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This article is an exploration of the history of the regulation of stock futures leading up to the recent regulatory resolution in which the regulators (SEC and CFTC) share responsibilities, thus leading to the trading of single stock futures.

The case describes two episodes where the basic valuation model (cost of carry model) for single stock futures appears to break down. The first involves market manipulation and the second involves an unexpected change in the record date for an already announced dividend. This breakdown leads to large losses for the participant in these futures markets.

This paper aims to compare and contrast the concept of conventional futures contract from the Islamic law of contract perspectives. The underlying theory and practice of Islamic finance is based on the principles of Islamic law of contract. Although the necessity of derivative instruments such as the case with futures contract is essential for developments in Islamic finance, the permissibility of using these instruments still remains a debatable issue.

The paper discusses arguments for and against using derivative instruments as in futures, for example, in light with the Qur’an and Sunnah (the Prophet’s traditions), as well as the views of classical scholars, jurists and contemporary researchers. Arguments for and against are analysed systematically to derive a logical conclusion.

The study finds that majority scholars consider futures contracts as non-compliant with the Islamic law due to the fact that selling something that does not exist, deferment in the both counter values, gharar or ambiguity and excessive risk taking, pure speculation and sale of one debt for another.

The study focuses narrowly on conventional futures contract. Analysing other financial derivative contracts could be a future research endeavour.

The study has so far found the verdict of impermissibility of conventional futures contract in its current form as has been argued by majority scholars in the premise that they do not comply with the Islamic law. Policymakers and industry practitioners need to take this opinion of majority scholars while developing new Islamic financial derivatives.

To the best of the author's knowledge, the present research is the first attempt so far that explained the validity of conventional futures by analysing arguments of classical and contemporary jurists, scholars and researchers.

This paper examines the price dynamics in the single stocks futures and spot markets. In order to enhance the liquidity of the stock futures market, Korea Exchange introduced the liquidity provider in 2014, and exempted the securities transaction taxes on stocks sold for hedging purposes of liquidity provider from 2015. This study performed a vector error correction model (VECM) based on spot-futures market linkage to evaluate the effectiveness of the liquidity policy by examining the difference in the price discovery around the event. The main empirical analysis results are summarized as follows. First, a statistically significant sample of price discovery over the entire period was evident in the interrelationship between spot and futures. This implies that stock futures have information effect equivalent to spot price, which is different from the previous studies in which futures lead the spot price discovery significantly as in the case of KOSPI200 futures market. Second, the tendency of feedback between spot and futures is consistent in price discovery even after introduction of liquidity provider and exemption of securities transaction tax. Overall, empirical results suggest that the effectiveness of the stock futures market policy is limited during the sample period and the additional measures to enhance the long term activation are needed.

This paper investigated the price discovery and asymmetric volatility spillover effects between single stock futures and spot markets. For this purpose we employ 4 largest Korean financial holding companies's daily data covering the period from May 7, 2008 to the end of December, 2010. We introduce the Nelson (1991)'s Exponential GARCH models and the major empirical results are as follows; First, according to Johansen co-integration test, there is a long run relationship between the level variables of 4 financial holding companies' futures and cash markets. Second, based on Granger causality test, 3 financial holding companies's futures contracts among 4 have an impact on the spot returns at a significant level. Third, financial holding companies' futures and spot markets are influenced at 10% to 27% by previous price changes of each market. Fourth, there is a asymmetric volatility spillover effects in 4 financial holding companies futures markets. From this result we infer that individual futures and spot markets in banking area are more sensitive to bad news than good news. These empirical results are consistent with the those of Sakthivel and Kamaiah (2010), Chan et al.(1991), Lien and Tse (2000), Yang et al.(2001) and from these results we infer that 4 single stock futures market are more efficient than those of there spot markets.

In this study, we analyzed whether the expiration day effect of domestic single stock futures exists. One-minute stock prices and trading volume by trader types is used. Data ranges from May 2008 to June 2016. The expiration day effects are measured by price reversal, price shock, volatility effect, and volume effect. Since the expiration day of single stock futures is on the second Thursday of each month, we analyzed whether the expiration day effects differ between expiration Thursday and non-expiration Thursday. The price reversal effect is evident in Samsung Electronics and Hyundai Steel, and the price shock effect is evident for KT and KT&G. However, price reversals and price shocks are not generally found in other stocks. On the other hand, in most stocks (16 out of 22), the volatility effect variables were statistically significantly larger on the expiration Thursday than non-expiration Thursday. The expiration day effects of single stocks are evident in the trading volume. First of all, trading volume increased significantly on expiration Thursday than non-expiration Thursday. In particular, the trading-volume shares of institutional investors and foreign investors increase and the share of individual investors is decreasing. This suggests that the increase in trading volume on expiration Thursday is mainly due to the increase in the trading-volume shares of institutional investors and foreign investors, who are supposed to be in the information superiority. In addition, we can conjecture that the larger volatility level on expiration Thursday than on non-expiration Thursday may be due to institutional investors and foreign investors rather than individual investors.

