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For futures on physical deliverable objects (well, I guess most futures are such, but anyway) -- would volatility and speculation be dampened/improved if the cl
by supernova87a 7y ago
For futures on physical deliverable objects (well, I guess most futures are such, but anyway) -- would volatility and speculation be dampened/improved if the clearinghouse forced everyone (or the seller) participating in a trade to certify that they had rights to the specific thing being traded? Could actually produce the contract -- like the oil producer is certified to have <xyz> barrels allowed to be sold?
My notion is that if much of the trading (and it can be shown by futures volumes) cannot possibly be on actual physically deliverable quantities, then most must be "speculation" by people who cannot actually produce the asset. Would this be a help to stabilize the market?
I know it all has to get settled in the end by the expiration date, but just an idea.
- kasey_junk 7y agoIt likely will settle the markets by driving spreads through the roof and costing buyers/sellers of the physical items. The underlying theme here is that speculators are not providing utility to the market, which is wrong. They are bridging time and risk.
- lazyjones 7y ago> then most must be "speculation" by people who cannot actually produce the asset. Let's just call it what it is: gambling.
- Rexxar 7y agoSome companies can use this as a proxy to protect themself against variation of a product they need. For example an airline can use this to protect itself against price variation of kerosene once they have sold a ticket. As kerosene is not directly available on commodity market they use this future because their price are strongly correlated to kerosene price.