Weexpandtheresearchoncommodityfuturesmarketsintoanewlydevelopedmarket:steelfutures.
Weexaminethemostliquidsteelfuturesmarketintheworld,theShanghaiFuturesExchange,which
counts fornearlyalloftheglobaltradingactivity.Our findings suggestthatfollowingthelaunchofthe
steel futures,steelhasbecomeamore “financial” product. We first exploretherelationshipbetweenthe
spot andfuturesprices.Futuresmarket finds itsplaceinthepricediscoveryprocesswherethespot
market continuestomaintainitsprominence.Wealso find evidenceindicatingthatvolatilityinthespot
market hasdecreasedduringthepost-futuresperiod.Our findings suggestthatregulatorsshould
consider launchingthesteelfuturessoastoenhancethecompletenessofthemarketwhilealsotaking
great caretopreservethelinkbetweenthephysicalandthe financial market.