The Participants in the Futures Market

The futures market is an area of the forex market that is expanding rapidly, and growing more complex. However, aside from the basic fundamentals of futures trading, it is also important for the forex trader to become familiar with the individuals and agencies that participate in the market.

First of course, are the futures exchange centers, the establishments where futures contracts are bought and sold. Among the most popular futures exchanges are the COB (Chicago Board of Trade), CME (Chicago Mercantile Exchange) and the NYMEX (New York Mercantile Exchange). While some traders prefer to conduct business online, a great deal still conduct futures transactions on the trading floor.

The futures exchange is responsible for what contracts can be traded, delivered, and the price limitations, among others functions.

Because there are several commodities involved, the trading floor in a futures exchange is separated into individual segments called pits or rings, one for each commodity. Those who conduct the transactions can be divided between the floor brokers and the floor traders.

Floor brokers conduct futures transactions for their clients. And for their services they are given a commission on each futures contract. A Floor trader, on the other hand, is someone who engages in the business for his own profits. At certain times, a floor trader can also act as a floor broker, subject to the exchange rules and regulations of course.

The clearinghouse is the agency of the exchange that oversees the integrity of each futures contract. By taking a margin from every contract signed, the clearinghouse is also the means by which futuress exchanges make money.

Other futures market participants are the Futures Commission Merchant (FCM). The FCM has several important functio0n related to the forex trader. The FCM holds the margin cash, and is responsible for the implementation of trade orders. Other pertinent records of the forex trader -profits, loses, account balance etc- are kept by the Futures Commission Merchant.

The Commodity Trading Advisor (CTA) are futures market participants, whose function is to serve as advisers for traders. CTAs can refer to an individual or a company. The Commodity Pool Operator (CPO) are persons or companies that sutilize solicited money from clients to be used for futures trading.

Part of being a successful forex and futures traders is keeping oneself informed. Knowing, they say, is winning half the battle. By learning who the people and organizations are in the forex futures market, you will be in a much better place to make an assessment of the market situation.