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Currency Futures
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Currency Futures

  #1 (permalink)
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Currency Futures

Does anyone know why the 6E contract has 125,000 Euros, but the 6B has only 62,500 pounds and the Australian and Canadian dollars have 100,000 dollars in their contracts?

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  #3 (permalink)
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patbateman View Post
Does anyone know why the 6E contract has 125,000 Euros, but the 6B has only 62,500 pounds and the Australian and Canadian dollars have 100,000 dollars in their contracts?

If you convert the contracts with today's exchange rate you will find

62,500 GBP = 101,425 $
125,000 EUR = 162,225 $
100,000 CAD = 102,432 $
100,000 AUD = 104,480 $

This shows that the 6E contract is oversized, if you compare them to the other contracts, which come all very close to a nominal value of 100,000 $.

As you may expect this has historical reasons. The Euro has gradually been gaining strength against the US dollar over the last decade, which has increased its value. The Aussie has gained even more, but probably the contract size to start with was smaller than today.

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patbateman View Post
Does anyone know why the 6E contract has 125,000 Euros, but the 6B has only 62,500 pounds and the Australian and Canadian dollars have 100,000 dollars in their contracts?

When these contracts are established, I suspect that they are based on what made sense at the time based on value, fluctuations, and socio/economics. Further, since these are deliverable contacts, they (exchange) had to accept what is a reasonable deliverable amount.

The notional value has been fluctuating on the currencies relative to the US has been fluctuating for a while but I dont think that after so many years there will be any change to the contract size.
The Swaps/Forwards contracts today is much bigger than the stand contacts because you can customer amounts and delivery so "standardization" is not always a solution to all.

As a side note: The first currency futures were established in NY. But, because of the fixed exchange at the time nothing really happened. When Brenton Woods was abolished (72?-I think) the currency futures took off.
Chicago again takes the cake LOL

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Makes sense!!!! Many thanks fattails, matt!

Any other additional comments, feel free to post.

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Fat Tails View Post
If you convert the contracts with today's exchange rate you will find

62,500 GBP = 101,425 $
125,000 EUR = 162,225 $
100,000 CAD = 102,432 $
100,000 AUD = 104,480 $

This shows that the 6E contract is oversized, if you compare them to the other contracts, which come all very close to a nominal value of 100,000 $.

As you may expect this has historical reasons. The Euro has gradually been gaining strength against the US dollar over the last decade, which has increased its value. The Aussie has gained even more, but probably the contract size to start with was smaller than today.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

Quick correction, everything in bold should be 6B, 6E, 6C and 6A to be clear great work fattails!

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-Yoda
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