WhatIsAStockIndexFuturesContraWhatIsAStockIndexFuturesContract?DrJenniferMaoAgoldfuturescontractbuysgoldforfuturedelivery.AfuturescontractonHSBCstockhastheHSBCsharesastheunderlyingcommodity.ButwhatdoesaStockIndexFutures(SIF)contractbuyorsell?Intheory，thecommodityunderlyinganSIFcontractisaportfolioofstocksreplicatingthespecifiedindex.ThebestwaytounderstandwhatthismeansistoseehowanSIFcontractcanbeusedbytheinvestortoprofitfromhisviewsonbroadmarketmovements.Inthisarticle，weshallusethesoon-to-be-launchedSimexMSCISingaporeStockIndexFutures(orSiMSCIFuturesforshort)forillustration.TheexactspecificationsofSiMSCIFuturesareyettobefinalised.Whatisknownatpresentincludesthefollowing.Thecontractassignsa$200-per-pointvaluetotheunderlyingMSCISingaporeFreeIndex.(Thisindexwillbeexplainedingreaterdetailinasubsequentarticle.)Therewillbesixcontractmonthsconcurrentlylistedfortrading.Themarginrequirementswillbeapproximately10%ofthecontractvalue.TheMSCISingaporeFreeIndexstoodat190.9on8May1998.ThecorrespondingSiMSCIFutureswouldhaveacontractvalueof$38，180，being$200times190.9.Inthisseries，wewillassumethattheinitialmarginandthemaintenancemarginforthiscontractare$5，000and$4，000，respectively.Notethattheyaretwospecifiedlevelsofthesamemarginaccount，nottwoseparatesumsofmoney.Whentwocounter-partiestradeSIFfutures，thebuyerisbettingthattheindexuptoaspecifiedpointintimewillbeaboveacertainlevel.Theseller，onthecontrary，holdstheoppositeview.The"specifiedpointintime"isthematuritydateofthefuturescontract.Futuresarestandardisedcontracts.ThestandardisedmaturitiesoftheSiMSCIFutureswillbethelastStockExchangeofSingapore(SES)tradingdayofthecontractmonths，beingthetwonearestserialmonthsandthenearestMarchquarterlymonths(meaning，inAugust98，thefollowingfourmonths:September98，December98，March99，June99).Asanearcontract(say，September98)matures，adistantcontract(i.e.，September99)willbeaddedonarollingbasis.WithoutanSIFfuturescontract，aninvestorwhoisbullishabouttheoverallmarketmovementandwishestotakeapositionaccordinglywill