Convergence

This Issue in United States

Concept of Convergence in Futures Trading

In this context of financial law, the following is a definition of Convergence: The tendency for prices of physicals and futures to approach one another, usually during the delivery month. Also called a ‘narrowing of the basis.’

Convergence

Concept of Convergence in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): The movement of the cash asset price toward the futures price as the expiration date of the futures contract approaches.

Resources

See Also

• Derivatives Contract