Financial Future

Definition

Financial Future. A futures contract based on a financial instrument.

Typically a financial futures contract is based on an underlying debt instrument. Examples of instruments underlying financial futures contracts include Treasury bills, Treasury notes, Government National Mortgage Association (Ginnie Mae) pass-throughs, foreign currencies, and certificates of deposit. Such contracts usually move under the influence of interest rates. As rates rise, contracts fall in value; as rates fall, contracts gain in value. Trading in these contracts is governed in the U.S. by the federal Commodities Futures Trading Commission. Traders use these futures to speculate on the direction of interest rates. Financial institutions use them to hedge financial portfolios against adverse fluctuations in interest rates.

Disclaimer

This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.