Arbitration happens with goods, with securities, and currencies. In its historical meaning, currency arbitrage is a foreign exchange operation that combines the purchase (sale) of a currency with the subsequent execution of a counter-transaction in order to make a profit due to the difference in exchange rates on different currencies markets (spatial arbitrage) or due to exchange rate fluctuations over a certain period of time (temporal arbitrage). The basic principle is to smoke currency cheaper and sell it more expensive. Simple and complex currency arbitrage (more than three currencies), on the terms of cash and forward transactions. Depending on the goal - speculative (the goal is to benefit from the difference in exchange rates due to their fluctuations) and conversion (the goal is to buy the most profitable currency needed. Using competitive rates from different banks. The possibilities are wider, since the difference in rates may . not as large as in speculative) currency arbitrage.

Dealers and banks strive to carry out foreign exchange transactions that create the most favorable, from their point of view, ratio of purchases and sales of individual currencies. At the same time, they change their quotes, making them more attractive to potential clients, and, if necessary, they themselves turn to other banks to carry out operations that interest them.

The difference between currency arbitrage and ordinary currency speculation is that the dealer focuses on the short-term nature of the transaction and tries to predict rate fluctuations in the short period between transactions. Sometimes he changes his tactics repeatedly throughout the day. To do this, the dealer must know the market well and be able to forecast, constantly analyze contacts with other dealers, monitor the movement of exchange rates and interest rates in order to determine the causes and direction of rate fluctuations. The goal of currency speculation is to maintain a given position for a long time in a currency whose exchange rate tends to increase, or a short position in a candidate currency for depreciation. At the same time, a targeted sale of currency is often carried out in order to create an atmosphere of uncertainty and cause a massive reset and depreciation of its exchange rate, or vice versa.

Arbitration currency transactions carried out with the aim of making a profit on the difference in exchange rates in the markets developed countries(spatial). A necessary condition for its implementation is the free convertibility of currencies. The prerequisite is a discrepancy between the courses. Due to the fact that the purchase and sale of currencies in different markets occurs almost simultaneously, arbitrage is almost not associated with currency risks. Arbitration can be conducted with multiple currencies. The relatively small amount of profit is compensated by the scale of transactions and the speed of capital turnover. Conversion arbitrage – buying currency in the cheapest way, using the most profitable market. In it, unlike spatial and temporal arbitrage, the initial and final currencies are not the same. It takes into account the use of the most favorable markets for its implementation and changes in exchange rates over time. Interest arbitrage involves making a profit from the difference in interest rates in various loan capital markets.

Currency arbitrage is a currency transaction that combines the purchase (sale) of a currency with the subsequent completion of a counter-transaction in order to make a profit due to the difference in exchange rates in different currency markets (spatial arbitrage) or due to exchange rate fluctuations during a certain period (temporal arbitrage).

IN modern conditions With the development of electronic means of communication and information, the expansion of the volume of foreign exchange transactions, significant exchange rate differences in individual foreign exchange markets arise less frequently, and therefore spatial currency arbitrage (in the West, but not in Russia) has given way to mainly temporary currency arbitrage.

Depending on the purpose of the transaction, speculative and conversion currency arbitrage differ. The first aims to benefit from the difference in rates on different currency markets. In this case, the source and final currencies are the same, i.e. the transaction is carried out, for example, according to the scheme: German mark - US dollar; dollar - mark. Conversion arbitrage aims to buy the required currency most profitably.

The difference between currency arbitrage and ordinary currency speculation is that the dealer focuses on the short-term nature of the transaction and tries to predict rate fluctuations in the short period between transactions.

Sometimes he changes tactics repeatedly throughout the day. To do this, the dealer must know the market well and be able to predict the direction of changes in rates, constantly analyzing the results of the activities of other banks, maintaining contacts with other dealers, observing the movement of rates and interest rates. Currency arbitrage is often associated with operations on the loan capital market. The owner of any currency can place it on the loan capital market in another currency at a more favorable interest rate, i.e. perform interest arbitrage. The ultimate goal of the owner of the currency is to obtain a higher profit than the bank could get by investing it directly, without first exchanging it for another currency. Depending on his assessment of the dynamics of the exchange rates of both currencies, he may not insure currency risk or temporarily implement a hedging transaction on more favorable terms. Interest arbitrage includes two transactions: obtaining a loan on a foreign capital market, where rates are lower; placing the equivalent of borrowed foreign currency on the national capital market, where interest rates are higher.

