The BFX has launched Futures contracts on Gold, Natural Gas, and Euro–US Dollar currency pair on the November 23, 2011. The cumulative trading turnover during the period between the launch date and December 19, 2011 was $44.22 million with a volume of 1,126 contracts (trading turnover and volume on a single-side). The Exchange achieved the highest trading turnover of $3.96 million with a volume of 98 contracts on December 15, 2011.
The state-of-the-art BFX electronic trading platform facilitates real-time access of the BFX market from any part of the world. The BFX is one of the few exchanges in the Middle-East to implement advanced trading, risk management and settlement systems. The margin computation of the BFX Futures contracts is based on the Standard Portfolio Analysis of Risk (SPAN) method, in line with international best practices and global standards. When a member or its customer takes a long (buy) or short (sell) position on the BFX Futures contract, the applicable margin is automatically blocked from the deposit that is provided by members and their customers upfront. The Exchange online risk management system tracks the deposit utilisation towards margin requirements as well as the mark-to-market intra-day loss limit on a real-time basis.
The settlement of the BFX Futures is on a T+1 day basis with the BFX Clearing and Depository Corporation (BCDC) guaranteeing the settlement obligations; thereby, eliminating credit risk between the counter parties. Thus, the BCDC acts as a Central Counterparty to all the BFX Futures transactions.
“We are extremely pleased with the continuous growth of trading volumes on the BFX platform, to see that our diversification strategy is delivering and our offerings are being very well received. At the BFX, we have deployed one of the best in-class technology platform that helped us in implementing advanced trading, risk management and settlement methodologies,” Arshad Khan, Managing Director and Chief Executive Officer of the BFX and the BFX Clearing and Depository Corporation (BCDC), said.
“This has ensured that our market operates as per the globally recognised state-of-the-art parameters. High-end technology platform along with the well trained and experienced staff enabled the BFX to achieve a smooth start of operations of 13 hours trading window each day from Monday to Friday and e-Tayseer operating on Sunday as well.”
The BFX Futures contracts facilitate efficient and effective hedge against asset price volatility by consumers, producers, importers, exporters and other market participants across different industry segments along the entire value chain. All the BFX Futures contracts are cash-settled; thereby, enabling hedgers and investors to square-off their positions without constraints of physical delivery of the underlying asset. The BFX Futures contract lot size has been designed to be within the reach of small and medium scale participants and is aligned with international exchanges and physical markets to achieve the maximum trading participation.
The BFX Gold Futures has a contract lot size of 32 troy ounces (approximately 1 Kilogram); whereas, the contract size of the BFX EURO-USD Futures is EUR 25,000. The BFX Natural Gas Futures contract is pegged at 2,500 million British thermal units (mmBtu). The narrow bid-ask spread on all the BFX listed contracts with the presence of market makers further decreases the transaction costs for traders along with enabling taking and squaring off positions with ease. The BFX Futures contracts are settled on the contract maturity date based on international reference prices.