Conclusion: Banging the Close
摘要
Henner’s close-of-trading drama in the egg futures market would become a not uncommon way of generating a artificial price in derivatives trading, particularly in derivatives with underlying assets that were also derivatives. While the Commodity Futures Trading Commission was able to sustain manipulation cases in some of these situations (in electricity and natural gas futures) it failed in a case involving interest rate futures in a decision that essentially held there was no such thing as an artificial price as long as both sides of a deal knew, or thought they knew, what they were doing. The point here: the dynamics of a competitive derivative market primarily functioning for price discovery, whether in egg futures or interest rates, can force prices to a trader’s predetermined goals that have nothing to do with the price of an underlying asset.