‘Future’ is a contract to buy or sell a commodity or financial instrument in a designated future date at a price agreed upon at the initiation of the contract by the buyer and seller. Every futures contract has standard terms that dictate the minimum quantity and quality that can be bought or sold, the smallest amount by which the price may change, delivery procedures, maturity date and other characteristics related to the contract. The above definition of the future contract is stipulated in the Annex III to Commission Delegated Regulation (EU) 2017/583 of 14 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivatives (RTS 2)).

Futures transactions are also sometimes defined as standardised forward transactions that are traded on an exchange (see CESR/CEBS consultation paper on the MiFID commodities review (CESR/08-370)). The difference between forward and future contracts relates mainly to their level of standardisation, the manner in which they are traded and their guaranteed execution (ENTSO-E policy paper of December 2022, EU's Electricity Forward Markets).

Futures should be differentiated from spot transactions.

Both EUA-futures and options are traded on ICE Endex. The ratio between EUA futures and EUA options traded at ICE Endex has been stable at circa 2.5, with futures being the leading product ICE Endex is offering. EUA options are mostly traded in block trades, whereas for EUA futures, more than 80% is traded on screen. Most activity in the futures market is in term futures instead of daily futures (ESMA Final Report of 28 March 2022, Emission allowances and associated derivatives, ESMA70-445-38, p. 30).

 

 

 

IMG 0744    Documentation

 

 

 

Commission Delegated Regulation (EU) 2017/583 of 14 July 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards on transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivatives (RTS 2), Annex III

 

CESR/CEBS consultation paper on the MiFID commodities review, CESR/08-370

 

 

 

clip2   Links
 

 

 

 

 

 

 

 

 

 

 

 

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