STC Series 3 Flashcards

Customers

Floor brokers execute orders for ____________

CME

Who owns the Globex Market

Clearinghouse

A _______ is the buyer for every seller and the seller for every buyer.

Inferior

Sellers of futures contracts can deliver an _______ grade of commodities at a discounted price.

Yes, at premium prices.

Can shorts deliver higher quality grades than the basis grade?

Scalpers or aslocals

What are floor traders known as?

Immmediately

If a trader is buying a cash commodity, when does she take delivery?

Settle disputes

What does the arbritration committee do?

FALSE.

Are floor traders obligated to maintain a fair and orderly market?

Daily

Clearing house settles positions on a _______ basis.

Europe, NY, Canada

Location of ICE Exchanges

Selling

How do investors offset positions

Both buyer and seller

In a futures contract, which party has obligations?

Investigate complaints, prevent manipulation, ensure member compliance with rules.

Role of BCC?

Cash commodities are exchanged instantly, futures are at a later date.

Cash commodities vs futures contracts?

Hedgers

_____________ buy or sell futures to protect themselves against a change in the price of a commodity

Buy, sell

Speculators ____ when market rises ______ when prices fall.

First notice day

When delivery of the cash commodity may be made.

Liquid market

Market with many participants

Lower.

Seller → delivery of lower grade, recieves what price?

Stopped

Exchange forces a long trader to accept a delivery notice.

NO, exchanges can’t do that.

Can exchanges buy and sell contracts or set prices?

Negotiated between a buyer and seller for any amount.

Cash forwards can be for any amount of a commodity

Go long or buy

How to offset a short position?

Arbritration committee, business conduct committee, floor committee

List of committees

Counterparty

Clearinghouse eliminates what risk

Clearing member

Permitted to enter and execute orders on exchange

Take delivery

Buyer of a future is obligated to _______ delivery

Make delivery

Seller of a future is obligated to ______ delivery

Futures

Which contracts trade on centralized excahnges?

To make a profit

Why do speculators enter into positions?

Seller

Determine time and place of delivery falls unto who?

Cash commodity price

Price of commodity for delivery

Clearinghouse

Exchange members deposit margin with

FALSE → hedgers reduce risk

Is this True or False: Hedgers enter positions to make a profit.

Yes, they do.

Clearing houses generally require margin deposits on net trades

Globex

Electronic platform for trading of options and futures owned and operated by CME

Clearinghouse main function

Guarantees all trades -> buyer to every seller, seller to every buyer.

Futures

What’s easier to offset between a future and a forward?