minority equity stake in NYSE Liffe US

5194-484: The company's package of offerings to customers. In 2011, Bloomberg reported that the German exchange operator Deutsche Börse was in advanced talks to buy NYSE Euronext for $ 9.53 billion in a deal that would create the world's largest trading powerhouse. The shares of both companies were temporarily frozen on the news due to the risk of large price movements and clarifications of the deal. A successful deal would see

5292-592: The company, with former Amex listings now trading directly on the NYSE, and has begun trading certain Nasdaq -listed securities. NYSE Arca is the first electronic market to offer listed ETP issuers a Lead Market Maker program, which encourages liquidity provision that contributes to the best prices and depth in the ETP marketplace. It is registered as a national securities exchange under the Exchange Act. NYSE Alternext

5390-423: The currency in the interval before payment is received. However, futures contracts also offer opportunities for speculation in that a trader who predicts that the price of an asset will move in a particular direction can contract to buy or sell it in the future at a price which (if the prediction is correct) will yield a profit. In particular, if the speculator is able to profit, then the underlying commodity that

5488-437: The day that a particular delivery month of a futures contract stops trading, as well as the final settlement price for that contract. For many equity index futures and interest rate futures as well as for most equity (index) options, this happens on the third Friday of certain trading months. On this day the back month futures contract becomes the front-month futures contract. For example, for most CME and CBOT contracts, at

5586-573: The deal as well. These decisions move the two sides closer to completing the transaction, which must still pass through forty separate regulatory approval processes to be finalized. The merger was subject to review in both the United States and with the European Union (EU) for concerns it could create a " de facto monopoly ". In October 2011, CEO Niederauer said the company had received the EU's so-called statement of objections, which

5684-413: The deal. On February 1, 2012, the European Union blocked the planned merger between NYSE Euronext and Deutsche Boerse. The European Commission—the EU's executive body—ruled against the merger because, they said, the combined exchange would control more than 90% of the trade in European derivatives. The European Commission report stated, "The merger between Deutsche Boerse and NYSE Euronext would have led to

5782-452: The deliverable asset exists in plentiful supply or may be freely created, then the price of a futures contract is determined via arbitrage arguments. This is typical for stock index futures , treasury bond futures , and futures on physical commodities when they are in supply (e.g. agricultural crops after the harvest). However, when the deliverable commodity is not in plentiful supply or when it does not yet exist—for example on crops before

5880-402: The deliverable asset exists in plentiful supply or may be freely created. Here, the forward price represents the expected future value of the underlying discounted at the risk-free rate —as any deviation from the theoretical price will afford investors a riskless profit opportunity and should be arbitraged away. We define the forward price to be the strike K such that the contract has 0 value at

5978-420: The derivatives market operated by LIFFE Administration and Management, Euronext Amsterdam, Euronext Brussels, Euronext Lisbon, and Euronext Paris. It offers customers the advantages of one of the most technologically advanced derivatives trading platforms as well as one of the widest choices of products of any derivatives market. Through a single electronic trading platform , NYSE Liffe offers customers access to

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6076-493: The execution of block orders covering 15 different European markets, with a full central counter party back-end through LCH.Clearnet and EuroCCP. SmartPool was created by NYSE Euronext in partnership with BNP Paribas , HSBC , and J.P. Morgan Chase . NYSE Euronext holds a 60% interest in BlueNext with the remaining 40% held by CDC Climat. BlueNext operates a spot market in carbon dioxide emission allowances and credits that

6174-544: The expected spot price is known as contango . Markets are said to be normal when futures prices are above the current spot price and far-dated futures are priced above near-dated futures. The reverse, where the price of a commodity for future delivery is lower than the expected spot price is known as backwardation . Similarly, markets are said to be inverted when futures prices are below the current spot price and far-dated futures are priced below near-dated futures. There are many different kinds of futures contracts, reflecting

6272-510: The expiration of the December contract, the March futures become the nearest contract. During a short period (perhaps 30 minutes) the underlying cash price and the futures prices sometimes struggle to converge. At this moment the futures and the underlying assets are extremely liquid and any disparity between an index and an underlying asset is quickly traded by arbitrageurs. At this moment also,

