Stock index futures have the function of price discovery. The futures market is extremely liquid because of its low margin and low transaction costs. Once there is information that affects everyone's expectations of the market, it will be quickly reflected in the futures market. And can be quickly transmitted to the spot market, so that the spot market price reaches equilibrium.
Stock index futures II has the function of risk transfer. The introduction of stock index futures provides a way for the market to hedge risks, and the risk transfer of futures is realized through hedging. If investors hold stocks related to stock indexes, they can sell stock index futures contracts in order to prevent losses caused by future declines, that is, when the short positions of stock index futures match the long positions of stocks, investors avoid the risk of total positions.
Stock index futures are beneficial for investors to rationally allocate assets. If investors only want to get the average return of the stock market, or are optimistic about a certain kind of stocks, such as technology stocks, if they all buy in the spot stock market, they will undoubtedly need a lot of money. However, if they buy stock index futures, they can track the market index or the corresponding technology stock index with only a small amount of money to achieve the purpose of sharing market profits. Moreover, stock index futures have a short term (usually three months) and strong liquidity, which is beneficial for investors to quickly change their asset structure and rationally allocate resources.
In addition, stock index futures provide new investment and speculative varieties for the market; Stock index futures also have arbitrage function. When the market price of stock index futures deviates greatly from its reasonable pricing, there will be arbitrage activities of stock index futures. The introduction of stock index futures also helps state-owned enterprises to directly raise funds in the securities market; Stock index futures can slow down the impact of fund cashing on the stock market.
Stock index futures provide a new means for risk management of securities investment. It changed the basic mode of stock investment from two aspects. On the one hand, investors have direct means of risk management, and portfolio risk can be controlled within the floating range through index futures. On the other hand, stock index futures ensure that investors can grasp the opportunity to enter the market in order to accurately implement their investment strategies. Take the fund as an example. When there is a short-term depression in the market, the fund can seize the opportunity to leave with the help of stock index futures without giving up the stocks to be invested for a long time. Similarly, when there is a new investment direction in the market, the fund can seize the opportunity and calmly choose individual stocks. It is precisely because the role of stock index futures in active risk management strategy is more and more accepted by the market that in the past twenty years, stock exchanges all over the world have launched this trading variety for investors to choose from.
The function of stock index futures can be summarized as four points. 1. Avoid system risks. 2. An active stock market. 3. Diversify investment risks. 4. You can hedge.
Compared with stocks traded in the stock index, stock index futures have important advantages, mainly in the following aspects:
1. Provide convenient short selling.
A prerequisite for short selling is that you must borrow a certain number of shares from others first. There are no strict conditions for short selling abroad, which makes it difficult for all investors to complete short selling in the financial market. For example, in Britain, only securities market makers can borrow British stocks; American Securities and Exchange Commission rule 10A- 1 stipulates that investors must borrow shares through securities brokers and pay a certain amount of related fees. Therefore, short selling is not suitable for everyone. The trading of index futures is not like this. In fact, more than half of index futures trading includes short selling positions.
2. The transaction cost is low.
Compared with spot trading, the cost of stock index futures trading is quite low. The cost of index futures trading includes: trading commission, bid-ask spread, opportunity cost of paying margin and possible tax. For example, in Britain, futures contracts do not need to pay stamp duty, and buying index futures only needs one transaction, while buying a variety of stocks (such as 100 or 500) needs multiple transactions, with high transaction costs. In the United States, a futures transaction (including the complete transaction of opening and closing positions) only charges about $30. Some people think that the transaction cost of stock index futures is only one tenth of the stock transaction cost.
3. Higher leverage ratio
In Britain, a futures trading account with an initial margin of only 2,500 pounds, the trading volume of the Financial Times 100 index futures can reach 70,000 pounds, and the leverage ratio is 28: 1. Because the amount of margin payment is determined according to the market value of the index futures traded, the exchange will decide whether to add margin or withdraw excess according to the price change of the market.
This market is highly liquid.
Research shows that the liquidity of stock index futures market is obviously higher than that of spot stock market. For example, 199 1, the trading volume of FTSE-100 index futures has reached 85 billion pounds.
Judging from the development of foreign stock index futures market, the investors who use stock index futures the most are the investment managers of various funds (such as mutual funds, pension funds and insurance funds). In addition, other market participants mainly include underwriters, market makers and stock issuing companies.