Risk management tool is an extension of futures hedging function, which can also be said to be an abstraction of the latter concept. Contemporary financial markets are guided by the concept of risk management tools when designing and developing futures varieties. The effectiveness of risk management function is also the main criterion to evaluate the success of variety development. At present, the research and development of stock index futures varieties in China is carried out under the ideological category of taking futures as a risk management tool.

Taking futures as a risk management tool is the embodiment of thinking about the role of futures from a macro-strategic perspective. It turns out that people's understanding of futures risks only focuses on a certain industry or a specific commodity. Now, the meaning of risk has expanded, and people have fully realized the richer extension of risk, including not only non-system risk, but also system risk. Futures plays an important role in macro-economy. From the perspective of risk management, it is to decompose system risk, develop futures varieties, and achieve the purpose of dispersing system risk. Of course, there are also direct development of systematic risk management tools to serve the macro economy, such as stock index futures. Therefore, in the research and development of stock index futures, researchers attach great importance to the important role of futures in macroeconomics and regard it as a risk management tool provided by investors in the stock market.

The function of futures can only be brought into full play after investors master and use diversified risk management tools, and the important role of futures in macro-economy can only be shown on the basis of diversification of futures varieties. The guiding ideology supporting the development of various futures varieties is based on the theory of risk management tools, which is the abstraction of futures functions, especially the function of avoiding risks. The former is an inevitable extension of the latter. At present, it is very important to strengthen the research and publicity of futures risk aversion theory and actively develop various futures varieties to highlight the important role of futures in the macro-economy.

1 deeply analyze the hedging function and correctly understand the meaning of risk management tools.

Hedging is a conservative trading method designed for spot traders, and it is also a way for spot traders to make rational use of futures functions. The convergence of futures price and spot price makes it possible for spot traders to use futures margin system to preserve their value. The convergence of spot price and futures margin system are two basic conditions for spot traders to hedge.

How do futures prices and spot prices converge? First, among the factors that affect the fluctuation of spot price, there are the factors that spot traders expect in the future, so that the influencing factors of spot price and futures price are the same. Second, the rational use of the futures market by spot traders, whose thoughts and behaviors have an important impact on futures prices in futures market hedging. These two aspects are the objective basis of spot price convergence.

Hedging is not only based on the convergence of spot price, but also the function of hedging and the convergence of spot price are mutually causal. It is very important to strengthen the understanding of the relationship between the two, which requires people not to artificially limit the hedging function, otherwise it will inevitably lead to the deviation between the futures price and the spot price, and the result of deviation from the spot price will inevitably affect the hedging function. There have been many events in the early stage of domestic futures development, one of which is the serious deviation between futures prices and spot prices. This phenomenon is related to ignoring the causal relationship between hedging function and spot price convergence when formulating trading systems, and some trading systems even artificially limit the full play of hedging function. These events have also seriously affected the hedging function and brought many negative effects to the society's understanding of the futures market.

In terms of effect, hedging is a relative concept. Hedging may be profit hedging, or it may just reduce losses. The reason is that hedging transactions have certain predictability, and uncertainty is still playing a role, because spot traders use futures to hedge. The role of hedging is to lock in profits and risks, because holding spot (; Whether it is held now or later); As a condition, this determines that hedging is different from "exposure" speculation. Therefore, financial settlement requires that the hedging effect must be linked to the spot and cannot be settled independently. At present, some enterprises still have obstacles in understanding futures hedging. For example, as hedge sellers, they only see the profit side of futures operating books, but they can't accept losses and think that futures are risky.

In fact, as long as the hedging behavior is implemented, such as selling one's own inventory in futures, the market will fall, and it is certainly gratifying that there will be a profit on the futures book, and the market value represented by the inventory will depreciate accordingly. The role of hedging here is to make up for the economic losses caused by spot depreciation through futures profits. There is no need to feel sad because of the book loss of futures caused by hedging, because the spot is appreciating. Hedging is a means to lock in profits or risks. For hedgers, the results of futures accounts are meaningless if they have nothing to do with the fact of holding spot. Therefore, real hedging need not be happy for profit, nor sad for loss. The risk of hedging is not in futures but in spot. If the hedger pays too much attention to the losses in futures and emphasizes futures risks, it will inevitably affect his correct understanding of the hedging function. At present, it is necessary to expand the scale of investors' participation in futures, so that enterprises and spot traders can correctly understand the risks and hedging functions of futures market.

According to the definition of risk management tools, hedge funds have expanded the role of futures. However, it must be pointed out that hedge funds do not have the function of innovative futures hedging because their trading behavior is essentially different from hedging.

As a risk management tool, futures are not only suitable for enterprises and spot traders related to futures varieties to hedge, but also suitable for some large speculative institutions and asset management companies. As long as the operation method is proper and the judgment is correct, it will be very effective for the latter to use futures for risk management and asset allocation. For institutional investors, using futures as a risk management tool may lead to two situations. First, there are indeed spot positions related to futures, such as holding stocks and government bonds, and using stock index futures, stock futures and government bond futures for risk management under expected unfavorable circumstances. Secondly, considering that holding some spot, including real estate, has less profit opportunities, we decided to arbitrage in the futures market to obtain better investment income.

As a big holder of funds, speculating in futures, that is, unilateral trading, will face great risks. Therefore, it is often necessary to combine speculation and make use of the correlation of different markets to buy in one market and sell in another market, so as to reduce risks and expand profits. This method is very common in foreign hedge funds. They arbitrage across time, markets and regions, give full play to the characteristics of free capital flow and internationalization of the capital market, and allocate the funds they manage in an optimal state. However, the arbitrage behavior of hedge funds is completely different from traditional hedging, regardless of the purpose pursued or the way of operation.

When distinguishing hedge fund arbitrage from hedging, we must first make it clear that reverse operation or reverse position is not the core concept of hedging. Strictly speaking, the holder of spot does not have the nature of purchase, such as the possession of spot by producers. Hedging can protect the value of existing spot or future spot. Therefore, when hedging, there is no fact that it is contrary to futures behavior at the same time. Hedging is first of all an objective need to manage risks and lock in profits, not a combination of two opposite trading behaviors. Without a clear understanding of this point, it is easy to regard two equal and opposite trading behaviors in futures as hedging. In fact, the two opposite behaviors, like hedge funds, are at best just arbitrage in effect, not so-called hedging, although its operating principle may come from the operation method of futures hedging, and it may be as conservative as hedging.

The arbitrage of funds is essentially different from the hedging of spot traders. The former behavior can be accurately called hedging, which is a reasonable use of the correlation of futures market and trading mechanism. This behavior is not without risk, but the risk may be small. Once the judgment is wrong, it will be overwhelmed by risks. In recent years, foreign tiger funds and quantum funds have successively lost money, which is the best example. However, as long as the spot dealers adhere to the principle of hedging, they can achieve a risk-free or zero-risk state in futures, which is beyond the reach of hedge funds. Judging from the content of risk transfer, the arbitrage behavior of hedge funds in futures is not to transfer the corresponding spot market risk of futures targets, to be exact, it is to transfer the risk that the principal cannot be added. When the changes of exchange rate and interest rate do not constitute risks or their changes can be ignored, this arbitrage behavior is essentially profit-seeking. Therefore, the use of futures by hedge funds should generally be regarded as a profit-seeking tool and sometimes as a risk management tool, especially when the funds adopt a more conservative and effective operation mode.

To accurately understand the essence of hedge fund arbitrage, we should not only understand the difference between it and hedging behavior, but also understand the logical relationship between the definition of risk management tools and the concept of hedging. Although the definition of risk management tools comes from the abstract meaning of hedging function, after abstract generalization, the extension of the definition of risk management tools is richer than hedging. For example, option trading is also regarded as a risk management tool in modern financial markets, which is innovative under the definition of risk management tool and is not a concept with futures. Among many risk management tools in modern financial market, futures is the most effective tool and the first of many risk management tools, so that futures and risk management tools are often equated in theory. Similarly, futures are traded under the concept of risk management, and the arbitrage behavior of hedge funds is completely understandable, because it is essentially different from the hedging of spot traders. The arbitrage behavior of hedge funds is not so much the innovative application of the function of preserving value in futures market as the full development of the function of futures speculation. An important reason is that there is no hedging object-the corresponding spot-behind the hedge fund arbitrage transaction.

