What Are Bond Futures?

Bond futures is a type of interest rate futures. It is a standardized buying and selling contract. This "interest-related commodity" is usually a medium- to long-term bond.

Bond futures

when

Price discovery

Futures

Chicago Board of Trade (CBOT)

CBOT's bond futures commodity structure is the most complete, including short, medium and long-term U.S. Treasuries

US Futures Market

Futures contracts range from 2 years in short to 30 years in length, and 10-year bond futures are the commodities with the largest volume (based on 2002).

European Futures Exchange (EUREX)

EUREX's main bond futures include Euro-BUND Futures, Euro-BOBL Futures, and Euro-SCHATZ F

Bond futures

utures), whose annual turnover in 2002 was 191.26 million, 114.68 million and 108.761 million, respectively, significantly ahead of CBOT's U.S. bond futures, ranking firmly among the world's top three bond futures, and EUREX also surpassed CBOT to become the world's largest Futures exchange.

Tokyo Stock Exchange (TSE)

Japan was once an important financial center in the Asia-Pacific region, so Japanese bond futures were introduced quite early. In 1985, Japan opened the trading of ten-year government bond futures, and then in 1988 and 1996 introduced 20-year and 5-year bond futures. Japan's bond futures trading is also very active, in 2002 it was ranked as the tenth largest bond futures trading commodity in the world.

Development of Taiwan Public Debt Futures

In Taiwan's financial market, bonds have developed very fast, and the amount of current bond transactions has jumped from 108.8 billion US dollars in 1991 to 3.141 trillion US dollars in 2001, which has grown 28 times in ten years, and the average daily transaction volume exceeds 12.5 billion US dollars. , Larger than the total turnover of the stock market in a week.

Because bonds have become the heavyweight commodity in Taiwan's financial market, by comparison, Taiwan's stock market has stock index futures and stock options, but the bond market does not have good derivatives. Although the bond forward trading has long been opened, the results have not been effective In addition, Taiwan's financial environment has been in line with international standards. Changes in international economic conditions can easily affect Taiwan's interest rate environment. After international integration, the speed and scale of capital flows have grown rapidly, and the price volatility of various financial commodities has increased. The risks faced by bond investors have become more and more obvious. Therefore, in order to provide a safe haven for fixed income securities, Taiwan completed it in 2003 The interest rate futures plan was implemented, and bond futures trading was implemented on January 1, 2004. Short-term ticket futures were opened in May 2004. At this point, interest rate derivative products were finally complete.