RESEARCH PROPOSAL

Research Proposal

Research Proposal

Research Title:

Quantitative and market microstructure research based on financial future and option market.

Key words:

Key words are Market microstructure, financial future and option market. Dependent variable market microstructure and independent variables are financial future and option market.

Purposes:

The purpose of the research is to analyze the impact of market microstructure on the future financials and option market. In short, the purpose is to conduct the quantitative and market microstructure research on financial future and option market.

Futures markets are market places where the parties agree to make a purchase or sale at a future date in time but at a price determined at the beginning of the operation.

Options markets are market places in which one party (the lessee or purchaser), upon payment of a sum of money (premium), acquired the right (but not the obligation) to require the other party (the shooter) the buy (call option or call) or sell (put option or "put") an underlying asset at a certain fixed price (strike price) during a fixed period (American style options) or a certain date (European style options). They include stock options, currency, index and exchange-traded funds. These financial instruments are used to protect your investments and ensuring growth. Both markets are intended to prescribe in advance the price of an underlying asset. (Harris, 2003)

Futures Markets and Options are financial markets. These are markets that continue to set the rules for trading.

Background:

The theory of the microstructure is a branch of microeconomics that studies the various mechanisms used in markets for financial assets and how they tend to influence the formation of market prices (e.g. stock). (Hasbrouck, 2007)

Market microstructure discusses what mechanisms enhance or degrade the exchange of market efficiency and optimal allocation of resources.

One aspect is the role of the price of information, as the market itself (endogenous information) that the assets exchanged (exogenous information, including economic and financial data) and quality (transparency) and frequency of such information. (Madhavan, 2000)

An analysis of stock trading is an integral part in the theory of market microstructure (market microstructure theory). It is an offshoot of microeconomic theory, which considers the markets of abstract financial assets. The theory of market microstructure studies the functioning of financial markets in terms of institutions and the trading mechanism of the market, the behaviour of economic agents and their performance. Analysis of what is happening in the financial market through the theory of market microstructure reveals the determinants of exchange rate, volatility, liquidity of the market and its relationship to other financial markets. Thus, theory can provide invaluable assistance to regulatory authorities in improving the efficiency and stability of the financial system. (Maureen, 1995)

Modern trading systems have many variety of market microstructure, and their number of variations is continuously growing.

The trading system provides all members equal opportunities section delivery and execution of orders to buy and sell foreign currency, as well as information about the course of trading. Bidders may make transactions on his behalf and on behalf ...