6370-443: The fifteen directors, nine to be designated by Deutsche Boerse and six by NYSE Euronext. Current NYSE Euronext CEO Duncan Niederauer would assume the same role with the newly founded company and would lead an executive committee with an equal number of current Deutsche Boerse and NYSE Euronext executives. On July 7, 2011, NYSE Euronext shareholders voted in favor of the merger, and on July 13, 2011, Deutsche Boerse shareholders approved

6468-399: The forerunner to today's exchange-traded futures contracts. Although contract trading began with traditional commodities such as grains, meat, and livestock, exchange trading has expanded to include metals, energy, currency and currency indexes, equities and equity indexes, government interest rates, and private interest rates. Contracts on financial instruments were introduced in the 1970s by

6566-519: The framework, NYSE Euronext remains the largest shareholder in the entity and manages the day-to-day operations of NYSE Amex Options, which operates under the supervision of a separate board of directors and chief executive officer. NYSE Euronext consolidates this entity for financial reporting purposes. NYSE Arca Options, the other of NYSE Euronext's two U.S. options exchanges, offers immediate, cost-effective electronic order execution in nearly two thousand options issues. The NYSE Arca Options business uses

6664-727: The full spectrum of NYSE Euronext's brand marketing, including advertising, marketing communications, event management, and market research. Through the NYSE Global Partnership Program, NYSE Euronext has created a series of strategic resources to support its listed companies' growth initiatives, so as to act as a conduit that enables them to reach new and important audiences. NYSE Euronext's 8,000 listed issues provide members with an extensive network of global investors and business leaders with which to interact. The company offers opportunities for co-branded advertising, linking listed companies to one another, as well as to

6762-468: The future when delivery and payment occur is known as the delivery date . Because it derives its value from the value of the underlying asset, a futures contract is a derivative . Contracts are traded at futures exchanges , which act as a marketplace between buyers and sellers. The buyer of a contract is said to be the long position holder and the selling party is said to be the short position holder. As both parties risk their counter-party reneging if

6860-446: The harvest or on Eurodollar Futures or Federal funds rate futures (in which the supposed underlying instrument is to be created upon the delivery date)—the futures price cannot be fixed by arbitrage. In this scenario, there is only one force setting the price, which is simple supply and demand for the asset in the future, as expressed by supply and demand for the futures contract. Arbitrage arguments (" rational pricing ") apply when

6958-534: The high risk trading instruments in the market. Stock market index futures are also used as indicators to determine market sentiment. The first futures contracts were negotiated for agricultural commodities, and later futures contracts were negotiated for natural resources such as oil. Financial futures were introduced in 1972, and in recent decades, currency futures , interest rate futures , stock market index futures , and cryptocurrency inverse futures and perpetual futures have played an increasingly large role in

7056-608: The increase in volume is caused by traders rolling over positions to the next contract or, in the case of equity index futures, purchasing underlying components of those indexes to hedge against current index positions. On the expiry date, a European equity arbitrage trading desk in London or Frankfurt will see positions expire in as many as eight major markets almost every half an hour. Exchanges implement strict limits on how much exposure an entity may have closer to expiration as an effort to avoid any volatility around final settlement. When

7154-406: The initial agreed-upon price and the actual daily futures price is re-evaluated daily. This is sometimes known as the variation margin, where the futures exchange will draw money out of the losing party's margin account and put it into that of the other party, ensuring the correct loss or profit is reflected daily. If the margin account goes below a certain value set by the exchange, then a margin call

7252-407: The listing month. Therefore traders must roll over their positions into the next month code. Example: CLX14 is a Crude Oil (CL), November (X) 2014 (14) contract. Futures traders are traditionally placed in one of two groups: hedgers and speculators . Hedgers have an interest in the underlying asset (which could include an intangible such as an index or interest rate) and are seeking to hedge out

7350-405: The many different kinds of "tradable" assets about which the contract may be based such as commodities, securities (such as single-stock futures ), currencies or intangibles such as interest rates and indexes. For information on futures markets in specific underlying commodity markets , follow the links. For a list of tradable commodities futures contracts, see List of traded commodities . See also

