Abstract: The futures market is a financial market providing futures trading, which mainly has three functions: price discovery, risk avoidance and hedging. The futures market plays an important role in the financial industry. Macroscopically, the futures market can play a role in regulating market supply and demand, slowing down price fluctuations and providing reference for the government's macro-control. Microscopically, the futures market mainly plays the role of forming fair prices, providing benchmark prices for transactions and providing economic leading indicators. Let's look at the function of the futures market. 1. What does the futures market mean?

The futures market is a financial market that trades according to the agreement reached and delivers on the scheduled date. The futures market in a broad sense includes futures exchanges, clearing houses or settlement companies, brokerage companies and futures traders. The narrow sense of futures market only refers to futures exchanges.

According to the analysis of modern economics, the futures market belongs to the category of "incomplete market". In this market, the level of commodity prices largely depends on the expectations of buyers and sellers for future prices. It is precisely because of the lack of varieties in the futures market that a large number of enterprises that need to avoid price risks have no suitable safe havens and become the source of irrational speculation.

What is the function of the futures market?

The futures market has three basic functions:

1, price discovery function

The futures market adopts bidding, which can reflect the change of supply and demand relationship between buyers and sellers. When the buyer's market demand increases, the futures price will rise, and the seller's market increases, which means that the futures will fall. The change of futures price can find the change of spot price.

2. Risk avoidance function

Because of the price discovery function, users can make timely response strategies according to market changes, thus avoiding some risks.

3. Hedging function

Because futures have the characteristics of two-way trading and can be hedged, the function of hedging can be realized.

Third, the basic role of the futures market

1, the role of futures market in macro-economy.

(1) Adjust market supply and demand and slow down price fluctuation.

(2) Provide reference for the government's macro-control.

(3) Promote the international development of domestic economy.

(4) contribute to the establishment and perfection of the market economic system.

2. The role of futures market in microeconomics.

(1) to form a fair price.

(2) Provide a benchmark price for the transaction.

(3) Provide economic leading indicators.

(4) Avoid the commercial risks caused by price fluctuations.

(5) Reduce the circulation cost and stabilize the relationship between production and marketing.

(6) Attracting speculative capital.

(7) The function of rational allocation of resources.

(8) Lock in the production cost and stabilize the profit of production and operation.