“Undated Futures Markets”, 1988-02-01 (; backlinks; similar):
This article discusses the mechanics, economics, advantages and disadvantages of undated futures markets with specific reference to the Chinese Gold and Silver Exchange Society of Hong Kong (CGSES). It also suggests a potential application of undated futures markets to the trading of stock index futures.
An undated futures market is an alternative to conventional futures markets. In conventional futures markets contracts mature at selected times during the year. Several contracts with different maturity dates trade simultaneously. In an undated futures market only a single contract trades, but that contract can serve the hedging purposes of the multiple contracts traded in a dated market. The CGSES is of interest both as a curiosum and as an example of a potentially valuable form of futures market.
The following section of this paper describes the operation of an undated futures market and the specific mechanics of trading on the CGSES. Sections II and III discuss the economics of price determination and hedging in undated futures markets. §IV describes the advantages of undated futures markets to futures traders and points out potential problems in certain applications. §V shows how such markets might be adapted to the US, especially for trading futures on a stock index or on other indices, and §VI is a conclusion. [cf. Perpetual futures.]
View PDF: