The World Federation of Exchanges, the industry group for exchanges and central counterparties (CCPs), published its annual WFE IOMA Derivatives Market Report today, which shows the total volume of derivatives traded in 2017 declined by 0.2%.
Stock markets worldwide and the global economy ended 2017 on a strong note. Benchmark market indices soared to record-high levels across many markets. There was a synchronized recovery in growth rates of GDP, low levels of inflation, low market volatility, a continuation of accommodative monetary policy in many regions, and a recovery in commodity prices. The report focused on trends in derivatives markets against this backdrop and examined how market participants have responded to shifts in the underlying market.
- Derivative volumes were down slightly (0.2%) on 2016 with a total of 25.0 billion contracts traded.
- This was made up of 10.5 billion options and 14.5 billion futures.
- An increase in the volume traded in the Americas (up 5.8%) was offset by declines in Asia-Pacific and EMEA (down 3.5% and 5.3%) respectively.
- While volumes of equity and interest rate derivatives increased on 2016 (up 5.4% and 13.1%), volumes of currency, commodity and other derivatives were down 3.2%, 14.5% and 4.3% respectively on 2016.
- Over 3.9 billion interest rate derivative contracts were traded in 2017 – the largest number in the time period examined (since 2005).
- As total volumes traded in 2017 were largely in line with 2016, the overall share of volumes traded has shifted with equity and interest rate derivatives now making up 48% and 16% of the total respectively, and commodity derivatives accounting for 24%.
- Equity derivatives remained the most actively traded exchange-traded derivative product category, at 48% of total volumes, but this was the second consecutive year in which they accounted for less than 50% of the total derivatives volume traded. While in the Americas and Asia-Pacific regions (where nearly 80% of equity derivatives volumes are traded) the numbers of contracts traded were up 2.4% and 23.9% respectively, there was a 10.9% decline in the volumes traded in the EMEA region.
- Interest rate derivatives accounted for 16% of total derivatives contracts traded in 2017, with over 3.9 billion contracts traded in 2017. This was the largest number of interest rate derivatives contracts traded in the time period examined (since 2005). Volumes traded were up 13.1% on 2016 driven by increases in volumes of both STIR and LTIR options and futures. The Americas and EMEA regions, which accounted for nearly 94% of total interest rate derivatives volumes, saw an 11.7% and 18% increase in number of contracts on 2016