Of great importance when creating and hedging currency positions within the framework of interest rate arbitrage are, as mentioned above, option transactions that allow you to fix income from the difference in interest and at the same time insure against its loss in case of unforeseen developments in exchange rates.

A variation of this operation is currency-interest arbitrage, based on the bank’s use of interest rate differences on transactions carried out for different periods. For example, if the premium on a forward transaction for 6 months in relative terms is 6% per annum, and on a transaction for 3 months - 4%, then an arbitrageur can sell currency for a period of 6 months with a premium of 6% and buy it for 3 months , paying a premium of 4%.

Forward-to-forward transactions, which depend on the supply of interest rates in the future, are increasingly linked to interest rate futures transactions.

When conducting foreign exchange transactions, banks bear various risks. First of all, the risks are associated with the possible detection of uncovered transactions in individual currencies - long or short positions. In forward transactions, there is a risk of non-fulfillment of the contract (for example, due to the bankruptcy of the counterparty). In addition, often banks, having made a transfer of the sold currency, only find out the next day whether a counter payment was made for the currency they purchased. This is due to the time difference in different countries peace.

In order to limit the risks of non-transfer of equivalent, banks set limits on foreign exchange transactions with other banks based on the size of their capital and reserves, reputation and other criteria. As payments are received for previously concluded transactions, the limits are released. Limits on forward currency transactions are usually lower than on transactions with immediate delivery, since the risk of non-payment on a transaction increases with the length of the period from its conclusion to execution.