7448-585: The new company becoming the world's largest stock exchange operator with a market capitalization of listed companies equal to $ 15 trillion. The proposed group would have dual headquarters, in Deutsche Boerse's newly built green tower near Frankfurt , Germany , and in New York City at 11 Wall Street. It would be led by a board with seventeen members, fifteen directors plus the chairman and the CEO. Of

7546-530: The official party leader, Almunia, and the prime ministerial candidate elected by the members in the primaries, Borrell. However, in May 1999, a fraud investigation affecting two former officials appointed by Borrell several years earlier while he was at the Ministry of Finance, led to his resignation as Prime Ministerial candidate. In 2000 , Almunia was therefore the PSOE candidate for prime minister . The party

7644-458: The overall futures markets. Even organ futures have been proposed to increase the supply of transplant organs. The original use of futures contracts mitigates the risk of price or exchange rate movements by allowing parties to fix prices or rates in advance for future transactions. This could be advantageous when (for example) a party expects to receive payment in foreign currency in the future and wishes to guard against an unfavorable movement of

7742-694: The position. Clearing margin are financial safeguards to ensure that companies or corporations perform on their customers' open futures and options contracts. Clearing margins are distinct from customer margins that individual buyers and sellers of futures and options contracts are required to deposit with brokers. Customer margin Within the futures industry, financial guarantees required of both buyers and sellers of futures contracts and sellers of options contracts to ensure fulfillment of contract obligations. Futures Commission Merchants are responsible for overseeing customer margin accounts. Margins are determined on

7840-532: The powerful brand that is NYSE Euronext. The Events department of NYSE Euronext is responsible for coordinating bell ceremonies, receptions, conferences, and street events. Beginning in 2010, the NYSE Euronext opened its doors to non-listed companies to utilize NYSE facilities for after-hours events. The opening and closing bell ceremonies hosted by the NYSE date back to 1903, taking place Monday through Friday at 9:30 a.m. and 4:00 p.m. respectively in New York City. Futures contract In finance ,

7938-418: The present time. Assuming interest rates are constant the forward price of the futures is equal to the forward price of the forward contract with the same strike and maturity. It is also the same if the underlying asset is uncorrelated with interest rates. Otherwise, the difference between the forward price on the futures (futures price) and the forward price on the asset, is proportional to the covariance between

8036-421: The price goes against them, the contract may involve both parties lodging as security a margin of the value of the contract with a mutually trusted third party. For example, in gold futures trading, the margin varies between 2% and 20% depending on the volatility of the spot market . A stock future is a cash-settled futures contract on the value of a particular stock market index . Stock futures are one of

8134-500: The principal executive office of NYSE Euronext is located at 11 Wall Street, New York, New York 10005. The European headquarters are at 39 Rue Cambon, 75001 in Paris , France . Below is a list of major NYSE Euronext locations: The merger between NYSE and Archipelago Holdings was initially approved in 2005 by a 95% majority of voting NYSE members. The acquisition of Archipelago, which held possession of highly regarded market technology at

8232-404: The rate of risk-free return r . or, with continuous compounding This relationship may be modified for storage costs u , dividend or income yields q , and convenience yields y . Storage costs are costs involved in storing a commodity to sell at the futures price. Investors selling the asset at the spot price to arbitrage a futures price earns the storage costs they would have paid to store

8330-622: The regulated compartments of NYSE Euronext. On May 4, 2010, NYSE Euronext and the Financial Industry Regulatory Authority (FINRA) announced that FINRA would assume responsibility for performing the market surveillance and enforcement functions originally conducted by NYSE Regulation. The agreement was subject to review by the Securities and Exchange Commission (SEC) and was completed in June 2010. Under

8428-411: The required margin. ROM may be calculated (realized return) / (initial margin). The Annualized ROM is equal to (ROM+1) -1. For example, if a trader earns 10% on margin in two months, that would be about 77% annualized. Settlement is the act of consummating the contract, and can be done in one of two ways, as specified per type of futures contract: Expiry (or Expiration in the U.S.) is the time and

8526-473: The risk of price changes. Speculators, by contrast, seek to make a profit by predicting market moves and opening a derivative contract related to the asset "on paper", while they have no practical use for or intent to actually take or make delivery of the underlying asset. In other words, speculators are seeking exposure to the asset in long futures contracts or the opposite effect via short futures contracts. Hedgers typically include producers and consumers of

