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Price Discovery and Energy Risk, or How Futures Contracts Are Changing the Energy Markets Forever The Case of the New York Mercantile Exchange

Price Discovery and Energy Risk, or How Futures Contracts Are Changing the Energy Markets Forever... Fundamentally, a commodity exchange, such as the New York Mercantile Exchange, serves a dual purpose. The first is hedging price risk, in which the exchange offers a fair and orderly market for shifting risk via the trading of future obligations. The second major function is price discovery, in which the exchange provides a centralized, open, and liquid forum for buyers and sellers to conduct business, by which the prices of all transactions conducted on the exchange are publicly disseminated. This article surveys the role of exchange traded futures and options contracts within the worldwide energy markets and the concepts, applications, and strategies that have evolved to a level of sophistication and versatility that could not have been foreseen 150 years ago. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Risk Finance Emerald Publishing

Price Discovery and Energy Risk, or How Futures Contracts Are Changing the Energy Markets Forever The Case of the New York Mercantile Exchange

The Journal of Risk Finance , Volume 1 (4): 10 – Mar 1, 2000

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1526-5943
DOI
10.1108/eb043453
Publisher site
See Article on Publisher Site

Abstract

Fundamentally, a commodity exchange, such as the New York Mercantile Exchange, serves a dual purpose. The first is hedging price risk, in which the exchange offers a fair and orderly market for shifting risk via the trading of future obligations. The second major function is price discovery, in which the exchange provides a centralized, open, and liquid forum for buyers and sellers to conduct business, by which the prices of all transactions conducted on the exchange are publicly disseminated. This article surveys the role of exchange traded futures and options contracts within the worldwide energy markets and the concepts, applications, and strategies that have evolved to a level of sophistication and versatility that could not have been foreseen 150 years ago.

Journal

The Journal of Risk FinanceEmerald Publishing

Published: Mar 1, 2000

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