Internationalization of futures markets: Lessons from China

John Hua Fan, Adrian Fernandez-Perez, Ivan Indriawan and Neda Todorova

Pacific-Basin Finance Journal, 2020, vol. 63, issue C

Abstract: We examine the impact of internationalization on the quality of Chinese iron ore and PTA futures markets, by comparing the trading activities, costs and volatilities before and after the event. Using a difference-in-difference framework, we find that internationalization improves the market quality for PTA, while the opposite effect occurs with iron ore futures. This difference is caused in part by the activities of hedgers and speculators, while decreases in the iron ore market quality are largely explained by the erosion of locational arbitrage opportunities. Since the effects of internationalization differ across commodities, its success must be assessed case by case.

Keywords: China; Futures markets; Internationalization; Market quality; PTA; Iron ore (search for similar items in EconPapers)
JEL-codes: C14 G13 G14 G18 N25 Q02 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:63:y:2020:i:c:s0927538x20302560

DOI: 10.1016/j.pacfin.2020.101429

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