spatial or inter-market currency arbitrage (a transaction and a counter-transaction are carried out on different currency markets, for example, buying in Tokyo and selling in London; profits are made due to random discrepancies in exchange rates in different markets). This is classic arbitration, its main distinguishing feature is that it is practically risk-free, since a currency position is opened in a matter of minutes. Intermarket currency arbitrage plays an important role in the functioning of foreign exchange markets, since as a result of these operations, exchange rates in different markets are aligned; temporary currency arbitrage (profits are made from differences in exchange rates over different periods of time); conversion arbitrage (making a profit due to random discrepancies in quotes for different currencies among different participants in the foreign exchange market); currency-interest arbitrage (making profit from the difference in interest rates on deposits in different currencies; consists of buying a currency with a high interest rate, placing it on deposit and then selling this currency for the original one in order to realize arbitrage profits). There are simple currency arbitrage, in which two currencies are involved in transactions, and complex currency arbitrage, when more than two currencies are involved (for example, conversion arbitrage). Currency arbitrage operations are the basis of foreign exchange dealing of commercial banks. SWAP operations are a special group of operations that have recently become increasingly widespread. There are currency, interest rate and currency-interest rate swaps. In the most general outline any SWAP is the replacement of a cash flow with one characteristics with a cash flow with other characteristics. Cash flow characteristics: payment currency and exchange rate; type of interest rates; level of interest rates; frequency of payments. The main goal of SWAP operations is optimization cash flows in order to reduce the costs of attracting resources and conducting operations, as well as insurance of interest and currency risks, although they can also be carried out for arbitrage (speculative) purposes. Often these problems are solved in the market interconnectedly. An interest rate swap is an exchange of interest payments calculated on an agreed upon (implied, nominal) amount over a specified period of time, such as three years. The exchange can involve either two parties (simple SWAP) or several parties (complex or structured SWAP). Participants in SWAP transactions can be either two or more banks or non-bank organizations. Typically, in an interest rate swap, one party (the bank) undertakes to pay the other party (another bank or company) fixed interest payments on some agreed upon nominal amount in exchange for floating interest payments on the same amount. which the other party to the swap agrees to pay. In this case, the nominal amount from which interest payments are calculated serves only as a basis for calculating the amount of payments, is taken into account as such on the balance sheet and, as a rule, is not subject to payment. In Fig. 3 shows an example of use interest rate swap to insure the bank's interest rate risk. The bank's assets are placed with a fixed weighted average yield of 9% per annum, while its liabilities are repriced in a six-month time interval at the average rate of LIBOR plus a spread of 2% per annum (LIBOR + 2%). With such a balance sheet structure, the bank may incur losses if the market interest rate increases, since this can lead to an increase in the cost of the bank's resources with a fixed return on assets. To hedge against possible losses, the bank enters into an interest rate swap for three years, committing to pay interest payments at a fixed interest rate of 8% per annum in exchange for receiving payments at a floating rate of LIBOR plus 2% per annum. Thus, the bank fixed for itself an interest margin of 1%, and the increase in the cost of resources with an increase in the interest rate will be compensated by increasing payments from the swap partner. Rice. 3. Insurance of interest rate risk using an interest rate swap. A currency swap is a combination of two currency transactions, spot and forward, concluded at the same time for the same amount, but having the opposite direction (deal and counter-transaction). A cash transaction (spot) provides an immediate transfer of resources from one currency to another, a forward transaction provides reconversion (reverse transfer of resources into the original currency). For currency swaps, it is typical that the exchange rate for both the cash and futures transactions is determined simultaneously at the time the swap transaction is concluded. As a result, the parties receive the necessary currency at their disposal for a certain period of time, they are protected from currency risk during reconversion (the SWAP forms a closed currency position) and save on operating costs. At the same time, the term of a SWAP transaction is usually more than a year, that is, it is a way of insuring long-term currency risks. This is how they differ from dealer swaps, with the help of which short-term currency risks are insured on the internal interbank market. foreign exchange market. On the global capital market, it is possible to conduct swap transactions for any period within 15 years. This market is based on the institution of swap intermediaries, whose role is played by international banks and financial institutions. To reduce the numerous risks associated with these complex individual contracts, the practice is to use standard agreements on the main terms of swaps (ISDA Master Agreement), which are adapted to the specific needs of the parties. Depending on whether the cash transaction is a purchase or sale, a distinction is made between DEPORT and REPORT operations. DEPORT cash urgent (bought/sold) purchase sale REPORT cash + urgent (sold/bought) sale purchase Currency SWAPs come in different types exchange rates and with the same rate for conversion and reconversion. A cross-currency interest rate swap is a combination of a currency swap (exchange of agreed amounts of different currencies followed by reconversion at a predetermined rate) and an interest rate swap (exchange of regular interest payments in the respective currencies between the beginning and end of the swap). Appendix 2 provides an example of using a currency-interest rate swap to insure a bank's currency and interest rate risks. In modern conditions of constant complication of financial schemes for carrying out contracts and the emergence of various financial innovations, there are opportunities to build other options for swap transactions in various markets, including credit and stock markets. Banks can participate in SWAP operations both as direct participants (parties to the SWAP) and as intermediaries who develop the terms of SWAPs, organize the conduct of these operations and guarantee the receipt of appropriate payments (guarantor banks). The last group of foreign exchange operations of commercial banks - international settlements in foreign currencies - is discussed in detail in the next chapter. *** Job commercial bank in the foreign exchange market should be aimed at achieving the optimal balance of such basic parameters of its activity as liquidity, riskiness and profitability. Only if this condition is met, foreign exchange transactions of commercial banks give them the opportunity to widely maneuver available resources, maintain stability and competitiveness, and expand their product range. banking products and services. Questions to consolidate the material: 1. Under what conditions can banks and their clients carry out foreign exchange transactions? 2. In this connection, foreign exchange transactions does the value date apply? 3. Why do banks need to control the size of their open foreign exchange positions? 4. What are “forward currency transactions” and what are they for? 5. What is the peculiarity of swap transactions and why have they become so widespread in the market? Terms Currency position is the ratio of the bank's assets and claims in foreign currency and its liabilities and obligations in a given currency. Currency arbitrage is the opening of short-term currency positions in order to make a profit on the difference in exchange rates in different markets. Exchange rate is the price of a unit of one currency expressed in a certain amount of another currency. Currency risk is the likelihood of incurring losses or excessive costs due to an unexpected and unfavorable change in the exchange rate of the currency in which the position is open. Conversion operations- these are transactions for the exchange of agreed amounts of monetary units of one country for the currency of another country at an agreed rate and on a certain date. An option is a forward transaction that provides the buyer of the option with the right to choose: to execute or not to execute the transaction on the agreed terms, while the seller of the option is obliged to execute it if the buyer so requests. For this right to choose (option), the buyer of the option pays a premium to the seller. A call option, or option to buy a currency (option call), is a contract that provides, on the one hand, the right of the buyer of the option to buy a currency at a fixed rate in the future in exchange for a premium, and on the other hand, the obligation of the seller of the option to sell to the buyer of the option an agreed amount of a specific currency. A put option, or option to sell a currency (option put), is a contract that provides, on the one hand, the right of the buyer of the option to sell the currency at a fixed rate in the future in exchange for a premium, and on the other hand, the obligation of the seller of the option to buy from the buyer option an agreed amount of a specific currency. SWAP is a group of transactions that represent the exchange of counter cash flows between counterparties in order to optimize cash flows, reduce the cost of attracting resources, as well as insure interest and currency risks. A forward is a firm (i.e., binding) over-the-counter transaction, which is concluded, as a rule, for the purpose of making an actual sale or purchase of the relevant currency for delivery at an agreed date in the future. Futures is an exchange transaction containing an obligation to deliver or accept financial assets (currency, securities etc.) in an agreed quantity, at a certain point in the future, at a price established at the time of conclusion of the contract.

