Foreign exchange and money markets pdf
The International Money Market
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The IMM Exchange was formed as a separate division of the Chicago Mercantile Exchange , and as of , was the second largest futures exchange in the world. The primary purpose of the IMM is to trade currency futures , a relatively new product previously studied by academics as a way to open a freely traded exchange market to facilitate trade among nations. The first futures experimental contracts included trades against the U. This list would later expand to include the Australian dollar, the euro , emerging market currencies such as the Russian ruble, Brazilian real, Turkish lira, Hungarian forint, Polish zloty, Mexican peso and South African rand. But these early successes didn't come without a price. The Drawbacks of Currency Futures The challenging aspects were how to connect values of IMM foreign exchange contracts to the interbank market - the dominant means of currency trading in the s - and how to allow the IMM to be the free-floating exchange envisioned by academics. Clearing member firms were incorporated to act as arbitrageurs between banks and the IMM to facilitate orderly markets between bid and ask spreads.
Capital Market Instruments pp Cite as. Money market securities are debt securities with maturities of up to 12 months. Market issuers include sovereign governments, which issue Treasury bills, corporates issuing commercial paper, and banks issuing bills and certificates of deposit. Investors are attracted to the market because the instruments are highly liquid and carry relatively low credit risk. Investors in the money market include banks, local authorities, corporations, money market investment funds and individuals. However the money market is essentially a wholesale market and the denominations of individual instruments are relatively large.
Note from the author. Although this book is called Foreign Exchange and Money Markets, the chapters on the money markets come first. This is because there.
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