Institutional Investors And The Development Of Financial Futures Market

With the development of the integration of world finance, the role of financial futures market becomes ever more evident in the world financial market. Beginning from the 1970s, modern financial futures market, now, has occupied an important position in the world futures market and playd an active role of stabilizing the financial market and regulating the price system of the security market, and so on. Based on the American market as an example, this paper focuses on the theory and history of institutional investors' behavior in American financial futures market; and from that discovers the important role and status of institutional investors; and analyses the significance of institutional investors to the financial futures market; and positions the financial futures market of China correctly; and gives policy suggestions to the development of financial futures market of China on the basis of absorbing the favorable experiences of American financial futures market. The full paper is divided into four parts. In the first part, it is introduced briefly the general balance theory of financial market, the pricing theory, the trading theory, and the risk-benefit balance theory. In the second part, it is concluded the development process and characteristics of American financial futures market. In the third part, it is mainly about the role and influences of American institutional investors to the financial futures market. In the fourth part, the policy suggestions are given for the development of financial futures market of China.The participants in financial futures market includes those who want to hedge against inflation and speculators. The suppliers are participants with expectation to fall and the demands are those with expectation to rise. The ultimate balance of the market is made by the power of suppliers and demands. In the financial futures market, the most mature theories are hedging transactions theory and arbitrage theory. However, it exists certain proportion of the non-rational behavior in the financial markets. Because of false and distorted signals in the presence, the market participants face to the noise dealer risk outside the systemic risks, which changes the rational expectation of the participates.The development of American financial futures market has experienced the emerging stage, the development stage, stagnation, and boom. In the booming time, financial futures become the mainstay of the futures market, and institutional investors become the main force of financial futures market. Institutional investors from the United States promote the financial market competition; and make the structure of financial futures market undergone revolutionary changes; and promote the innovation of derivatives and the modernization of transactions. Meanwhile the behavior of institutional investors promotes a fair and reasonable environment of the market. Institutional investors protect their own interests while strengthen the legislation of market information noted; and reduce the asymmetry of information; enhance the transparency of the market. Currently, the American financial futures market has developed to a mature market with a variety of productions and complete settlement system and market-based regulatory rules.Compared with the United States, China's financial futures markets started late; the financial markets and regulation lag backward; the development of institutional investors is not standardized. Although the obstacles of institutional investors entering the financial futures market have been cleared, we should make more efforts to form mature financial futures market mainly based on institutional investors and sound regulatory system.