Recently, some experts regard the operation of hedge funds as "hedging" in the modern sense of international futures. They think that China's backward concept of "hedging" is an important reason for restricting many enterprises to participate in futures, and demand innovative "hedging" to enable many domestic enterprises to follow the example of foreign funds to enter the futures market. At present, it is a fact that many domestic enterprises and investment institutions are unable to enter the futures market, which highlights the characteristics that China futures are out of the mainstream economy and the huge gap with the international futures market. There are many reasons for the existence of facts, including the restriction of relevant national laws and the lack of corresponding futures varieties suitable for all kinds of investors. However, it is debatable to blame this on the lagging understanding of hedging function in China and think that hedging needs innovation.

First of all, there is no internal relationship between the use of futures by foreign hedge funds and the concept of hedging; Secondly, the use of futures by hedge funds came into being when futures were widely used as a risk management tool or the society had reached a general consensus. However, China's understanding of futures as a risk management tool is still not universal. The difference in social understanding and the lack of futures varieties determine the participation of China enterprises or investment institutions in futures, and also determine the distance between domestic futures development and international futures development.

It must be emphasized that the current situation of domestic futures can not be changed by the so-called innovation of hedging function, and the operation of foreign hedge funds has nothing to do with hedging, so advocating hedging innovation will cause some important ideological understanding and methodological confusion. For example, if we take practical problems as theoretical problems and try to solve practical problems through innovative futures theory, especially innovative futures function theory, it is possible to lead futures development astray. For China, it is very important to strengthen the understanding of the basic functions of futures, which will help narrow the gap with international understanding and lay a solid ideological foundation for the in-depth development of domestic futures. As far as innovation content is concerned, China futures market urgently needs to innovate futures varieties, that is, to develop various risk management tools, followed by futures theory innovation. In this sense, it is particularly urgent to widely popularize the basic knowledge of futures.

Futures price discovery function

1 the essence of price discovery.

Futures price discovery is an understanding of future prices, and price discovery ensures the existence of the future, just like the determination of spot prices, so futures are also called trading futures. At the same time, the discovery of futures prices provides convenience for relevant producers and consumers to plan production and consumption, and promotes the circulation of commodities. At present, there are not many objections to these understandings. Perhaps this price discovery function is not unique to futures. As long as there is speculative trading and the trading is very concentrated, the market price will have the function of future discovery, as will the stock market and emerging wholesale markets. In Shanghai and Shenzhen stock markets, investors believe that buying a stock is optimistic about the future earnings of enterprises, which is consistent with the meaning of price discovery. The function of market price discovery is related to the etymological meaning of the definition of speculation, and is actually related to people's expected transactions.

Futures is essentially the future of trading. Because its speculative function is more significant than other markets, the price discovery function is very obvious. When discussing the content of price discovery, some scholars think that futures price discovery is the discovery of price trend, not just the discovery of price level, and price discovery is a dynamic process. Therefore, it is of no practical significance to be too rigid about the right or wrong of specific prices. This feature of futures price discovery can be considered as the reason why the futures market is often more active than the spot market, and the price fluctuation in the futures market is greater than that in the spot market, because in the latter, traders are very concerned about the specific price level in specific transactions, and they do not fully consider the future information of prices than futures.

2 The relationship between price discovery function and hedging function.

The convergence of spot prices is based on the fact that the price movements of the two markets are basically the same, which is the basis for spot traders to hedge. If it is found that the futures prices are different rather than the spot prices converge, the futures market will lose its hedging function. Therefore, the content of futures price discovery stipulates that the convergence of spot prices is very important, which is the basis for determining whether futures prices have risk management functions. In order to ensure the normal function of risk management, it is necessary to standardize the process of futures price discovery that deviates from the convergence of spot price, and the convergence of spot price becomes the standard of whether futures price discovery is reasonable or not. In this sense, in view of the fact that the futures market price deviates from the spot price at a certain moment, some market manipulators have no idea what it means, and it is necessary for relevant parties to carry out necessary management on futures prices. Historically, the risk warning policy of the exchange was issued in time and should be supported by investors.

