Glossary: E-F

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ECU: European Currency Unit was a basket of the currencies of the European Community member states, used as the unit of account of the European Community before being replaced by the euro on 1 January 1999, at parity. The ECU itself replaced the European Unit of Account, also at parity, on 13 March 1979.

Efficient Market: A market in which all information is immediately assimilated and therefore has no alterations.

Equity: The residual dollar value of a future, option or leveraged trading account, assuming its liquidation at the going market price.

Eurodollar: U.S. dollar deposits placed with banks outside the U.S. Holders may include individuals, companies, banks and central banks.

Evening Up: Buying or selling to offset an existing market position.

Exchange rate: The price of one currency compared with another currency.

Exotic Options: Any of a broad variety of options with non-standard payout structures, including Asian options and Look back options.

Expiration Date: The date on which an option contract automatically expires.

Ex-Pit Transactions: Trades executed for certain technical purposes in a location different to the usual exchange trading pit.

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Fast Tape: Transactions in the pit or ring take place in such volume and with such speed that price reporters are behind with price quotations.

Feed Ratio: The relationship of the cost of feed, expressed as a ratio to the sale price of animals. These serve as pointers of the profit margin or lack of profit in feeding animals to market weight.

Fill or Kill: An order put in place by traders which stipulates automatically that a position must be entirely filled, or not at all – i.e. it must be filled by the markets, or killed in its entirety.

Financial Instruments: This generally refers to any futures or option contract that is not based on an agricultural commodity or a natural resource (currencies, securities, financial papers, etc.).

First Notice Day: The first date on which notices of intentions to deliver actual commodities against futures are authorised.

Floor Broker: A member who executes orders for the account of one or more clearing members.

Floor Trader: A trader who executes trades for his or her own account, also referred to as a “local”.

Foreign Exchange (Forex): Forex stands for foreign exchange, and is the term used to describe the international currency markets which trade 24 hours a day and allow traders to speculate on the price outlook of different currency pairings. Almost always permits highly leveraged trading positions.

Forward: In the future.

Forward Market: Refers to informal trading of commodities to be delivered at a future date. Contracts for forward delivery are “personalised”.

Free Supply: The storage supply of a commodity outside of government-held stocks.

Futures Contract: A contract tying in the buyer to execute an order on a future date for a defined asset at today’s price, regardless of how price may fluctuate between today and the date of maturity. Futures are used both as an instrument of speculation and for manufacturers looking to lock in their costs of production ahead of time.

Futures Commission Merchant: Individuals, associations, partnerships, corporations and trusts soliciting or accepting and handling orders for the purchase or sale of commodities for future delivery on or subject to, the rules of a futures exchange and that accept payment from or extend credit to those whose orders are accepted.

Futures Price: The price of any futures contract.

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