What is EFP in gold?

Exchange For Physical (EFP) allows traders to switch Gold futures positions to and from physical, unallocated accounts. Quoted as dollar basis, relative the current futures prices, EFP is a key component in pricing OTC spot gold.

What commodities are traded on CME?

Agricultural Futures and Options

• Corn.
• Soybeans.
• Chicago SRW & HRW Wheat.
• Black Sea Wheat Corn & Sunflower Oil.
• Live Cattle.
• Lean Hogs.

How does an EFP trade work?

An exchange of futures for physical (EFP) is a private agreement between two parties to trade a futures position for the basket of underlying actuals. An exchange of futures for physicals can be used to open a futures position, close a futures position, or switch a futures position for the underlying asset.

What is an EFP transaction?

The Exchange of Futures for Physical (EFP) is an alternative mechanism that is used to price physical crude oil. This enables participants to exchange their futures positions for a physical position thus separating the pricing from the physical supply.

Can you spread bet on gold?

Spread betting can be a useful tool for an investor who is considering trading on gold. It allows tax free*, leveraged trades. You can also take a long or a short position, ie speculate on the price of gold to go up or down. Gold is considered to be a long-term hedge against inflation.

Why is gold spread so high?

Why are spot gold spreads currently so wide? Wider spreads in the spot gold market are the result of lower liquidity and increased volatility. Spreads – the difference between the bid and ask prices – are not fixed, but fluctuate and widen naturally as volatility increases.

Is CME Group a broker?

We are a registered Futures Commission Merchant providing comprehensive services to retail, commercial and institutional clients. Our work is supported through a network of Introducing Brokers, non-clearing FCMs, branch offices, subsidiaries and sister companies across the United States and around the globe.

Is an EFP a swap?

An EFP is similar to an EFS, except that it involves a physical contract rather than a cash swap contract. An EFP gives the market participants the ability to manage risk.

What is an EFP bomb?

Dubbed “superbombs” because of their lethality, an Explosively Formed Penetrator (EFP) is a type of improvised explosive device (IED) that has had enormous effects on the U.S. Military in war zones. EFPs are self-forging warheads designed to effectively penetrate armor and fire in a way similar to cannons.

When do you need CME Group commodity products?

As global event risk strikes instantly in the markets, you need to be able to move when the markets do. With trading nearly 24 hours a day, six days a week, CME Group markets are here when you need them. Sign up to receive a quarterly newsletter about CME Group commodity products.

When to use CME exchange for Physical ( EFP )?

For example, when trading OTC S&P 500 index options, a CME E-mini S&P 500 index futures or S&P 500 index futures trade can be consummated to exchange the offsetting delta in the transaction, and reported to CME Clearing as an EFRP trade.

Can a CME Clearing firm be audited for efrp?

If a trade investigation or periodic audit by the Exchange’s Market Regulation Department calls for it, however, the CME Clearing member firms who serve the counterparties to the EFRP trade may be required to produce documentation evidencing that the cash leg was indeed transacted and that it meets Exchange standards as a valid offsetting position.

How does an EFP work in the futures market?

Because both sides of the trade track the same benchmark, an EFP is market-neutral. As such, the pricing of the EFP is quoted in terms of the basis between the price of the futures contract and the level of the underlying index.