Futures Trading and Market Information
- 1 December 1976
- journal article
- research article
- Published by University of Chicago Press in Journal of Political Economy
- Vol. 84 (6) , 1215-1237
- https://doi.org/10.1086/260509
Abstract
This paper investigates the effect of organized futures trading on information in spot markets. First, a model is developed that relates spot-price behavior and market information. The model can be viewed as a particular efficient markets model; this connection provides additional implications about price behavior and information. Next, price series for six different commodities are investigated for an information effect of futures trading. For each commodity, the empirical evidence indicates that futures trading increases traders' information about forces affecting supply and demand.This publication has 0 references indexed in Scilit: