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FAB Spread - Five Against Bond. A futures spread trade involving the buying (selling) of a five-year Treasury note futures contract and the selling (buying) of a Treasury bond futures contract.

FAN Spread - Five Against Note. A futures spread trade involving the buying (selling) of a five-year Treasury note futures contract and the selling (buying) of a ten-year Treasury note futures contract.

Fast Tape - Transactions in the pit or ring take place in such volume and with such rapidity that price reporters are behind with price quotations, so insert "FAST" and show a range of prices. 

Feed Ratio - The relationship of the cost of feed, expressed as a ratio to the sale price of animals, such as the corn/hog ratio. These serve as indicators of the profit margin or lack of profit in feeding animals to market weight.

FIA - See Futures Industry Association.

Fictitious Trading - Wash trading, bucketing, cross trading, or other schemes which give the appearance of trading. Actually, no bona fide, competitive trade has occurred.

Fill or Kill Order - An order which demands immediate execution or cancellation.

Financial Instruments - Generally refers to any futures or option contract that is not based on an agricultural commodity or a natural resource. It would include currencies, securities, mortgages, commercial paper, and indices of various kinds.

First Notice Day - The first day on which notices of intention to deliver actual commodities against futures market positions can be received. First notice day may vary with each commodity and exchange.

Fix, Fixing - See Gold Fixing.

Floor Broker - Any person who, in or surrounding any pit, ring, post or other place provided by a contract market for the meeting of persons similarly engaged, executes for another person any orders for the purchase or sale of any commodity for future delivery.

Floor Trader - An exchange member who executes his own trades by being personally present in the pit or place for futures trading. See Local.

F.O.B. (Free On Board) - Indicates that all delivery, inspection and elevation or loading cost involved in putting commodities on board a carrier have been paid.

Forced Liquidation - The situation in which a customer's account is liquidated (open positions are offset) by the brokerage firm holding the account, or, in the case of leverage accounts, by the leverage transaction merchant, usually after notification (margin calls), because the account is undercapitalized.

Force Majeure - A clause in a supply contract which permits either party not to fulfill the contractual commitments due to events beyond their control. These events may range from strikes to export delays in producing countries.

Foreign Exchange - Foreign Currency. On the foreign exchange market, foreign currency is bought and sold for immediate or future delivery.

Forward - In the future.

Forwardation - See Contango.

Forward Contracting - A cash transaction common in many industries, including commodity merchandising, in which a commercial buyer and seller agree upon delivery of a specified quality and quantity of goods at a specified future date. A price may be agreed upon in advance, or there may be agreement that the price will be determined at the time of delivery.

Forward Market - Refers to informal (non-exchange) trading of commodities to be delivered at a future date. Contracts for forward delivery are "personalized," (i.e., delivery time and amount are as determined between seller and customer).

Forward Months - Futures contracts, currently trading, calling for later or distant delivery. See Deferred Futures.

Forward Purchase or Sale - A purchase or sale between commercial parties of an actual commodity for deferred delivery.

Free Crowd System - A system of trading, common to most U.S. commodity exchanges, where floor members may bid and offer simultaneously either for their own accounts or for the accounts of customers, and transactions may take place simultaneously at different places in the trading ring. Also see Board Broker System and Specialist System.

Front running - With respect to commodity futures and options, taking a futures or option position based upon non-public information regarding an impending transaction by another person in the same or related future or option.

Full Carrying Charge, Full Carry -See Carrying Charges.

Fundamental Analysis - Study of basic, underlying factors which will affect the supply and demand of the commodity being traded in futures contracts. See Technical Analysis.

Fungibility - The characteristic of interchangeability. Futures contracts for the same commodity and delivery month are fungible due to their standardized specifications for quality, quantity, delivery date and delivery locations.

Futures - See Futures Contract.

Futures Commission Merchant - Individuals, associations, partnerships, corporations and trusts that solicit or accept orders for the purchase or sale of any commodity for future delivery on, or subject to the rules of, any contract market and that accept payment from or extend credit to those whose orders are accepted.

Futures Contract - An agreement to purchase or sell a commodity for delivery in the future: (1) at a price that is determined at initiation of the contract; (2) which obligates each party to the contract to fulfill the contract at the specified price: (3) which is used to assume or shift price risk; and (4) which may be satisfied by delivery or offset.

Futures-equivalent - A term frequently used with reference to speculative position limits for options on futures contracts. The futures-equivalent of an option position is the number of options multiplied by the previous day's risk factor or delta for the option series. For example, 10 deep out-of-the-money options with a risk factor of 0.20 would be considered 2 futures-equivalent contracts. The delta or risk factor used for this purpose is the same as that used in delta-based margining and risk analysis systems.

Futures Industry Association (FIA) - A membership organization for futures commission merchants (FCM's) which, among other activities, offers education courses on the futures markets, disburses information and lobbies on behalf of its members.

Futures Price - (1) Commonly held to mean the price of a commodity for future delivery that is traded on a futures exchange. (2) The price of any futures contract.

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