06/14/2017 ·

The arbitration technique itself is as old as time.. It functions equally both in the field of small business in rural areas and in the high-tech sector of stock trading. This is a phenomenon that is based on information delay. For some, it entails making huge profits due to the fact that there is an understanding of what is happening; for others, this subsequently becomes a reason to reproach themselves for haste. One way or another, the one who has this information earlier has a great advantage, and this is true for almost any type of activity, but in the area where work is being done with financial instruments, especially.

Here we can draw some analogy between arbitrage in Forex and insider information, which, as is known, is prohibited for use in trading, and liability is provided. But, unlike insider trading, arbitration is absolutely legal; moreover, there are schemes that are actively used major players and bring in some income. All this is paid for by an ordinary ordinary trader, to whom the results of such activities come in the form of changed quotes, slippage, and low liquidity at certain points in time. Let's try to figure out what currency arbitrage is and how it can be used to make money.

Forex arbitrage

In order to understand what it is, you first need to explain how the entire currency trading system functions and how it differs from the rest. If you look at the quotes of shares listed on the stock exchange, you will notice that they are the same on both the London Stock Exchange and the Frankfurt Stock Exchange at a time when both stock exchanges are operating. At first glance, this seems absolutely normal and the fact that it could be different is surprising. The thing is that stock trading is centralized, that is, between trading platforms There is a connection, hence the lack of different prices. That is, the same paper is presented in both London and Frankfurt at the same price at each moment of time.

The foreign exchange market is essentially decentralized. The well-known ECN accounts are actually simply united into larger networks, which together represent the so-called pools. And from these pools a larger scale is being built commercial network. But there is no complete connection between them all, so during periods of very strong price fluctuations (for example, the announcement of the results of the Brexit referendum or decoupling Swiss franc from the euro) leads to the fact that different liquidity providers (large associations of ECN networks) get different results at extremes, this in turn is reflected in quotes from the final large consumer - the broker. And these are the quotes he sees. By the way, not entirely honest companies actively take advantage of this, drawing what is convenient for them. But this is only possible during periods of really very strong and rapid fluctuations; this happens less than once a year.

High volatility days are ideal for using arbitrage

In connection with this method of obtaining quotes, currency arbitrage becomes possible. If there is a delay in receiving signals or any pattern in the differences in quotes between brokers, this is used to make money. Conventionally, we can say that arbitrage in Forex for the most part is profiting from imperfection trading system , equipment. And much less often is it some kind of thoughtful use trading algorithms in relation to ordinary instruments, albeit different from each other. If you intend to use currency arbitrage, then first of all you should evaluate your capabilities, the quality of the communication channel, track the history of quotes and see how it works in demo mode, that is, fully test the system.

Types of currency arbitrage

At the moment there is only four main options application of arbitrage in Forex. The first three relate to the technical side of the issue, the last, fourth, can be called the most substantiated and intellectual. But this should not influence the choice in any way - everyone earns as much as they can, and taking advantage of flaws in the operating system of their dealing center is not at all a shameful activity, because, as practice shows, brokers themselves often try to deceive their clients. But in the case of currency arbitrage, there is no deception, there is an exploitation of the vulnerabilities of the system itself.

1. Double currency arbitrage. Based on the difference in quotes from different brokers. That is, you need to find a pair of brokers such that, taking into account the spread and commission in the case of an ECN account, there is a difference of at least 0.1 points. For example, at dealing center 1 at a given time the Ask price for the EUR/USD pair is 1.30100, and at dealing center 2 the Bid price for the same trading instrument is 1.30130. That is, in fact, the purchase price from the first office is significantly lower than the sale price from the second. This can be used by concluding transactions in both at once, one to buy at a lower price, the second to sell at a higher price. This method can be turned into a very profitable business if you can find dealing centers that meet the requirements of the currency arbitrage system.

