[shawnee_]

> I don't understand how cash-settled futures are meant to provide price stability to a market.

Interestingly, thrash and volatility provide stability (and profit) to the entities that take a cut of every transaction with a transaction cost. Think about brokers of any sort (real estate, stocks, insurance); they do not care whether the price momentums are going up or down, only that they can extract the maximum "equity" out of each and every transaction. Since fear-based selling (or fear-based buying by folks with fear of "losing out" on the next big thing) tends to increase overall thrash and volatility (and thus overall volume of selling), it is kind of the perfect scheme for them.

News and momentum of any sort can be exploited by insiders with information.