The Swiss franc futures is very popular among forex traders, being the sixth most-traded currency in the world behind the U.S. dollar, euro, Japanese yen, British pound, and the Australian dollar. It is well known for its low volatility — one of the reasons it is considered a safe-haven currency.

Created by Swiss cantons in 1798, the Swiss franc became the official currency of Switzerland and Lichtenstein in 1859 after the issue of the currency was restricted to the federal government. The currency is issued and maintained by the Swiss National Bank (SNB) and is known by the code CHF.

Swiss Franc Futures Contract Specifications
Symbol
CME Globex: 6S // CME ClearPort: E1
Exchange
CME
Tick Size
$12.5
Contract Size
125,000 Swiss francs
Contract Months
Mar, Jun, Sep, Dec
Trading Hours
Sunday – Friday 5:00pm – 4:15pm
Settlement
Deliverable
Last Trading Day
The 2:nd business day after the third Wednesday of the contract month. (Usually Mondays)

 

What Do Swiss Franc Futures Mean?

The Swiss franc future is a financial derivative product in which the underlying asset is the Swiss franc, and the pricing is based on the expected exchange rate of the Swiss franc to the U.S. dollar in the future. In other words, the Swiss franc futures is a tradable contract in which the seller agrees to deliver (and the buyer agrees to receive) a specified amount of Swiss francs on a future date, at an already agreed exchange rate.

As with any other futures contracts, the Swiss franc futures are standardized contracts that trade on the futures exchanges. Thus, the currency contracts are different from the CHF/USD spot forex market, which operates over the counter. One of the main benefits of trading on an exchange is that the futures market is highly regulated, unlike the spot forex market, where the broker can trade against the trader.

The Swiss franc futures is a leveraged instrument. As a result, a trader only needs to deposit a portion of the total worth of the contract to be able to trade the contract. The minimum amount a trader would need to carry a contract is referred to as the margin, which varies with the exchanges, market conditions, expiration of the contract, and the type of contract (full or micro contract).

At the close of any trading day, the clearinghouse of the exchange would settle each trader’s account with the profits or losses made on that day. A trader whose account falls below the maintenance margin would be required to top up his accounts to be able to keep the contract.

To start trading the Swiss franc futures, all you need is to create an account with the exchange through a futures broker and deposit the required margin. Interestingly, you don’t need to have the full dollar worth of the contract to start. Be careful with futures trading though — while you can easily make money, you can also lose more than you invested.

Why Trade the Swiss Franc Futures Contract

Why Trade Swiss Franc Futures Contract

Why Trade Swiss Franc Futures Contract

Different traders play the Swiss franc futures market for different reasons, such as these:

Preserving wealth: The Swiss franc is considered a safe-haven currency, so investors tend to buy it during periods of global financial market crisis.

Speculation: Most of the traders in the currency futures market are there for speculative reasons, and the Swiss franc futures offers a great opportunity for speculation.

Arbitrage trading: Currency arbitrage traders can simultaneously buy and sell the Swiss franc futures contract on different platforms so as to benefit from any imbalance in prices.

Hedging: Investors, fund managers, and business people, who are exposed to Swiss franc exchange rate risks, may see the Swiss franc futures as a risk management tool.

How Does the Swiss Franc Futures Contract Trade?

The Chicago Mercantile Exchange (CME) Group offers Swiss franc futures contracts, and through their Globex electronic trading platform, the contracts can be traded from any part of the world — Sundays to Fridays from 5:00 p.m. to 4:00 p.m. CT the following day, with a one-hour break each day. Friday is an exception, as the market closes by 4:00 PM and reopens on Sunday by 5:00 PM.

One Swiss franc futures full contract settles for 125,000 Swiss francs. The price quotation is in U.S. dollars, and the minimum price fluctuation is as follows:

  • $0.0001 per CHF increment or $12.50 per contract for outrights
  • $0.00005 per CHF increment or $6.25 per contract for intra-currency spreads executed electronically

Apart from the full contract, there are also micro contracts, which settle for 12,500 Swiss francs. For the full contracts, there are contracts listed for 20 months in the March quarterly cycle (March, June, September, and December).

Trading terminates at 9:16 a.m. Central Time on the second business day prior to the third Wednesday of the contract month (usually Monday). If the stated date for termination is a bank holiday in Chicago or New York City, then, trading shall terminate on the next preceding business day common to Chicago and New York City banks and the Exchange.

At expiration, the contract is settled by physical delivery of the specified amount of Swiss francs and is usually done on the third Wednesday of the expiring month. If the delivery day is a bank holiday in either Chicago, or New York City, or is not a business day in the country of delivery, the delivery shall then be made on the next day which is a business day in the country of delivery and is not a bank holiday in Chicago or New York City.

Swiss Franc Trading Strategies

Currency Futures Trading Strategy

Currency Futures Trading Strategy

Trading strategies on the swiss franc futures market will help a lot with reducing risk and achieving higher returns when traded in a portfolio of trading strategies on other markets. And while the market isn’t the easiest to find a trading strategy for, it certainly is possible if you just give it enough time!

For those who like to get trading edges right to their inbox, we offer a unique edge membership. Each month, you’ll be sent edges for various markets, ranging from index ETFs to commodity futures!

Swiss Franc Futures Seasonality

Here is a seasonal chart of the swiss franc futures market:

Swiss Franc Futures (SF) Seasonal Chart

Source

 

Factors That Affect the Swiss Franc Futures

There are many fundamental and technical factors that can affect the Swiss franc futures. The major fundamental factors are economic reports and political events.

Economic reports: The data with the highest impact on the Swiss franc futures market include the following:

  • Monetary policy reports, including interest rates and policy statements
  • Inflation-focused reports, such as the consumer price index and the producers’ price index
  • Unemployment rate and wage data
  • Growth reports, such as the GDP, manufacturing PMI, services PMI, and retail sales
  • Reports about the balance of payments, such as current account and trade balance reports
  • Reports on financial market crises

Political events: Serious political events, such as elections and trade issues with the European Union, can have significant effects on the Swiss franc futures. Global uncertainties, such as terrorism and natural disasters can affect the market.

Conclusion

The Swiss franc futures offers investors a way to preserve their wealth during periods of global uncertainties, as well as help businesses to hedge their exchange rate-exposed obligations. It also provides traders with the opportunity to speculate on the Swiss franc. The contract trades on the CME and its Globex electronic trading platform.