Trading in listed derivatives on regulated exchanges worldwide accelerated in 2010 to levels not seen since 2003, the World Federation of Stock Exchanges (WFE) reported yesterday.

 

More than 22.4 billion of derivative contracts were traded on exchanges worldwide in 2010 (11.2 billion futures and 11.1 billion options) against 17.8 billion in 2009, an increase of 25 percent. The number of futures traded increased faster - up 35 percent - than options - up 16 percent, according to statistics compiled by WFE, which annually conducts a survey for the International Options Markets Association (IOMA).

"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," commented Ronald Arculli, chairman of WFE and chairman of Hong Kong Exchanges and Clearing, in the release. During the same period, Arculli noted that, according to Bank for International Settlements (BIS) statistics, notional amounts outstanding of OTC Derivatives decreased by 13 percent between June 2009 and June 2010.

 

The increase in volume transacted on exchanges confirms the trend noted in a study commissioned by the WFE and conducted by Tabb Group," stated Arculli.

 

Highlights of the study include:

Interest rate derivatives trading surged grew substantially (+29 percent), surpassing pre-2009 financial crisis levels. After experiencing a negative growth rate (-23 percent) in 2009, this segment was most heavily hit by the financial crisis, according to WFE, the trade association for the operators of regulated financial exchanges. Equity derivatives' trading grew rapidly (+14 percent) in 2010, while Asia Pacific experienced the highest growth rate (+20 percent), followed by the Americas (+10 percent) and Europe Africa, Middle East region (+8 percent).

 

Currency derivatives remain the smallest section of the exchange-based derivatives markets, with 2.3 billion contracts traded in 2010. However, driven by the Indian exchanges that accounted for 71 percent of the volumes traded in 2010, they have experienced triple-digit growth (+144 percent). When Indian exchanges are removed from the statistics, the growth rate of currency volumes in 2010 was still very strong (+36 percent.)

 

Commodity derivatives continued to grow rapidly in 2010 (+34 percent). Chinese exchanges accounted for 51 percent of the traded volumes.