Just 10 years ago, this approach to Forex arbitrage was quite workable, but now brokers themselves constantly monitor competitors’ quotes and it’s practically impossible to find such a big difference. By large we mean at least more than 0.1 points. So as not to work in vain. Basically, all the differences come down to the fact that there are brokers with an adequate spread, say, 1 point on the main trading pair EUR/USD during the European and first half of the American session, and there are those for whom it is fixed at 3 points throughout trading day. That is, the difference in quotes is formed by widening the spread due to poor-quality supply of liquidity, or the greed of such a company.

2. Currency arbitrage based on delay (or single). In this case, the trader doesn’t even have to think; the most important thing is to also find a couple of brokers with a certain condition. One of them must have fairly recent and current quotes, while the second needs a delay. Sometimes it turns out that even half a second of delay in the receipt of a signal can lead to significant losses, anyone who trades news knows this. Accordingly, if you managed to find such a pair, then, in fact, all that remains is to look at what is happening with the “fast” broker and use arbitrage on Forex itself with the slow one.

If the price goes up, we immediately buy, if it goes down, we sell. But this is in theory. But in practice, this is extremely difficult to encounter; usually, small offices that have not yet managed to grow to a significant size and use not the most advanced equipment or low-quality liquidity providers are lagging behind. And in this case, you can expect constant requotes, slippages, delays and other delights that are usually characteristic of all offshore kitchens, not even in the context of currency arbitrage, but in ordinary short-term trading.

3. . Very simple circuit, which should be clear to anyone who has even the slightest understanding of fractions. Let's say there are three currency pairs- GBP/USD, AUD/USD and GBP/AUD. There are three currencies here, which are determined by the behavior of all three pairs. Knowing the quotes for two of them, you can easily calculate what the current value is for the third. To do this, you just need to divide one by the other. But practice does not always agree with what should be in theory. You can see amazing phenomena when two of three such pairs are actively moving, and not in different directions, but completely randomly and unpredictably, while the third at this time seems to have frozen and practically does not move. It is at such moments that currency arbitrage should be used. This is not so easy to do, you will have to calculate the value, look for the “incorrect quote”, a third-party terminal with quotes from another broker, or some service that provides such information, can help with this.

Earnings due to the difference in quotes between three currencies

For greater convenience, they usually use ready-made or ones that are already fully prepared to search for such absurdities in quotes and understand how to use this to carry out currency arbitrage. A robot can do this quickly, efficiently and accurately, but a person is not immune from this and is certainly inferior to a computer in the speed of processing numerical information. Therefore, if there is a specific justification in the form of numbers that a similar technique is applicable to the selected broker, you can look for an advisor (there is a large number of programs specifically for arbitrage on Forex) and start making money on this technical imperfection of currency trading.

4. Currency arbitrage on different types of instruments. This type of currency arbitrage can be carried out only if you have access to futures trading. This separate category instruments, which has its own “expiration date” - after which expiration occurs and the contract ceases to exist, and a new one appears in its place. A futures is a contract with deferred delivery; its price usually differs from that offered on the spot market. It is on this difference that it is proposed to make money, since as the expiration date approaches, it can begin to shrink quite noticeably, the spread between these two pairs will decrease, with oppositely directed transactions this leads to the fact that, regardless of where the trend is directed, it will turn out ultimately profit.

In relation to foreign exchange markets, the law of one price is formulated as follows: the exchange rate of a currency is approximately the same in all countries. The deviation of the exchange rate in various foreign exchange markets is determined by the amount of transaction costs associated with the transfer of a given currency from one foreign exchange market to another. Thus, the dollar exchange rate in New York differs from the dollar exchange rate in Tokyo by the amount of transaction costs associated with transferring the dollar from New York to Tokyo. If exchange rates differ by an amount greater than the amount of operating expenses, the possibility of playing on exchange rate differences arises, which is called currency arbitrage.

Currency arbitrage is an operation with currencies, consisting of the simultaneous opening of equal (or different) opposite positions in one or more interconnected financial markets in order to obtain a guaranteed profit due to the difference in quotes.

