1. Futures contracts trading hours
According to the Exchange rules, the trading hours of each future products vary differently; please refer to the details in the Tiger Trade App. You may take Exchange announcement as confirmation.
2. Minimum futures contract trading unit
The trading unit of futures contract is different from trading stock. In futures trading, "Contract" is the trading unit, and the minimum trading unit of futures is a standard contract which is normally called one standard lot. The contract size of different futures contracts varies differently.
3. Futures price changes
The range of futures price change is considerably large. Some contracts have no intraday price change limit, investors are strongly advised to manage your own trading risk.
4. Futures trading methods
The futures contracts are traded in margin, investors can enter a futures contract after fulfilling the initial margin requirement which is a certain percentage of contract value (margin ratio less than 50%, usually about 10%). Exchange will conduct the settlement for investors’ position contracts in daily basis, and issue margin call to investors whose account cash collateral fails to meet the margin requirement requirements; futures merchant may require a higher overnight margin requirement.
5. Futures contract delivery mechanism
When the futures contract approaches to its delivery date, the contract will be delivered in a designated manner required by the Exchange, and the manner of delivery usually are physical delivery or cash delivery.
The cash delivery refers to a manner of delivery that, for the due and open position futures contract is delivered, the profit and loss is calculated based on its settlement price and settle the contract by paying cash.
While the physical delivery is such a manner of delivery that, for the futures contract is due, the buyer and the seller transfer the physical underlying of the futures contract according to the Exchange rule to settle the contract.
6. Futures trading market
(1) CME Group (Chicago Mercantile Exchange Group Inc.)
CME Group (Chicago Mercantile Exchange Group Inc.) owns four Exchange brands, i.e. CME (Chicago Mercantile Exchange), CBOT (Chicago Board of Trade), NYMEX (New York Mercantile Exchange), COMEX (New York Commodity Exchange), which are in Chicago and New York, and the varieties of futures contract cover hundreds of futures and option contract across seven categories, i.e. energy, precious metal, base metal, agricultural product, exchange rate and interest rate.
(2) SGX (Singapore Exchange Limited)
SGX (Singapore Exchange) is a major financial products trading center in the world. SGX provides world class trading products across foreign exchange futures, stock index futures, interest rate derivatives (futures, option, forward, interchange, etc.). Besides, due to the special geographic location of Singapore, A50, iron ore, and natural rubber contracts provided by SGX are very influential trading products in the world.
(3) HKEX (Hong Kong Exchanges and Clearing Limited)
HKEX (Hong Kong Exchanges and Clearing Limited) is one of the principal exchange groups in the world, and its Hong Kong Futures Exchange provides various futures and option contract trading, such as stock index futures, precious metal, foreign exchange rate, interest rate.
(4) CBOE (Chicago Board Options Exchange)
CBOE established the option trading marketplace and standardized contracts, revolutionarily changing the option trading activities. In addition to option trading, CBOE also provides futures trading, of which the most famous one is the volatility futures of S&P500 index.
7. Last trading day and first notice day of futures
In a contract that is physically delivered, at contract expiration, any entity with remaining positions will be matched against an entity with an opposite position, and the process of physical delivery will begin. Eventually, the commodity will change hands between the maker of delivery and the taker of delivery – any entity still holding a position after the close on first notice day (FND) is eligible to be matched for delivery, and every entity with a position after expiration will need to deal with the delivery process. Since Tiger does not support physical delivery, a deliverable futures contract position may be forced liquidated three trading days before its first notice day, i.e. it may not be tradable on its last trading day.
On the other hand, cash-settled contracts are not physically tied to the underlying commodity. At expiry, a final settlement price is determined, and each entity is either owed money or pays money to settle their position. No one involved in a cash settled futures contract is at risk of being compelled to make or take delivery of a physical product. For a cash settlement futures contract, Tiger supports trading in that contract until the last trading day on which the contract expires. On the last trading day, the Exchange will declare the final settlement price and all open contracts will be settled in cash at that final settlement price. Please note that final cash settlement for Tiger's clients is subject to processing by Tiger's clearing broker which by convention is usually one business day after the final cash settlement price is declared but may be later at the clearing brokers’ discretion.