The spot and the futures markets are separate markets.
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 The futures market is highly centralized and highly competitive. All futures transactions are made in a dozen exchanges, where buying and selling orders converge from all over the world. The "spot market," on the other hand, if it can be spoken of as a market at all, is highly decentralized, frequently only partially competitive, and much less responsive to minor forces making for change. Spot trades which it is desirable to hedge take place in Gopher Prairie as well as on the floor of the Minneapolis Chamber of Commerce. The exporter in Baltimore and the miller in Painted Post may be as anxious to hedge purchases or sales as is the terminal elevator operator who buys on the floor of the Chicago Board of Trade. In speaking of the spot market we may be talking about the market in any one of many places. Whereas an almost perfect system of communication has made the futures markets practically a unit, the separate spot markets are at best only partially merged into one. |
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