Arbitrage transactions are small in percentage terms, so they are only profitable major transactions. They are carried out mainly by financial institutions. The basic principle of arbitrage is to buy a financial asset at a lower price and sell it at a higher price. A necessary condition for arbitrage operations is the free flow of capital between different market segments (free convertibility of currencies, absence currency restrictions, no restrictions on the implementation of certain types of activities for various types agents, etc.). The prerequisite for the operations under consideration is the discrepancy between quotes financial assets in time and space under the influence of market forces.

There are temporary currency and spatial currency arbitrage. In addition, each of them is divided into simple and complex (or cross-course, triple). Simple arbitration is performed with two currencies, and cross-rate arbitration is performed with three or more currencies.

Local, or spatial, arbitrage involves generating income due to the difference in exchange rates in two different markets. An opportunity for local arbitrage exists if the buying rate of a currency at one bank is higher than the selling rate at another bank. Complex arbitrage can occur when the calculated cross rate between two currencies differs from the actual quoted rate by any bank or market. Time arbitrage is an operation aimed at making a profit from differences in exchange rates over time.

In modern conditions, currency arbitrage is giving way to interest and currency-interest arbitrage, since in the foreign exchange markets, after almost two decades of sharp jumps in exchange rates, there is a relative leveling of exchange conditions between European monetary units, and in the relationship between them and the US dollar. However, there is a difference in interest rates due to the inconsistency of national policies in the field of interest rates, although integration processes are increasing in the capital markets. Currency arbitrage is based on the use of differences in interest rates on transactions carried out in different currencies. In the simplest case, this operation is a conversion national currency to a foreign one, placing it on deposit in foreign bank, after the end of which the funds are transferred back to national monetary units. Such operations can be carried out in two forms - with and without forward coverage.

Covered interest arbitrage is most often used when playing with exchange rates. Covered interest rate arbitrage is a transaction that combines foreign exchange and deposit transactions, which are aimed at arbitrageurs adjusting the currency structure of their short-term assets and liabilities in order to profit from differences in interest rates across different currencies. As an example of interest rate arbitrage with forward coverage, the following scheme of actions can be given: buying currency at the spot rate, placing it on a time deposit and simultaneously selling it at the forward rate. This operation does not bear currency risk, and the source of profit in this case is the difference in the levels of income received due to the difference in interest rates on currencies and the cost of insurance of currency risk, determined by the size of the forward margin.

Non-bank foreign exchange market participants sometimes use interest rate arbitrage without forward coverage. This transaction is usually medium- or long-term and involves the movement of capital. Its essence is that arbitration? buys currency on spot terms with its subsequent placement on deposit and reverse conversion at the spot rate upon expiration of its validity period. For participants engaged in this type of arbitrage, it is important to correctly assess the trend of changes in the exchange rate over a medium- and long-term period of time, since their currency position is open and thereby exposed to the risk of changes in the exchange rate.

Arbitration operations are the main ones in the work of commercial bank dealers. Often, the opportunity to conduct arbitrage transactions arises only for a few minutes, therefore, the bank’s profit on any given day largely depends on the dealer’s ability to instantly evaluate and calculate the arbitrage operation. Arbitrage transactions are complex and require good market vision, so dealers specialize in transactions in a certain number of currencies.

Arbitration transactions are also of great economic importance for the entire financial market. Since arbitrage operations are based on capitalizing on the differences that exist between markets or, in the same market, between the terms of contracts, the intervention of arbitrageurs allows for the interconnection of rates and regulation of the market. Unlike speculation and hedging, arbitrage contributes to the short-term equalization of rates in various markets and smoothes out sharp market fluctuations, increasing market stability.

Another operation that is often used by large participants in the foreign exchange market is speculation - an activity aimed at making a profit due to the difference in the rates of financial instruments over time. The success of speculation depends on the accuracy of forecasts, since the implementation of a speculative strategy requires its participant to buy foreign exchange instruments when rates are expected to rise and sell when they are expected to fall, making the best use of the leverage created by the guarantee deposit and the volatility of quotes.

Speculative operations significantly increase the liquidity of the futures market financial instruments. About 60% of all transactions are concluded in the futures market in the hope of speculative profit. This allows for large-scale operations. In addition, speculation creates a fundamental opportunity for hedging, since the speculator, for a fee, consciously assumes the risk of changes in the prices of financial assets, which are transferred to him by hedgers. Thus, hedging is impossible without speculation.

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