A standardized, exchange-traded futures contract to buy or sell a money market security at a set price on a particular future date. In essence, a money market futures is a trade on money market rates that is basically used to eliminate future interest rate risk and to trade views on interest rate trends. Generally, the underlying of a money market futures is a short-term deposit that implies the interest rate of a short future period. For example, there are actively traded futures for three month Eurodollar time deposits, one month Eurodollar time deposits. There are also futures contracts based on 13-week treasury bills and a 30-day average of the daily federal funds rate.
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