Eurodollar Futures Trading

Eurodollar futures: read the definition of Eurodollar futures and 8,+ other financial and investing terms in the tvopale.info Financial Glossary.

This extends tradeable contracts over ten years, which provides an excellent picture of the shape of the yield curve. Distribution in some jurisdictions may be prohibited or restricted by law. There is an arbitrage relationship between the interest rate swap market, the forward rate agreement market and the Eurodollar contract. Applications for some of the models are given for regular bonds, Treasury futures and Eurodollar futures , bond options and callable bonds, forward rate agreement, interest rate options, swaps, swaptions, mortgage securities, and default- prone corporate bonds. There would be no chance of confiscating that money, because it belonged to the British bank and not directly to the Soviets.

Eurodollar Market History

Applications for some of the models are given for regular bonds, Treasury futures and Eurodollar futures, bond options and callable bonds, forward rate agreement, interest rate options, swaps, swaptions, mortgage securities, and default- prone corporate bonds.

An instrument evidencing the obligation of a seller to deliver securities sold to the buyer. Occasionally used in the bill market. Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.

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Eurodollar Market Eurodollar futures are time deposits denominated in U. A Eurodollar future is a contract on a three-month Eurodollar deposit of one million U.

If a Eurodollar future is quoted at Eurodollar futures contracts expire every March, June, September and December out to ten years. Additionally, there are contracts expiring in the upcoming four months not covered by the quarterly expiration. Eurodollar futures are widely used for hedging fixed income obligations, especially fixed income derivatives. Consequently, such deposits are subject to much less regulation than similar deposits within the U.

The term was originally coined for U. There is no connection with the euro currency or the eurozone. More generally, the euro- prefix can be used to indicate any currency held in a country where it is not the official currency: As a result, large amounts of U. Some foreign countries, including the Soviet Union , also had deposits in U. Various history myths exist for the first Eurodollar creation, or booking, but most trace back to Communist governments keeping dollar deposits abroad: In one version, the first booking traces back to Communist China , which, in , managed to move almost all of its U.

In another version, the first booking traces back to the Soviet Union during the Cold War period, especially after the invasion of Hungary in , as the Soviet Union feared that its deposits in North American banks would be frozen as a retaliation. It decided to move some of its holdings to the Moscow Narodny Bank , a Soviet-owned bank with a British charter. The British bank would then deposit that money in the U. There would be no chance of confiscating that money, because it belonged to the British bank and not directly to the Soviets.

Initially dubbed "Eurbank dollars" after the bank's telex address, they eventually became known as "eurodollars" [2] as such deposits were at first held mostly by European banks and financial institutions. In the mids, Eurodollar trading and its development into a dominant world currency began when the Soviet Union wanted better interest rates on their Eurodollars and convinced an Italian banking cartel to give them more interest than what could have been earned if the dollars were deposited in the U.

The Italian bankers then had to find customers ready to borrow the Soviet dollars and pay above the U. Eurodollars can have a higher interest rate attached to them because of the fact that they are out of reach from the Federal Reserve.

These required reserves and Fed backing make U. Dollar deposits in U. By the end of , billion eurodollars were booked offshore. Several factors led Eurodollars to overtake certificates of deposit CDs issued by U.

By December the Eurocurrency market was estimated by Morgan Guaranty bank to have a net size of 1.

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