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A theoretical model is used to study the effects of news reversals on futures contracts. The model predicts a heightening in return volatility following a news reversal, and that this effect is more pronounced early in the monthly macroeconomic news cycle.

The lead-lag relationship of stock index futures between the years 1992 and 1996 are researched. There is a futures lead in a rising market, but there is less evidence of this in a falling market.

The existence of speculators improves market efficiency and may help reduce costs to hedgers. Although the profitability of significant speculators in the commodity futures market is assumed, they do not bring about immediate risk premia on hedgers. A possibility exists whereby a speculator venturing into the market has no knowledge of the particular category of the trader in the other aspect of contractual arrangements.

The relationship between the level of trading in currency futures and the variability in underlying exchange rates is investigated due to growing popularity of currency futures. The level of futures trading and the volatility in the spot rates of the British Pound, Canadian Dollar, Japanese Yen, Swiss Franc and the Deutsche Mark are examined. A volatility measure is applied which is consistent with the return distribution of the underlying currencies being studied. Findings show a positive correlation between the level of futures trading and the volatility in exchange rate changes.

A study was conducted to determine the relationship between options trading activity on the Standard and Poor 500 Index and the variability of the underlying cash index. The results show that an increase in the level of options trading follows increased volatility in the cash market, while an increase in options trading is followed by a drop in cash price variability. This indicates that options trading tends to stabilize cash markets.

Hartzmark's model for future demand is used in assessing the impact of margin requirements on the activity and volatility of futures markets using data from the soybean and corn markets. Results indicate that as contracts mature, trading becomes more sensitive to margin changes. This finding negates the observation that margins present significant opportunity costs for futures traders. Moreover, it has been noted that margins have a negative effect on the trading activities for all types of traders.