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Exchange for physicals

Off-market transaction where one party buys physical assets and sells futures contracts while the opposite party sells the physical market products and buys futures contracts

The exchange for physicals (EFP) facility is an off-market trading mechanism that enables customers to swap futures and options exposure for an offsetting physical position. It offers the flexibility and certainty of an over-the-counter (OTC) market, plus the counterparty guarantee of an exchange market. EFPs are approved on the basis of the notional value of the offsetting physical and futures legs being equal.

The EFP mechanism is an invaluable tool for all types of investors, from fund managers equitising cash to arbitrageurs taking advantage of pricing anomalies. Customers are afforded the benefits of an ASX off-market trading facility, such as pre-trade price and execution certainty.

Benefits of EFPs include:

  • Off-market transactions allow for flexible order arrangement pre-arrangement, disclosure and withholding stipulations do not apply to orders arranged under EFP rules. The facilitating ASX 24 Participant, therefore, has maximum flexibility to bring large orders to the market.
  • Price certainty EFP trades can be transacted at any price agreed between counterparties. EFP trades may therefore legitimately occur at prices different to the prevailing price of a contract in ASX Trade24 at the time.
  • Execution certainty EFP trades will be approved by the Exchange as long as they occur in prescribed contracts and do not contravene the ASX 24 Operating Rules covering EFP transactions.
  • EFPs do not affect open/high/low/close/volume information in the ASX Trade24 market. However, EFP volumes will be included in all ASX 24 market data reporting.
  • Ease of access, for example, swap from an ASX SPI 200 index futures position into the underlying stock without having to purchase each and every stock in the correct proportion and at a certain price.
  • Choice of stock basket, for example, swap an ASX SPI 200 index futures or options position for the underlying stocks in the index or even a single stock

Further information