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    THE FUTURES MARKET

   In this case, only standardised contracted agreement are bought and sold. These agreements are formally called the futures contract. Provide for delivery of a specific amount of a financial instruments during a specific future month, but in actual fact no immediate transfer of the item. In other words, you can buy and sell financial instuments in the futures market, regardless of whether or not you have own that specific item.

HONG KONG SPOT INDEX MARKET

   It is similar to the futures market where the financial instrument are bought and sold on a negotiated basis except it is traded on an off-exchange platform whereby investors are willing to bid and offer at current prices.

A SPOT INDEX MARKET CONTRACT CONSISTS OF THE FOLLOWING POINTS

Standard amount [ contract size ]
Provide a facility whereby spot index trading can take place [ Bid and    offer basis ]
Collects and disseminates prices and volume information.

REASONS FOR AN OFF-EXCHANGE SPOT INDEX MARKET.

   One of the main reasons for the spot index market is to transfer price risk.   The spot index market allows one group to hedge or transfer price risk to another group who is willing to accept the risk.

   Another important function of the spot index market is price discovery. What should be the price of the spot index be ? Price discovery means determining the proper price for the index.

   The benefits of an organized off - exchange spot index market is that it provides a centralized location with consistent rules for buying or selling the index on a bid and ask basis. Anyone who wish to make a transaction need only look at the price on the computer screen, pick up the phone, call the executives to execute the order.