The traditional necessary condition for futures market inefficiency is the existence of alternative forecasting methods that produce mean squared forecast errors smaller than the futures market. Here, a more exacting requirement for futures market efficiency is proposed - forecast encompassing....

Organized exchanges have evolved methods for enforcing contracts, which allow the contracts themselves to be traded at low cost. Theorists have modeled futures contracts as tools for risk management, despite an extensive empirical literature that does not support predictions about bias in prices...