Derivatives trading volumes increase by 40.4% in 2020

Derivatives trading volumes last year climbed by 40.4% – which was three times larger than 2019, according to the World Federation of Exchanges’ (The WFE) annual derivatives report.

“The role derivatives play in managing risk came to the forefront last year, mitigating the uncertainty and volatility driven by the COVID-19 pandemic” said Nandini Sukumar, CEO of the World Federation of Exchanges.

She added, “Markets remained open to meet the needs of investors and this must always be the case in a crisis. Derivatives exchanges were robust and resilient even as the entire financial ecosystem moved to remote working.

The increase in trading volumes was greater than the surge during the financial crisis of 2007-2008, underscoring the resilience of derivatives exchanges across the world.”

Sukumar also noted that, “although the peak trading activity across all trading types occurred in March as the pandemic spread, there was a sustained increase across the year for most instruments.”

Nandini Sukumar, CEO of the World Federation of Exchanges.

The report found that while the share of total volume per region remained largely the same, all regions reported higher volumes. Asia Pacific led the pack with a 43.4% hike followed by the Americas, up 42% and the EMEA region at 29.7%. 

In addition, the total volume of options jumped by 44.1% to 21 bn, while futures volumes rose 37.5% to 25.2 bn. This compares to respective increases of 15.3% and 11.6% in 2019.

ETF derivatives rose 65.1% versus a fall of 8.8% the prior year due to a rebound in the ETF options market.

As in previous years, the Americas was dominant, with a 99.9% share of global ETF derivatives volume.

Equity derivative contracts increased by 56.5% against 18.4% in 2019.. They closed 2020 at  almost 26 bn contracts. 

The only asset class that bucked the upward trend was interest rates contracts, Volumes slid 11.9% compared to a 2.8% rise in 2019.

The decrease was most pronounced in short term contracts (STIRs) which plunged 59.7% versus a 14.9% in long term interest rates (LTIR) contracts in 2020.

The WFE analysis and report is based on the WFE’s annual survey of the derivatives markets operated by its members, affiliates, and other exchanges that voluntarily submit data. 

©Markets Media Europe 2021

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