The new "Futures Trading Management Regulations" came into effect on April 15, 2007. The regulations laid a legal foundation for the launch of financial futures and cleared obstacles for the launch of stock index futures. After the launch of stock index futures, what impact it will have on the secondary market is a hot topic in the market.
The "crowding-out effect" of stock index futures on the stock market is limited. The initial listing of stock index futures may have a certain capital crowding effect on the stock market, especially for some speculators who are sensitive to the index, and will divert some of the funds invested in the stock market. From the perspective of capital volume, the trading amount of stock index futures may exceed the trading amount of the stock market, but stock index futures are traded on margin. Even if the trading volume of stock index futures is twice that of spot, based on 10% margin calculation, the actual trading amount is only that of the stock market. 20%. The "crowding-out effect" of the launch of stock index futures on the stock market is very limited. Carrying out stock index futures trading will help attract OTC investment funds into the market and increase the amount of funds. With risk management tools such as stock index futures, the scale of insurance funds and social security funds invested in the stock market will continue to expand in the future. As institutional investors continue to expand, demand for large-cap blue-chip stocks is also increasing, and my country's stock market will enter a virtuous cycle. At the same time, overseas funds will also increase their interest in investing in the Chinese market because of the availability of relevant hedging tools, and will be more willing to invest funds in the Chinese A-share market. In this way, the growth of domestic institutional investors and the influx of foreign funds will significantly increase the proportion of assets invested and managed by institutional investors, which can broaden the source of funds for the stock market, expand the scale of the stock market, and increase the liquidity of the stock market.
Futures and spot arbitrage increases new demand for spot transactions and enhances market liquidity. Based on the judgment of the price difference between stock index futures and spot prices, investors sell overvalued stock index futures (spot prices) and buy undervalued spot prices (stock index futures) through bilateral transactions, thereby realizing the seamless gap between stock index spot prices and stock index futures. Risk arbitrage trading to obtain stable returns. For emerging markets, when stock index futures were first launched, the market efficiency was low, and the basis difference between futures and spot prices often widened. Investors could obtain almost risk-free profits through futures and spot arbitrage. In addition, the existence of arbitrage can quickly restore distorted market prices, improve the pricing efficiency of the secondary market, and promote the healthy development of the secondary market.
To sum up, stock index futures can provide effective hedging and hedging tools for investors in the stock market, attract funds to enter, and have limited "crowding-out effect" on the stock market. At the same time, the existence of the arbitrage mechanism can also increase market liquidity, promote long-lasting activity in the stock market, and improve market effectiveness. An active secondary stock market is not only the basis for the survival of the primary market with financing functions, but also has a positive impact on the flow of social resources to high-quality listed companies, accelerating industrial upgrading, and improving the governance level of listed companies. role. Therefore, developing my country's financial derivatives market and launching stock index futures in a timely manner under the premise of "high standards and strict requirements" are intrinsic requirements for better utilizing the functions of my country's securities market and improving the efficiency of social resource allocation.
That is to say, ordinary retail investors cannot afford to play with stock index futures. Only institutions can buy and sell large-cap index stocks to suppress and increase the index. Only in this way can institutions make huge profits on futures.