Introducing New Futures Contracts: Reinforcement Versus Cannibalism

Posted: 15 Jan 2003

See all articles by Joost M. E. Pennings

Joost M. E. Pennings

Maastricht University; Wageningen UR; University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Raymond M. Leuthold

University of Illinois @ Urbana-Champaign

Abstract

In order to assure survival, futures exchanges around the world are in constant search of new futures contracts that will generate a profitable level of trading volume. Introducing new futures contracts may increase or decrease the volume for those contracts already listed. Using a multi-product hedging model in which the perspective has been shifted from portfolio to exchange management, we study these effects. Using data from two exchanges that differ regarding assets traded and market liquidity (Amsterdam Exchanges versus Chicago Board of Trade) we show the usefulness of the proposed method. The method may also be used to evaluate the benefits for exchanges that plan to internationalize their activities by merging with another exchange or by cross listing other exchanges' futures contracts.

JEL Classification: G1

Suggested Citation

Pennings, Joost M. E. and Leuthold, Raymond M., Introducing New Futures Contracts: Reinforcement Versus Cannibalism. Journal of International Money & Finance, Vol. 20, 2001. Available at SSRN: https://ssrn.com/abstract=334881

Joost M. E. Pennings (Contact Author)

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

HOME PAGE: http://marketing-finance.nl/cv/cvpennings.pdf

Wageningen UR ( email )

Hollandseweg 1
Wageningen, 6706KN
Netherlands

HOME PAGE: http://marketing-finance.nl/cv/cvpennings.pdf

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

1301 W. Gregory Drive
326 Mumford Hall MC-710
Urbana, IL 61801
United States
217-244-1284 (Phone)
217-333-5538 (Fax)

HOME PAGE: http://marketing-finance.nl/cv/cvpennings.pdf

Raymond M. Leuthold

University of Illinois @ Urbana-Champaign ( email )

1301 W. Gregory Drive
326 Mumford Hall
Urbana, IL 61801
United States
217-333-1810 (Phone)
217-333-5538 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
593
PlumX Metrics