What is a Bax futures contract?

It is recognized as the benchmark for Canadian short-term interest rates. BAX futures reflect the three-month Canadian Dollar Offered Rate (CDOR), expressed as an interest rate per annum. At all times, 12 quarterly futures contracts are listed in addition to nearest two non-quarterly contract months (serials).

Why is Bax more liquid than other futures markets?

Similar to other futures markets, the first BAX is more widely followed than newer contracts expiring at a later date and therefore more liquid. This is consistent with a narrower spread between bid and ask prices than remaining contracts.

What is a futures market?

Today, the majority of trading of futures markets occurs electronically, with examples including the CME and ICE. Unlike most stock markets, futures markets can trade 24 hours a day. In order to understand fully what a futures market is, it’s important to understand the basics of futures contracts, the assets traded in these markets.

How does a banker buy a Bax?

In the secondary market, an investor purchasing bankers’ acceptances buys them at the discounted price and, at maturity, receives their face value. The BAX was the first interest rate futures product to be listed on the Montréal Exchange. It is recognized as the benchmark for Canadian short-term interest rates.