Trading in derivatives contracts on regulated exchanges worldwide surged to the highest levels in nearly a decade in 2010, according to statistics compiled by the World Federation of Exchanges (WFE).
More than 22.4 billion derivative contracts were traded on exchanges worldwide in 2010 (11.2 billion futures and 11.1 billion options) against 17.8 billion in 2009. The growth rate (+25%) is one of the highest observed since 2003. The number of futures traded increased faster (+35%) than options (+16%), according to WFE, which annually conducts a survey for the International Options Markets Association (IOMA). The full report will be available a few weeks after the annual IOMA conference, hosted by NSE of India in Mumbai from 1st to 4th May.
“The increase in volume transacted on exchanges confirms the trend noted in a study commissioned by the WFE and conducted by TABB Group,” said Ronald Arculli, Chairman of WFE and Chairman of Hong Kong Exchanges and Clearing. “The strong volume in exchange-traded derivatives in 2010 indicate that reforms in regulation of over-the-counter derivatives markets are causing participants to shift some of their risk transfer activities to exchange-traded derivatives.”
Mr. Arculli noted that, according to Bank for International Settlements (BIS) statistics, notional amounts outstanding of OTC Derivatives decreased by 13% between June 2009 and June 2010.
Other highlights of the preliminary WFE derivatives report:
• Equity derivatives grew rapidly (+14%) in 2010. Asia - Pacific region experienced the highest growth rate (+20%) followed by the Americas (+10%) and Europe - Africa - Middle East region (+8%).
• Interest rate derivatives trading grew substantially (+29%), surpassing pre-2008 financial crisis levels. With a significant negative growth rate (-23%) in 2009, this segment had been the most heavily hit by the crisis.
• Currency derivatives, with 2.3 billion contracts traded in 2010, remain the smallest segment of organized markets. Nevertheless, driven by the Indian exchanges that accounted for 71% of the volumes traded in 2010, they have experienced triple-digit growth rates in 2010 (+144%). When the Indian exchanges are excluded from statistics, the growth rate of traded volumes in 2010 was still a very strong (+36%).
• Commodity derivatives continued to grow rapidly in 2010 (+34%). Chinese Exchanges accounted for 51% of the traded volumes.
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