Regulated futures contracts currency
This International Tax Alert provides an updated list of foreign currencies that are traded on futures markets for purposes of determining whether a forward contract with respect to those currencies should be marked-to market under section 1256.1 The list contained in this Alert updates the list of foreign currencies that was provided in an International Tax Alert dated 17 January 2013, Updated list of foreign currency contracts subject to Section 1256.
Under Section 1256(a)(1), each Section 1256 contract held by a taxpayer at the close of the tax year must be marked-to-market. The term Section 1256 contract includes, among other things, any foreign currency contract.2 The term foreign currency contract is defined under Section 1256(g)(2)(A) as a contract that:
1. Requires delivery of, or the settlement of which depends on the value of, a foreign currency that is a currency in which positions are also traded through regulated futures contracts,
2. Is traded in the interbank market, and
3. Is entered into at arm’s length at a price determined by reference to the price in the interbank market.
The statutory definition is intended to describe the characteristics of bank forward contracts used for trading currencies.
Although Section 1256 may govern the timing of gains and losses on foreign currency contracts, Section 988 generally governs the character of those contracts.3 Under Section 988, any gains or losses with respect to those forward contracts on foreign currency generally should be ordinary in character.4
The following is a list of currencies in which positions are traded through regulated futures contracts as of the date of this Alert:
1. Australian dollar
2. Brazilian real
3. British pound
4. Canadian dollar
5. Chinese renminbi
6. Czech koruna
8. Hungarian forint
9. Israeli shekel
10. Indian rupee
11. Japanese yen
12. Korean won
13. Mexico peso
14. New Zealand dollar
15. Norwegian krone
16. Polish zloty
17. Russian ruble
18. South African rand
19. Swedish krona
20. Swiss franc
21. Turkish lira
As described above, provided that the additional conditions described in Section 1256(g)(2)(A) are satisfied, forward contracts with respect to these foreign currencies should be marked-to-market under Section 1256(a)(1).
In certain cases, it may be possible to make an argument that Section 1256 does not apply where the foreign currency is so thinly traded in regulated futures contracts that a market price is not available. Please, however, consult with one of the individuals listed below before adopting the position that Section 1256 does not apply due to thin trading.
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Who Uses the NYMEX Division Heating Oil Futures Contract?
If the price of a barrel in 30 days is $78/barrel, why would I sell that barrel today at $70/barrel when I could just hold onto it for 30 days and pocket another $8 profit?
And believe me, that is an incredible oversimplification of the energy market. A better explanation is merely that demand has nothing to do with last month's pricing. Demand is a function of people's desires today and that obviously set the price at $2.69/gal.
More fundamental is the question of where are we going to get tomorrow's energy from? And what will it cost?
When nymex futures contract and nyse futures contract expire?
Go to the exchange's website and look up the contract specifications of the particular contract you are interested in. Different commodities have different expiration procedures and dates.