International Development International Development of Futures and Optionsof Futures and Options
International Development International Development of Futures and Optionsof Futures and Options
Karyn YamamuraKaryn Yamamura
BA 543BA 543
May 26, 2005May 26, 2005
OverviewOverviewOverviewOverview FLEX and Exotic OptionsFLEX and Exotic Options Developed and Developing MarketsDeveloped and Developing Markets
EuropeEurope ChinaChina
Trading Floor MovementTrading Floor Movement Electronic vs Open OutcryElectronic vs Open Outcry
FLEX and Exotic OptionsFLEX and Exotic OptionsFLEX and Exotic OptionsFLEX and Exotic Options Flexible Exchange Options (FLEX)Flexible Exchange Options (FLEX)
1993 CBOT1993 CBOT CustomizationCustomization
Exotic OptionsExotic Options Average Rate (a.k.a. Asian Rate) OptionAverage Rate (a.k.a. Asian Rate) Option Barrier OptionBarrier Option
Knock-outKnock-out Knock-inKnock-in
Basket OptionBasket Option
International Options and Futures Markets
Buenos Aires Cereal Exchange
Mercado Abierto Electronico SA
Rosario Board of Trade
Buenos Aires Futures Market
Merfox
Rosario Futures Exchange
Australian Derivatives Exchange
Asian Capacity Exchange
Sydney Futures Exchange
Securities Exchange of Barbados
Bahia, Sergipe, Alagoas Stock Exchange
Brazilian Futures Exchange
Pernambuco and Paraiba Stock Exchange
Minas, Espirito Santo, Brasilia Stock Exchange
The Commodities & Futures Exchange
Sofia Commodity Exchange
Montreal Exchange
Canadian Venture Exchange
Winnipeg Commodity Exchange
Bolsa Electronica de Chile
China Zhengzhou Commodity Exchange
Guandong United Futures Exchange
Shanghai Cereals and Oils Exchange
Beijing Commodity Exchange
Wuhan Securities Exchange Centre
Hong Kong Futures Exchange
Shenzhen Mercantile Exchange
China-Commodity Futures Exchange, Inc of Hainan
Finnish Options Exchange
Helsinki Exchanges
MONEP
MATIF
Deutsche Terminborse
Athens Derivatives Exchange
Chinese Gold and Silver Exchange Society
Budapest Commodity Exchange
Madhya Pradesh Stock Exchange
The OTC Exchange of India
Capital Market Supervisory Agency
Indonesian Commodity Exchange Board
Italian Derivatives Market
Italian Financial Futures Market
Tokyo Commodity Exchange
Maebashi Dried Cocoa Exchange
Osaka Textile Exchange
Kobe Raw Silk Exchange
Kobe Rubber Exchange
Nagoya Textile Exchange
Osaka Securities Exchange
Tokyo Grain Exchange
Tokyo International Financial Futures Exchange
Niigata Securities Exchange
Japan Securities Dealing Association
Kammon Commodity Exchange
Kansai Agricultural Commodities Exchange
Cubu Commodity Exchange
Sapporo Securities Exchange
Yokohama Raw Silk Exchange
Amman Financial Market
The Kuala Lumpur Options & Financial Futures Exchange
Malaysia Derivatives Exchange
Commodity and Monetary Exchange of Malaysia
Mexican Derivatives Exchange
AEX-Agricultural Futures Exchange
AEX-Options Exchange
Financiele Termijnmarkt Amsterdam NV
New Zealand Futures & Options Exchange Ltd
Muscat Securities Market
Manila International Futures Exchange
Warsaw Commodity Exchange
Oporto Derivatives Exchange
Romanian Commodities Exchange
Sibiu Monetary-Financial and Commodities Exchange
Moscow Interbank Currency Exchange
Russian Exchange
St Petersburg Futures Exchange
Moscow Commodity Exchange
Saudi Arabian Monetary Authority
Singapore Commodity Exchange Ltd
Singapore International Monetary Exchange Ltd
Commodity Exchange of Ljubljana
South African Futures Exchange
Spanish Options Exchange
Citrus Fruit and Commodity Market of Valencia
Spanish Financial Futures Market
The Swedish Futures and Options Market
Swiss Options & Financial Futures Exchange AG
Swiss Exchange
London International Futures & Options Exchange
The Baltic Exchange
London Metal Exchange
The London Securities and Derivatives Exchange
International Petroleum Exchange of London Ltd
Tradepoint Investment Exchange
Developed MarketsDeveloped MarketsDeveloped MarketsDeveloped Markets Europe - LondonEurope - London
Has some of the most developed and widely Has some of the most developed and widely used Futures and Options Marketsused Futures and Options Markets
EurexEurex Euronext.liffeEuronext.liffe OMX OMX
ConsolidationConsolidation Electronic trading systemElectronic trading system
Developed Markets (cont.)Developed Markets (cont.)Developed Markets (cont.)Developed Markets (cont.) Euronext.liffeEuronext.liffe
Euronext established in 2000Euronext established in 2000 LIFFELIFFE ( (London International Financial Futures ExchangeLondon International Financial Futures Exchange))
LIFFE ConnectLIFFE Connect Euronext.liffe is creating a single market Euronext.liffe is creating a single market
for derivatives, by bringing all its for derivatives, by bringing all its derivatives products together on a single derivatives products together on a single electronic trading platform electronic trading platform
Future Future ConsolidateConsolidate
Acquire London Stock ExchangeAcquire London Stock Exchange
Developing MarketDeveloping MarketDeveloping MarketDeveloping Market ChinaChina
1500 to 1978 country faced war, poverty, corruption1500 to 1978 country faced war, poverty, corruption Prohibited foreign investment Prohibited foreign investment 1978 opened economy to outsiders1978 opened economy to outsiders
1990 Futures Market established1990 Futures Market established CorruptCorrupt
Plagued with insider trading, scandals, fraud, etcPlagued with insider trading, scandals, fraud, etc Many Markets closedMany Markets closed
1992 CSRC (China’s Securities Regulatory Commission)1992 CSRC (China’s Securities Regulatory Commission) Similar to the SEC (Securities and Exchange Commission)Similar to the SEC (Securities and Exchange Commission)
Enforce regulationsEnforce regulations Future OpportunitiesFuture Opportunities
One of the world’s leading countries in natural resources, One of the world’s leading countries in natural resources, population, and landpopulation, and land
Futures market limited to domestic financial institutionsFutures market limited to domestic financial institutions Options marketsOptions markets
Trading Floor MovementTrading Floor MovementTrading Floor MovementTrading Floor Movement Traditional Open OutcryTraditional Open Outcry
Sentimental valueSentimental value 150 year history in USA150 year history in USA
ExcitementExcitement Shouts, hang signals, etc.Shouts, hang signals, etc.
Source of RevenueSource of Revenue Tourist AttractionTourist Attraction
EmploymentEmployment Floor brokers, clerks, Floor brokers, clerks,
assistants, etc.assistants, etc.
Electronic PlatformElectronic Platform SpeedSpeed
millisecondsmilliseconds CostCost
20-30% less20-30% less Robustness/StabilityRobustness/Stability
Fewer mistakesFewer mistakes Resilient to Resilient to
catastrophescatastrophes
ConclusionConclusionConclusionConclusion
FLEX and Exotic OptionsFLEX and Exotic Options Developed and Developing MarketsDeveloped and Developing Markets Electronic vs Traditional Open Outcry Electronic vs Traditional Open Outcry
Trading FloorTrading Floor
Questions?Questions?Questions?Questions?