Amid benign monetary policy in mature market countries and high liquidity‐induced demand, lower risk premia have encouraged risk diversification into alternative asset classes outside the scope of conventional investment. The development of derivative markets in emerging economies plays a special role in this context as more institutional money is managed on a global mandate, with more and more capital being dedicated to emerging market equity. This paper aims to focus on these issues.

This paper reviews the recent development of equity derivative markets in emerging Asia and informs a critical debate about market practices and prudential supervision. Goal of the paper is also to outline essential elements and key policy considerations in developing derivative markets.

The supervision of emerging derivative markets depends on the expedient and tractable resolution of challenges arising from consistent risk management, risk mutualization, and prudential standards that guarantee market stability in crisis situations. In particular, further efforts are needed in areas of cash market liquidity, trading infrastructure as well as legal and regulatory frameworks based on a set of coherent principles for capital market development.

The paper offers a comprehensive set of principles for the development of equity derivative markets based on the current state of equity derivative trading in emerging Asia. Given current efforts by national regulators in the region to implement comprehensive guidelines on derivatives and revise short selling restrictions, the scope of this paper has topical appeal from the perspective of market participants and regulators.

The purpose of this paper is to examine the cross-sectional predictive power and the information content of volatility smirks for future stock returns using single stock options.

The study uses Fama-Macbeth procedure and portfolio approach to investigate the predictability and informativeness in a setup when options settlement style is changed from American to European.

The study reports that the volatility smirk of European style options, unlike American style options, predict the underlying cross-sectional equity returns. Firms with steepest volatility smirk underperform firms with flatter volatility smirks, by an average of 3.28 and 4.01 per cent annually for American and European options, respectively. The results are robust to the control of idiosyncratic and systematic risk factors.

The results confirm that a trader with negative information prefers to trade out-of-the-money put options. The more pronounced results of European options designate the trader’s preference to less risky European style stock options. Results are robust and signify the delay of equity market in incorporating information impounded in the volatility smirk.

Very few studies examine smirk and returns relationship and to the best of the authors’ knowledge, no study exists that examine the unique case of change in options style and its role in affecting relationship between smirk and future returns.

Consumer response to merchandise shortage in the online supply chain outlet is an interesting and important issue for e‐vendors because of the high risk associated with the online environment. The purpose of this study is to examine the effects of the online environment on consumer out‐of‐stock behaviors. In addition, it aims to examine the relative impact of non‐web site situational factors on consumer out‐of‐stock behavior.

The study proposed an expectation confirmation‐disconfirmation framework based on the utility maximization principle in consumer research. This framework was validated with data from online shopping transactions gathered in two field studies.

The occurrence of a stock‐out had a pervasive negative impact on consumers' assessment of their online transactional experience and repurchase intentions. Furthermore, item substitution behavior was positively linked with merchandise information content, vividness of web site content, and service speed and a few situational factors. Overall, it was found that consumers' reaction to the “shock” effect of a stock‐out was best explained by an expectation confirmation‐disconfirmation model rather than a performance‐only or expectation‐only model.

While the focus on the total expectation confirmation‐disconfirmation process limited the scope of the study to a single stock‐out event, future research should examine multiple stock‐out events to further validate the proposed framework.

Managers can take advantage of the positive linkage between web site design features and item substitution behavior by tracking the online consumers' expectation confirmation‐disconfirmation evaluative process and its effect on how consumers respond to high priced versus low priced items during a stock‐out event. Design features for low priced items such as CDs and books require product specific information to reduce item switching or exit from the e‐supply chain during a stock‐out event.

Scholars need a systematic framework for examining consumer response to a stock‐out that is applicable in the e‐commerce context because of the effects of abundant information access, low switching cost and the high service expectations of online customers.

The purpose of this paper is to highlight the continuing diligence required of the tax compliance function of any investment vehicle that holds commodities contracts. In addition to monitoring Congressional developments that are likely to pick up where 2010's Dodd‐Frank Act left off, with the globalization of commodities trading, contracts traded on foreign exchanges are being added to the list of “Section 1256” contracts, which have special beneficial tax treatment under current law.

This technical paper describes new technical rules applicable to the tax returns for taxpayers who trade in commodities contracts, as well as the need to be alert to future developments, whose likely parameters are provided.

After a period of low levels of new developments, commodities taxation has come to the fore in Washington and an increasing tempo of developments is expected.

This paper provides timely guidance from an expert on tax issues relating to tax planning and tax return preparation from commodities traders.