A tale of two markets: Who can represent the soybean futures markets in China?.


Ling-Yun He* and Ran Wang

There exist two soybean futures markets in China Dalian commodity exchange (DCE), that is, No.1 and No.2 soybean futures markets (SB#1 and SB#2 for short respectively). Due to its dominant market share, trading volume and turnover, SB#1 is taken for granted to be the only representative of China’s soybean markets; so that, there is an implicit misconception in current literature that researchers can simply study the SB#1 to obtain the understandings of the whole China’s soybean futures markets and apply their findings in SB#1 to the whole soybean markets in China. This article mainly doubted whether SB#1 can represent China’s soybean futures markets or not, and provided empirical evidence that although, SB#2 only take small percentage in the whole market share, it is completely distinct from the SB#1. The study also found by means of information share (IS) model that instead of the previous misconception, SB#2 is much more important in that its information share is larger than its market share.

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