The Difference between Futures Index and Stock, Margin Trading and ETF

In China, stock index futures is still a new thing, and many investors don't know much about it. They often confuse stock index futures with other products, and even have a joke of "speculating futures as stocks". Then, what is the difference between stock index futures and some financial products we are familiar with? Let's do it together.

First of all, there are great differences between stock index futures and stocks. First, stock index futures contracts have an expiration date and cannot be held indefinitely; Stocks are different. Generally speaking, as long as a listed company does not withdraw from the market, its shares can be traded permanently. Secondly, in terms of trading methods, stock index futures use margin trading, and investors can participate in trading without paying the full value of stock index futures contracts, and only need to pay a certain proportion of funds as performance guarantee; Stock trading needs to pay the full price of the stock. Third, in terms of settlement method, stock index futures trading adopts daily debt-free settlement. In contrast, stock trading is conducted in full, and there is no need for daily debt-free settlement and no need for investors to add margin. Fourth, in the direction of trading, stock index futures trading is a two-way transaction. In some countries, there is no short selling mechanism in the stock spot market. Stocks can only be bought first and then sold, and short selling is not allowed, which is a one-way transaction.

Secondly, there are great differences between stock index futures and margin trading. First, the theme is different. The trading object of stock index futures is the futures contract with the stock price index as the subject matter, and the object of margin financing and securities lending is a single stock or ETF and other products, all of which are specific investment tools. Second, margin financing and securities lending are spot transactions. When trading stocks by financing, investors need to borrow money from securities companies in part and own funds in part. When trading stocks by securities lending, investors pay a certain margin and then borrow shares from securities companies to sell them. Therefore, margin trading is a leveraged operation for investors, but it is still a 1 0,000% exchange of currency and securities for registered clearing companies, and there is no leverage. The registration and clearing company does not bear the performance risk. The counterparty of financing to buy stocks may be an investor who sells stocks in full, and the counterparty of selling stocks in short selling may also be an investor who buys stocks in full. In futures trading, both buyers and sellers are margin trading, which is also a leverage operation for futures exchanges (clearing institutions), so futures exchanges (clearing institutions) have to bear risks.

Thirdly, there are obvious differences between stock index futures and ETF. ETF(ExchangeTradedFunds) is a special type of open-end fund, which is called transactional open-end index securities investment fund in China. It combines the advantages of closed-end funds and open-end funds. Investors can buy and sell ETF shares in the secondary market, or buy or redeem ETF shares from fund management companies. However, the purchase and redemption must be exchanged for a basket of stocks (or a small amount of cash) or a basket of stocks (or a small amount of cash).

Stock index futures and ETF are both indexed products, and the trading objects are closely related to the stock price index, which can play a role in avoiding the stock market price risk to a certain extent. However, stock index futures are futures products and ETFs are spot products. The main differences include: first, in the trading mechanism, stock index futures use margin trading, and pay a small part of the contract value when trading, while ETFs generally trade in full. Second, from the perspective of maturity and delivery, stock index futures have maturity time, while ETF has no maturity time; Stock index futures will be delivered in cash when they expire, and ETF has no delivery link. Third, in the trading place, from the global market situation, stock index futures can be listed on futures exchanges or stock exchanges, and ETFs are generally listed on stock exchanges.