| By combining theories with practices, this paper proposes a new type of financial derivative, Stock Index Futures Contract ,on the basis of the international practices as well as the concrete conditions in China. The preface mainly introduces the definition, functions, background and development of Stock Index Futures. The main body of this paper consists of three parts. Analyzing both the positive and negative effects that Stock Index Futures may have on the spot market ,the first chapter arrives at the conclusion that it is necessary and urgent for China to adopt Stock Index Futures by. The second chapter, the center of this dissertation, works out a Stock Index Futures Contract for China by referring to the practices of other countries. The third chapter studies the possible risks once the Stock Index Futures is adopted and proposes some specific supervision measures.In the preface, the Stock Index Futures is defined as a futures contract based on stock indices. As a form of financial futures, the Stock Index Futures has all the features of futures transaction. The Stock Index Futures offer investors a financial instrument that enables them to avoid effectively systematic risks caused by the drop of the stock market as a whole. In February 1982, the American KCBT initiated the first Stock Index Futures Contract in the world, which is called the value line composite average VLF. Since then, the Stock Index Futures developed rapidly, bringing about a worldwide Stock Index Futures trade upsurge, which is regarded as a revolution in stock trading. From the macro perspective, Stock Index Futures has the following three economic functions: first, price discovery; second, controlling the fluctuations in the stock markets; third, increasing the market liquidity. From the micro perspective, Stock Index Futures also benefit the investors: first, hedging;second, speculation; third, arbitrage. The first chapter mainly discusses the positive and negative impacts that the Stock Index Futures has on the spot market. The positive impacts find their way in the following areas: It provides a new channel to avoid investment risks, and thus enlarges the scale of participation in the security market. It facilitates the development of institutional investors by providing a new risk-control-strategy. The index arbitrage can stabilize and control stock prices, strengthen the roles of the spot market in allocating resources, and avoid the troubles in choosing stocks frequently. Theoretically, the Stock Index Futures trade is a double-edged sword. The artificial stock price index is virtual. Although it helps individual investors to control risks effectively, it can only transfer the risks of the market as a whole instead of eliminating them. The negative impacts that the Stock Index Futures has on the spot market include the following aspects: transaction capital might be transferred; unfair trades and illegal market manipulations might occur. However, the relations between stock index futures and the fluctuation of stock indices proves us that the former seldom exacerbates the fluctuation of stock indices. In spite of the diversion of capital at the very beginning of the adoption of stock index futures and the impacts on the spot stock market, the negative impacts are just partial and temporary. Considered as a whole in the long run, the stock index futures will only activate the stock trading , lead the prices to fluctuate reasonably, and result in the healthy development of stock markets. The analysis of the American stock catastrophe in 1987 denies the Cascade Theory proposed by Brandy Committee, which ascribes the cause of stock market catastrophe to the internal defects of stock markets. China's security market is still in its infancy, so it is featured with improper market operations, high systematic risks and the so-called "Policy Market" and "Information Market". The healthy development of China's security market turns to be extremely urgent for the benefits ofinvestors.The second chapter talks ab... |
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