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Futures and Derivatives M4 Flashcards

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  1. Under the Singapore Securities and Futures Act (SFA), which regulatory authority is responsible for overseeing futures trading activities?

    Answer: Monetary Authority of Singapore (MAS)

    The Monetary Authority of Singapore (MAS) is the primary regulator for all capital markets activities including futures trading under the Securities and Futures Act.

  2. What is a futures contract?

    Answer: An agreement to buy or sell an asset at a future date for a price agreed today

    A futures contract is a legally binding agreement to buy or sell a specific asset at a predetermined price on a specified future date.

  3. What is the primary purpose of initial margin in futures trading?

    Answer: To serve as a performance bond ensuring contract fulfilment

    Initial margin acts as a performance bond or good-faith deposit that protects the clearing house against potential default by either party.

  4. Which of the following best describes the process of 'marking to market' in futures trading?

    Answer: Daily settlement of gains and losses based on the closing futures price

    Marking to market is the daily process of crediting or debiting margin accounts based on the change in the futures contract's settlement price.

  5. A trader who expects the price of crude oil to fall would most likely take which position in crude oil futures?

    Answer: Short (sell) position

    A short position profits when prices fall, making it the appropriate strategy for a trader with a bearish view on crude oil.

  6. What is the role of the Central Counterparty Clearing House (CCP) such as SGX-DC in futures markets?

    Answer: To become the buyer to every seller and the seller to every buyer, eliminating counterparty risk

    The CCP interposes itself as the counterparty to all trades, guaranteeing contract performance and eliminating bilateral counterparty risk.

  7. Under MAS regulations, a Futures Trading Representative must be appointed by a holder of which Capital Markets Services (CMS) licence?

    Answer: CMS licence for trading in futures contracts

    Representatives who conduct futures trading activities must be appointed by a firm holding a CMS licence specifically for trading in futures contracts.

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Sources & references

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  1. ibf.org.sg — Eligibility, fees, score release, registration, retake policy, exam format, passing score, time limit · verified Oct 2026