Some of the Pros and Cons that you should keep in mind prior to engaging in Futures trading :

Pros:

• Provides leveraged trading. i.e. only a fraction of asset value in terms of margin is required to establish a position
• Provides a means to hedge against general market conditions
• Comparatively low commissions
• Access to global markets round the clock

 

Cons:

• Futures are considered high risk and complex instruments that are subject to high to extreme volatility. Futures trading is not suitable for conservative traders who are not able to assume high risks and losses
• When adverse price movements deplete your maintenance margin to a critically low level, your positions may be liquidated without any prior notification
•  Losses are not limited to what you deposit for margin. You can lose much more than your initial deposit.
• Trades cannot be held perpetually as contracts typically expire on monthly or quarterly basis.  Traders need to consciously take note of their position to roll over to the next active month to maintain positions
• Potential difficulties in liquidating positions when market conditions are hectic or illiquid

Contract specifications differ for different Futures contracts. Please refer to the official website of the different Futures Exchange to view and understand their respective contract specifications.

Traders should take note of the following components of a typical Futures contract when placing an order.

1. Buy/Sell
2. Quantity/Number of Lots
3. Exchange and contract (e.g. SGX Nikkei 225)
4. Contract month & year (e.g. Dec 10)
5. Price
6. Order type (if applicable)

Order types applicable in Futures trading.

                                   *Note: Not all order types are available for all products or supported by all Exchanges.

• Profit/Loss of Long Position

= (Last Traded Price – Price of Long Position) x Tick Value x Number of Lots

• Profit/Loss of Short Position

= (Price of Short Position – Last Traded Price) x Tick Value x Number of Lots

*Note: Customers’ daily statements will reflect the marked-to-market value based on daily settlement price, as well as unrealised profit and loss which the customer has gained or incurred.

 

 

DAILY MARKED TO MARKET COMPUTATION

 

Example 1

Buy 1 lot SGX SG Sep 10 at 357.0; Settlement Price at 358.0
Mark to Market     = 10 Ticks x Tick Value (S$20)
                              = S$200

 

The unrealised profit will be reflected in your daily statement.

Example 2

Buy 1 lot SGX SG Sep 10 at 357.0; Settlement Price at 356.5
Mark to Market       = 5 Ticks x Tick Value (S$20)
                                = -S$100

 

The unrealised loss will be reflected in your daily statement.

All Futures contracts require an initial margin in its base currency to be placed with the Exchange. The initial margin is a security deposit to be used to cover any potential loss due to market movements against the open positions and to ensure traders’ fulfillment of contractual obligations.

We will make a margin call when the customers’ equity balance falls below the maintenance margin level.  Maintenance margin level as prescribed by the Exchange is usually about 80% of the initial margin level. For more information on margin call, please refer here.

When a margin call is made, customers may choose to either close out their open positions or bring in new funds to top up to initial margin level to support existing positions.  Customers will not be able to initiate new positions when any margin call has not been satisfied. During margin call, OSPL reserves the right, without prior notice to customers, to liquidate any position/s should the equity balance falls below 30% of the initial margin or such percentage as OSPL may determine in its sole and absolute discretion.  For more information on margin call, please refer to the General Guide and the Terms and Conditions governing Futures Margin and Options Trading and OTC Transactions.

On expiry, a Futures contract will either be cash settled or physically delivered, depending on the contract specifications stated by the relevant Exchange.

• cash settlement  -- on settlement day, your P&L based on the final settlement price determined by the relevant Exchange will be reflected in your daily statement.

 

• physical delivery -- the underlying product is transferred from the seller to the buyer in accordance with the contract specifications. However, OSPL does not handle physical delivery.

When a Futures contract approaches expiry, a trader can choose to:

• close out his long/short position;
• rollover his position to the next active month
• allow the contract to be cash settled on expiry if the contract delivery mode is cash settlement;
• for contracts with physical delivery, positions would have to be closed out or rollover before the First Notice Day or Last Trading Day (whichever is earlier). This is because OSPL does not handle physical delivery.

To determine the notional value of a Futures contract, you will first need the contract specifications and a current quote for the price of the Futures.

Example 1, STI Futures

STI SEP10 Futures Price             = 3028.00
Tick Value                                   = S$10

STI Contract Value                      = Futures price X Tick Value 
                                                    = 3028.00 X S$10.00 = S$30,280.00

Contract Value of 1 lot of STI Futures is S$30,280.00.

 

Example 2, Comex Gold Futures

                    Gold Dec 10 Futures Price               = 1328.00

                Contract Size                                   = 100 troy oz

                Contract Value                                = Futures price X Contract size

                                                                       = 1328.00 X 100 = US$132,800

                    Contract value of 1 lot of Comex Gold Dec 10 Futures is US$132,800

You may refer to the guide here 

There is currently no charge for the use of electronic trading system.

It is not possible to login on two PCs simultaneously. An error window will pop up and inform you with an error message - “user already logged in”. Please contact us immediately if you still encounter the same error every time you try to login.

As J-Trader requires SUN Java Virtual Machine (JVM) you may download the appropriate JVM from Sun's product download page. Please look for "JDK/JRE - 6" and select version JRE 6 Update2 and follow the installation instructions.

This error message will pop up. You have 3 trials after which your ID will be disabled. Please contact helpdesk to reset your password.

a)  When the Host Button is showing RED colour, it indicates that electronic certificate is not installed. Please refer to page 8 of the J-Trader installation guide to install the electronic certificate.

b) When the Host Button is showing AMBER colour, it indicates that there may be an access issue like blockage by a network firewall . Please refer to page 17 of  the J-Trader installation guide on how to self-test the connectivity.

For other technical issues, please contact our 24 hr helpdesk at 65-64381412.