Contract Design, Transaction Cost and Market Speculation: A Demonstration Study of Chinese Futures Market

Market speculation is an important standard to evaluate the market efficiency. Comparing the contract design and the transaction cost of corn futures traded on the Da Lian futures market with the wheat futures traded on the Zheng Zhou futures market, both of which have the similar commodity attribute and transaction mechanism, this paper analyzes the inner reasons why the speculation in the corn futures market is stronger than that in the wheat futures market and make the following basic conclusion: First, the transaction cost is the important inner affect to determine the market speculation. Second, the contract design plays an important role in the scale of transaction cost.