Futures

A  futures contract is an agreement between two counteragents, according to which the seller undertakes to deliver to the purchaser a certain number of assets in due time at an agreed price, that is to be paid on a delivery day.

There are currency indication and delivery time standards for futures contracts.

Futures contracts may be used both for speculation and for hedging. In case of speculative deals, the delivery of goods does not normally take place, because speculators usually close their positions before the agreed time. In case of hedging, the use of the futures contract allows one to secure himself against drastic modifications in the  price of assets planned to be purchased and sold in the future.

Parex banka gives clients the opportunity to make any futures contract, including contracts on currencies, interest rates, stock indices, metal, oil, cereals and so on.

To make a futures contract, an agreement with Parex banka on carrying out stock operations must  be concluded.

After having purchased and sold the contract, the customer has to keep on his account a certain amount that would not be lower than a certain percentage of the initially paid cover. That is because according to futures contract clearing, calculation of profits and losses is done daily, affecting the account status.

It is worth mentioning that a futures contract does not stipulate for real delivery of assets. When the time comes for the execution of the contract, the loser pays to the winner the amount equal to the difference between the rate agreed in the futures and the real rate at the market multiplied by the amount of the futures contract.

Should you have any questions, please contact us at Capital Market and Investments Department by phone: (+371) 701-00-08, fax: (+371) 701-01-91 (GMT +2) or e-mail: margin@parex.lv.