Increasing financial sophistication and the recent acceleration in the pace of financial innovation has led to a dramatic growth in the economic significance of futures markets. In particular, the volume of trade in financial futures has mushroomed over the last decade, and in the case of stock index futures now rivals that of trade in the stocks themselves. Given the greater prominence of these markets, it is important for both students and academics to be aware of recent advances in the theoretical understanding of their function and performance. This volume examines a wide range of issues which arise in the theory of futures markets. An introductory chapter analyses a simple equilibrium model of a futures market and focuses upon the role of the market in spreading risk. Other chapters examine such issues as the following: conditions under which trading in futures markets leads to a fully efficient reallocation of risk; the role of different assumptions about expectations formation on the nature of equilibrium; the affect of trading futures on price volatility in the spot market; the provision of liquidity and the role of transactions costs; the extent to which futures prices reveal traders' private information; determinants of hedging and speculative trading decisions; factors influencing the likelihood of a manipulation of the market i.e., a corner or squeeze; the importance of program trading and dynamic hedging strategies on price volatility in equity markets. The breadth and timeliness of the book will ensure it becomes a standard reference for academics and professionals working in financial markets.