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Unformatted text preview: 3 and 10 Year Australian Treasury Bonds Futures and Options Interest Rate Markets Fact Sheet The 3 and 10 Year Treasury Bond contracts provide an efficient way to gain exposure to the Australian debt markets. This makes them ideal for short term trading, long term trend following, and hedging of medium to long term AUD fixed interest securities and interest rate swaps. Completing the suite of bond derivative products, the Exchange also offers One Session Options Intra-day Options and Overnight Options which are available to trade over a single SYCOM session. The 3 and 10 Year Treasury Bond Futures and Options are approved for trading by: US Commodities Futures Trading Commission (CFTC) UK Financial Services Authority (FSA) Monetary Authority of Singapore (MAS) and Hong Kong Securities and Futures Commission (SFC Hong Kong) The Commonwealth Government Securities Market The Commonwealth Government of Australia is the benchmark issuer in the medium to long term debt market. Fixed coupon Commonwealth Government Bonds constitute the bulk of debt issued by the Australian Federal Government. Currently there are ten benchmark lines issued with a maximum maturity of 12 years and totalling approximately A$50 billion on issue. On average, the market turns over A$356 billion a year. 1 3 and 10 Year Australian Treasury Bond Futures Features The 3 and 10 Year Treasury Bond Futures contracts are ranked amongst the 10 most traded long term interest rate futures contracts in the world today. Average daily turnover in 2006 was 121,000 and 59,000 contracts for the 3 and 10 Year Treasury Bond Futures, respectively. Cash Settled 3 and 10 Year Treasury Bond Futures are cash settled against the average price of a basket of Commonwealth Government Bonds. Variable Tick Value 3 Year and 10 Year Treasury Bond Futures are traded on the basis of their yield with the futures price quoted as 100 minus the yield to maturity expressed in per cent per annum. Due to this convention the dollar value of the minimum price movement, or tick value, does not remain constant but rather changes in accordance with movements in the underlying interest rate. For information on the pricing of the 3 and 10 Year Treasury Bond Futures contracts please see: The Guide to Pricing SFE Interest Rate Products Sydney Futures Exchanges (SFE) Australian 3 and 10 Year Treasury Bond Futures and Options are the benchmark derivative products for investors trading and hedging medium to long term Australian Dollar interest rates. The 3 and 10 Year Treasury Bond contracts are cost effective tools for enhancing portfolio performance, managing risk and outright trading....
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