| Word |
Meaning |
| Arbitrage | The simultaneous purchase and sale of identical or equivalent financial instrument or commodity futures in orderto benefit from a price of discrepancy. |
| Arbitration | The judgment process provides to conciliate the conflict between member and member or between member and customer. |
| Associated Person (AP) | A person, commonly called a commodities broker. |
| Basis | The difference between the current cash price and the futures price of the same commodity. Unless otherwise specified, the price of the nearby futures contract month is generally used to calculate the basis. |
| Bear Market | A period of declining market prices. |
| Bid | An expression indicating a desire to buy a commodity at a given price, opposite of offer. |
| Broker | A company or individual that executes futures and options orders on behalf of financial and commercial institutions and/or the general public. |
| Bull Market | A period of rising market prices. |
| Buying Hedge | Buying futures contracts to protect against a possible price increase of cash commodities that will purchase in the future. At the time the cash commodities are bought, the open futures position is closed by selling an equal number and type of futures contracts as those that were initially purchased. |
| Cash Commodity | An actual physical commodity someone is buying or selling, e.g., white rice 5%, ribbed smoked rubber sheet No.3, tapioca, black tiger prawn, etc. Also referred to as actuals. A sales agreement for either immediate or future delivery of the actual product. |
| Cash Market | A place where people buy and sell the actual commodities, i.e., fresh market, etc. Spot usually refers to a cash market price for a physical commodity that is available for immediate delivery. A forward contract is a cash contract in which a seller agrees to deliver a specific cash commodity to a buyer sometime in the future. Forward contracts, in contrast to futures contracts, are privately negotiated and are not standardized. |
| Clearinghouse | An agency or in-house of a futures exchange that is responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery, and reporting trading data. Clearinghouse acts as third parties to all futures and options contracts, acting as a buyer to every clearing member seller and a seller to every clearing member buyer. |
| Clearing Member | A member of an exchange Clearinghouse. Memberships in clearing organizations are usually held by companies. Clearing members are responsible for the financial commitments of customers that clear through their firm. |
| Commodity Pool | An enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts or commodity options. |
| Commodity Pool Operator (CPO) | An Individual or organization that operates or solicits funds for a commodity pool. |
| Commodity Trading Advisor (CTA) | A person who, for compensation or profit, directly or indirectly advises others as to the value or the advisability of buying or selling futures contracts or commodity options. Advising indirectly includes exercising trading authority over a customer account as well as providing recommendations through written publications or other media. |
| Contract Month | A specific month in which delivery may take place under the terms of a futures contract. |
