Exchange traded derivatives set for bumper year

Trading of futures and options is on track to a record year, with higher levels of trading activity in many sectors, notably interest rate and equity index contracts, according to the FIA’. in a webinar titled, Q3 2022 Trends in Futures and Options Trading.

Around 60.7 billion contracts traded in the first nine months of 2022, up 35.6% from last year, said Will Acworth, senior vice president, Publications, Data and Research at the global trade group for the futures, options and centrally cleared derivatives markets.

That overall number was bolstered by the NSE of India, which offers relatively inexpensive options on equity indices.

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The exchange traded 26.4 billion contracts in the first nine months of this year, up 2.5 times from a year ago. However, Acworth said that as it is an outlier, the FIA would concentrate on the numbers from the rest of the world.

Acworth added, “In North America – the US and Canada – the overall level of trading rose from last year, with the growth coming mainly from futures and options on equities, interest rates, currencies and other financial instruments,” said Acworth in a webinair.

Index options in Europe also increased, but not as much as in the US, he added. Eurex has become the dominant exchange and offers the top equity index contracts in Europe.

Equity index options at Eurex grew 24% in volume, although single stock futures and options were down this year.

Global volumes hitting record highs reinforces why the industry needs to work together to solve the ETD workflow conundrum once and for all. When volumes rise, the operational risk and capacity burden on market participants intensifies,” said Joanna Davies, head of FX and Securities, OSTTRA:

She added, “Even if an asset manager is highly efficient in the allocation process during times of peak volumes, there could still be multiple allocations being communicated within minutes of the market closing. This creates a myriad of problems, which the industry continues to wrestle with.

Overcoming this longstanding issue requires continued industry wide collaboration on designing the workflows with asset managers, executing brokers, and clearing brokers. As we have always advocated, the industry needs to work together to solve the longstanding issues around the allocation workflow.”

©Markets Media Europe 2022

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