Eligible Contract Participant

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DEFINITION of 'Eligible Contract Participant'

A group or individual allowed to engage in financial transactions not open to retail customers. The Commodity Exchange Act outlines the requirements for eligibility, stating that those seeking to become eligible contract participants must have sufficient regulated status or a specified amount of assets.

BREAKING DOWN 'Eligible Contract Participant'

Eligible contract participants include financial institutions, insurance companies, commodity pools and wealthy individuals. These participants are authorized to engage in complex stock or futures transactions such as block trades, exchanging excluded commodities and transacting on a derivatives transaction execution facility. Becoming an eligible contract participant provides a person or group with a wider range of investment choices and financial options than would be available to a standard investor.

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RELATED FAQS
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    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
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    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
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    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
  4. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  5. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>
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