Risk comes from the concept of uncertainty in the future, and the discovery of futures price is the process of revealing the risk of spot market in this sense, so that spot traders can realize risk transfer. Therefore, the futures price discovery function is also the basis for spot traders to hedge. This requires the relevant parties to fully develop and improve the functions of the futures market and give full play to their roles. Emphasizing one side while ignoring the other will affect the healthy development of the futures market.

Futures speculation function

Is the source of futures speculation or speculative function inherent or exogenous in the futures trading system? Do conjectural functions conflict with other functions? These problems involve the relationship between speculative function and other functions. Futures, taking futures as the trading object, attracts and strengthens traders' speculative consciousness with the margin system, and coexists with price discovery and hedging functions in the futures market. It is very important to understand the symbiosis of the three basic functions of futures, which stems from the institutional innovation of futures market and the characteristics of trading objects. Just like people's five senses coexist with people, there is no conflict between them, and there is no essential conflict between the three basic functions of futures-speculation, price discovery and hedging. This is the basis of correctly understanding the relationship between the three.

The problem is that speculation is a universal function of many markets, not unique to futures. It is only the characteristics of futures trading objects and the design of trading system that make this speculative function play more fully than other markets. Speculation is an expected transaction, which is obviously different from hedging in terms of chasing up effect. Speculators pursue the spread profit brought by the price fluctuation of futures contracts, which means taking risks at the same time; Hedgers transfer risks to hedge their value, and their risks are transferred to speculators. Therefore, the hedging function is directly proportional to the speculative function. The more speculation, the better the hedging effect and the more thorough the risk transfer.

Regarding the role of speculation, some people in China mainly see its contribution to the circulation of the futures market. They think that there is no circulation without speculation, and they indulge unreasonable speculation in pursuit of circulation. In fact, the liquidity of the futures market comes from two aspects, on the one hand, speculation, on the other hand, hedging, including the spot quantity circulating in the futures market. Liquidity is determined by the trading volume of these two aspects, and liquidity has become an important indicator of the speculative function and hedging function of the futures market. In terms of contribution to futures circulation, speculative trading and hedging trading share joys and sorrows. There is no problem that the large transaction volume of one party inhibits the participation of the other party. In reality, the increase or decrease of futures circulation has a certain relationship with the market price level. Some people explain that when the liquidity of the futures market is small, the speculative function and the hedging function are opposite. In the process of pursuing liquidity, it is suggested to protect one party and restrain the function of the other party through system design to expand liquidity. This understanding is biased. The following views represent the current understanding of the opposition between the two. "This group (; Here refers to the hedger); Its appearance has played a great role in realizing the combination of futures and spot and exploring new ways for futures market to serve the reform of grain circulation system. However, the continuous emergence of a large number of physical deliveries will also threaten the normal development of the current grain futures market. " On the one hand, emphasizing the function of hedging is conducive to highlighting the practical significance of the futures market, on the other hand, it is believed that it will affect the function of speculation and make the relationship between them antagonistic. This view does not admit that the conflict-free relationship between the two is the basic function of the futures market, and it is also easy to mislead market stakeholders to take the road of quick success and instant benefit in order to activate a futures product. This view is easy to exist in the troubled futures market, which may become one of the important reasons to explain the existence of the dilemma and become the guiding ideology to solve the dilemma. Judging from the development of domestic futures in recent years and the recent operation of some varieties, it is not feasible to guide the establishment, development and operation of futures market trading system from the viewpoint of opposing speculation and hedging function. To truly solve the problem, we must broaden our thinking, improve the trading system on the basis of a correct understanding of the functional relationship between futures hedging, price discovery and speculation, and strengthen research and development of varieties suitable for the development of futures markets to meet the needs of traders.