8624-474: The speculator traded would have been saved during a time of surplus and sold during a time of need, offering the consumers of the commodity a more favorable distribution of commodity over time. The Dōjima Rice Exchange , first established in 1697 in Osaka , is considered by some to be the first futures exchange market, to meet the needs of samurai who—being paid in rice—needed a stable conversion to coin after

8722-544: The term "maintenance margin", which in effect defines how much the value of the initial margin can reduce before a margin call is made. However, most non-US brokers only use the term "initial margin" and "variation margin". The Initial Margin requirement is established by the Futures exchange, in contrast to other securities' Initial Margin (which is set by the Federal Reserve in the U.S. Markets). A futures account

8820-567: The time, was intended to bring automated trading to NYSE markets (which had previously utilized an " open outcry " system) and increase efficiency. For the first time in its 213-year history, the New York Stock Exchange became a for-profit company, and began trading publicly on its own stock exchange under the NYX ticker. Owners of the 1,366 NYSE seats received 80,177 shares of NYSE Group stock plus $ 300,000 in cash and $ 70,571 in dividends for each seat. The completion of this deal created two new branches of

8918-476: The two Barroso Commissions , he was European commissioner responsible for economic and monetary affairs (2004–2009) and, subsequently, vice-president and the European Commissioner for Competition (2009–2014). Previously, he had been Spanish Minister for Employment (1982–1986) and Public Administrations (1986–1991). From 1997 to 2000, he was the leader of the opposition as secretary general of

9016-416: The underlying asset price and interest rates. For example, a futures contract on a zero-coupon bond will have a futures price lower than the forward price. This is called the futures "convexity correction". Thus, assuming constant rates, for a simple, non-dividend paying asset, the value of the futures/forward price, F(t,T) , will be found by compounding the present value S(t) at time t to maturity T by

9114-633: The world. By 1875 cotton futures were being traded in Bombay in India and within a few years this had expanded to futures on edible oilseeds complex , raw jute and jute goods and bullion . In the 1930s two thirds of all futures was in wheat. The 1972 creation of the International Monetary Market (IMM) by the Chicago Mercantile Exchange was the world's first financial futures exchange, and launched currency futures . In 1976,

9212-546: Was a member of the Congress of Deputies from 1979 to 2004, representing Madrid . He served as Minister of Employment and Social Security of the Government of Spain from 1982 to 1986 and as Minister of Public Administration from 1986 to 1991. He was replaced by Juan Manuel Eguiagaray in the latter post. He was also the PSOE spokesperson from 1994 to 1997. Upon the resignation of Felipe González after being defeated in

9310-593: Was again defeated by incumbent Prime Minister José María Aznar of the conservative PP , suffering its worst result in a general election since the Spanish transition to democracy , which resulted in an absolute majority for Aznar. As a result, Almunia resigned as PSOE leader. Almunia was the director of the research program on "equality and redistribution of income" at the Fundación Argentaria from 1991 to 1994. In 2002 he founded and served as director of

9408-714: Was an associate lecturer on employment and social security law at the University of Alcalá de Henares from 1991 to 1994. Almunia was chief economist of the Unión General de Trabajadores (UGT), a trade union linked to the Spanish Socialist Workers' Party (PSOE), from 1976 to 1979. He was economist at the Council Bureau of the Spanish Chambers of Commerce in Brussels from 1972 to 1975. Almunia

9506-443: Was created by NYSE Euronext to meet the needs of small and mid-sized companies seeking simplified access to the stock market. Its streamlined listing requirements and trading rules are suited to the size and business needs of such firms. The rules also ensure investor transparency. NYSE Alternext's special listing procedures, unique market model, and listings of sponsor companies for members are its most notable features. NYSE Alternext

9604-531: Was more than 100 pages long, and would be responding within two weeks, possibly by asking for the opportunity for an oral hearing with the regulators. The EU examination of the proposal formally began June 29 has said its expanded probe has a Dec. 13 deadline. In March, Joaquín Almunia , the EU's antitrust commissioner, expressed concern that the deal would maybe monopolize the derivatives market due to Deutsche Boerse's "vertical silo" which routes all trade clearing through its own services. Almunia said then he preferred

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