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 determines the price of an FX futures product?

The price of an FX futures product is based on the currency pair’s spot rate and a short-term interest differential. The pricing formula is similar to how FX forwards are priced in the OTC market. In the following equation, R is the short-term interest rate of a currency and d is the number of days from trade settlement until expiration.

What is the definition of 'Forex futures'?

DEFINITION of 'Forex Futures'. A forex future is an exchange-traded contract to buy or sell a specified amount of a given currency at a predetermined price on a set date in the future.

What are exchange-traded FX futures?

Exchange-traded FX futures are a growing portion of this vast international marketplace. The growth in exchange-traded and cleared FX products is due to the highly transparent nature of exchange-traded products and also the safety that is derived from central clearing and post-trade risk collateralization, which reduces counterparty risk.