New study reveals key to successful futures contracts lies in market participants.
A study looked at why some futures contracts succeed while others fail. They focused on a contract for distillers’ dried grains (DDGs) that didn't do well despite interest from market participants. The researchers found that the type of participants (hedgers or speculators) and the trading volume of related contracts can impact the success of a futures market. This suggests that commodity exchanges should consider these factors when creating new futures contracts.