Introduction to Treasury bond futures

Treasury bond futures refer to the derivative trading mode of treasury bonds, in which the buying and selling prices are determined in advance through organized trading places and the delivery of money and bonds is carried out in a specific time in the future. Treasury bond futures belong to a kind of financial futures, which is a kind of advanced financial derivatives. It came into being in order to meet the demand of investors to avoid interest rate risk under the background of the instability of American financial market in 1970s.

Futures trading is a complex trading mode, which has the following main characteristics different from spot trading
1. Treasury bond futures trading does not involve the transfer of national bond ownership, but only the transfer of the risk of price changes related to this ownership.
2. Treasury bond futures trading must be conducted in designated trading places. The purpose of the futures market is to be open and free. OTC trading and private hedging are prohibited.
3. All treasury bond futures contracts are standardized contracts. Bond futures trading is a kind of leverage trading.
4. The daily settlement system without liabilities shall be implemented for treasury bond futures trading.
5. The physical delivery of treasury bond futures is generally less.

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