Introduction of futures and options on ISE-30 index and their impact on the volatility and trading volume

Future markets help producers and investors to manage their risks effectively against abrupt price swings. Trading in future markets may some effect on spot market. Some researchers argue that index futures trading will increase the volatility and trading volume in the stock market while some others defend completely the opposite idea.In this study, it is examined whether the introduction of futures on Istanbul Stock Exchange National 30 Index (ISE National ? 30) has any impact on the volatility and volume of the ISE National ? 30 index components. Futures on the ISE National ? 30 index have been trading on the Turkish Detivatives Exchange (TDE).The first part of the study contains the history of futures market, its structure, and some related definations about the future markets.In the second part, the history of the TDE, its structure, end the products that are traded in TDE are presented.In the last part of the study, an interaction between the futures markets and spot market has been searched by testing whether futures trading on ISE National ? 30 index has any effects on the volatility and trading volume of the ISE National ? 30 index components. The empirical results indicated that the volatility and trading volume of the 65% of the stocks increased.Key Words: TDE, Futures Markets, Risk, Istanbul Stock Exchange Market, Istanbul Stock Exchange Market National 30 Index, Stocks, Volatility, Trading Volume.