who brings futures and cash stock prices together?

Z

z32000

does the "electronic system" automatically bring cash & futures prices together if there is a wide point difference?

I know that cash-futures arbitragers (hedgers and speculators) do this most of the time, but what happened if they didn't? Would the "electronic system" kick in and force an arbitrage between them?
 
Which "electronic system" are you talking about?

The premise that no-one would step in to take a "risk-free" arbitrage doesn't make sense.

I think adequate links have been provided for you on this matter in your other two threads.
 
Quote from TraderMojo:

Which "electronic system" are you talking about?

The premise that no-one would step in to take a "risk-free" arbitrage doesn't make sense.
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Say that you're trading ES. You get nothing delivered to you when the contract expires. Basically, if SPX moved one way and ES moved another way, I don't see what would motivate investors to bring them together...I guess if you anticipate other investors will bring them together, then by jumping in first to narrow the gap would make a profit...
But what if everyone just let them go there seperate ways?

Does the "system" kick in to force an arbitrage?
 
What do you mean nothing is delivered?

It's cash settled BASED ON THE UNDERLYING. That itself is enough to force it into fair value territory.
 
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