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Foreign Exchange

Thai Futures Exchange to offer USD futures

The Thailand Futures Exchange (TFEX) has begun offering USD futures contracts, allowing investors to manage their Thai baht exposure through the derivatives market.

The futures exchange, part of the Thailand Stock Exchange group, launched the new contract on June 5, after approval from the Thai ministry of finance, the Bank of Thailand, and the US Securities and Exchange Commission. The exchange has reported strong interest in the new contract, with more than 3,400 contracts traded on the first day.

“As the US dollar is the currency most used in international trade transactions, USD futures will enhance trading opportunities and will allow small- and medium-sized enterprizes to be able to more efficiently manage Thai baht/US dollar currency risk,” says TFEX managing director Kesara Manchusree.

“The USD futures is also an exchange-rate hedging tool for investors who invest overseas or in products related to world commodities.”

The USD futures have four maturities, which are the three nearest consecutive months plus the next quarterly months. Given the June launch, the contract months will be June, July, August and September.

The value of one futures contract is USD 1,000 and the contract will be cash-settled, meaning no physical delivery of US dollars will be received upon expiration.

Initially, investors must be of Thai nationality or resident in Thailand and the market is yet to open for non-residents.

To promote USD futures, TFEX has said retail investors who trade more than 5,000 USD futures contracts per month for three straight months, or have a combined trading volume exceeding 15,000 contracts during the three-month period, will receive the new Apple iPad.

Investors can trade USD futures by opening accounts with any of the 31 authorized brokers.

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