An Additional Aspect of Whether Futures Contracts Succeed: The Nature of Governmental Intervention

By Hilary Till, Solich Scholar, J.P. Morgan Center for Commodities, University of Colorado Denver Business School; and Principal, Premia Research LLC

The history of futures regulations reveals four features in determining whether a futures contract can succeed: (a) a contract must have a convincing economic rationale; (b) it is helpful if contracts are viewed as being in the national interest; (c) competition requires regulatory parity among exchanges; and (d) markets can survive even draconian interventions so long as they are short-term. This paper is excerpted from a seminar that was provided by the author for staff at the Shanghai Futures Exchange.