What does the stock index futures "the greatest financial innovation since 1970s" mean?
Stock index futures provide a tool to avoid systemic risks and enhance the stability of the stock market. The introduction of stock index futures has provided new functions for the capital market. Stock index futures is a means to avoid risks, which can provide a way to hedge risks for the stock spot market and meet the strong demand of market participants to avoid systemic risks in the stock market. Before stock index futures, there is no more convenient and effective short-selling tool to avoid the risk of market decline. When the stock market is expected to fall, investors can hedge the systemic price risk of the overall stock market decline by directly opening positions and selling stock index futures contracts. Even if the stock market falls, they will benefit from the trading activities of selling high and buying low to make up for the losses caused by the stock market decline. Large shareholders can maintain the original value of their stock assets while continuing to enjoy the corresponding shareholders' rights and interests through this hedging transaction. Funds can reduce the panic impact of centralized selling on the stock market. The contract prices of different maturities generated by the open bidding of stock index futures fully reflect all kinds of information related to stock index and the judgments of different investors, and also reflect the expectations of market participants on the future trend of the stock market to a certain extent, which breaks the information monopoly advantage of some institutions and large households to a certain extent and is conducive to rational analysis and prediction of investors. The expected price generated by stock index futures can be quickly transmitted to the spot market, so that the spot market price can reach equilibrium.