What are currency futures contracts?

Currency futures contracts are a type of futures contract to exchange a currency for another at a fixed exchange rate on a specific date in the future. The contracts are standardized and are traded on centralized exchanges. Currency futures can be used for hedging or speculative purposes.

What are foreign exchange futures?

Like other futures, foreign exchange futures can be used for hedging or speculative purposes. A party who knows they will need a foreign currency at a future point, however, does not want to purchase the foreign currency at this point in time may buy FX futures.

How big is the currency futures market?

While not nearly as large as the forex market, the currency futures market has a respectable daily average closer to $100 billion. 2  Currency futures —futures contracts where the underlying commodity is a currency exchange rate—provide access to the foreign exchange market in an environment that is similar to other futures contracts.

Where are currency futures traded?

Currency futures, sometimes termed financial exchange derivatives, are traded at several global exchanges. The highest volume of such trades has been reported at the Chicago Mercantile Exchange. Involving exchanges and clearing houses protects the parties from any probable losses.