标题: Currency Hedge: Forward or Futures? [打印本页] 作者: LBriscoe 时间: 2011-7-11 19:56 标题: Currency Hedge: Forward or Futures?
So it is better to hedge currency risk with a futures contract rather than a forward contract since they are "easier to use for frequent adjustments"?
Reading 40.作者: Colum 时间: 2011-7-11 19:56
dhwit Wrote:
-------------------------------------------------------
> In general I believe fwds are preferred when
> hedging currencies. Can't remember where I read
> it (I think a CFA sample exam), currency forwards
> are more liquid than currency futures.
This
NO EXCUSES作者: zwjy 时间: 2011-7-11 19:56
really?
if anyone has a page #, that'd be great- obviously need a read through this if this is true.作者: strikethree 时间: 2011-7-11 19:56
page 302 - reading 40
but the answer is not there... so you have to figure it out...
as bpdulog and dhwit said : it seems like forwards are preferable since they are more liquid.作者: mar350 时间: 2011-7-11 19:56
markCFAIL Wrote:
-------------------------------------------------------
> They are only more liquid for currency derivs,
> right? All others i thought futures were more
> liquid due to being standardized and exchange
> traded.
that is my understanding...futures are more liquid than forwards EXCEPT for currency.作者: canadiananalyst 时间: 2011-7-11 19:56
Paraguay Wrote:
-------------------------------------------------------
> Forwards are more liquid.
>
> Futures are easier to change quickly according to
> Schweser. Never found that word for word in the
> book.
>
> Made absolutely no sense but at this point I think
> everyone knows the differences between futures and
> forwards so most questions should be a slam dunk.
Are you *sure* forwards are more liquid outside of currency markets which require highly customizable contracts?作者: jmh530 时间: 2011-7-11 19:56
markCFAIL Wrote:
-------------------------------------------------------
> Paraguay Wrote:
> --------------------------------------------------
> -----
> > Forwards are more liquid.
> >
> > Futures are easier to change quickly according
> to
> > Schweser. Never found that word for word in
> the
> > book.
> >
> > Made absolutely no sense but at this point I
> think
> > everyone knows the differences between futures
> and
> > forwards so most questions should be a slam
> dunk.
>
>
> Are you *sure* forwards are more liquid outside of
> currency markets which require highly customizable
> contracts?
I was just speaking of currencies. This thread was related to currencies. Equity and bond have much greater liquidity in futures.
Edited 1 time(s). Last edit at Friday, May 27, 2011 at 08:07PM by Paraguay.作者: infinitybenzo 时间: 2011-7-11 19:56
currency forward has greater liquidity
but futures are based on small size , more fixed maturity choice , so it is better to rebalance by currency futures but it is better to use forward to hedge currency risk
Edited 1 time(s). Last edit at Friday, May 27, 2011 at 08:16PM by goodman2011.作者: nannan66 时间: 2011-7-11 19:56
Generally I think currency forwards are preferable for hedgers (corporations + international investment managers), and futures are preferable for dealers to hedge their positions as counterparties in the forward markets. My understanding anyway.作者: cityboy 时间: 2011-7-11 19:56
Let's check out what the curriculum said.
"Either futures or forward currency contracts may be used to hedge a portfolio. They differ in several ways. Futures are exchange traded contracts while forwards are over-the-counter (OTC) contracts. Currency forwards are sometimes referred to as currency swaps. Portfolio managers tend to primarily use forward contracts in currency hedging. But forward and futures contracts allow a man- ager to take the same economic position. Therefore, in this reading, the generic term futures will denote both futures and forward (or swap) contracts."
(p. 292)作者: bpdulog 时间: 2011-7-11 19:56
Confirming evidence.
In Reading 41, Page 383:
"Forward contracts are the preferred vehicle for the risk management of foreign currency. This preference partly reflects the deep LIQUIDITY in the forward market, which has been around longer than the futures market. "
-- This is why L3 could be so hard.
Edited 1 time(s). Last edit at Saturday, May 28, 2011 at 12:01AM by deriv108.作者: mik82 时间: 2011-7-11 19:56
