Global futures and options fell by 14% in
the first six months of the year against the same period last
In total across the 85 largest derivatives
markets covered by FOW Data 9.7bn changed hands between January
and June 2013 compared with 11.2bn the previous year.
The first half global figure is the
lowest since 2009 when 8.2bn contracts were traded.
The downward turn in volumes has been
global, with almost every major exchange in every major region
outside China and India reporting a fall in trading.
However, there are signs that volumes in
some markets are slowly picking up, with sectors such as short
term interest rate, energy and metal derivatives beginning to
rise in June.
Uncertainty surround regulatory reform and
persistently low volatility in part due to central bank rates
in Europe and the US are seen as the key reasons behind the
decline in volumes.
However China continued to buck the global
trend as its nascent futures markets continue to launch new
The Zhengzhou Commodity Exchange (ZCE)
experienced a massive jump in agricultural futures trading,
while the Dalian Commodity Exchange’s (DCE) iron
ore and polypropylene contracts becoming two of the most
dominant contracts in Asia.
Among the largest declines were seen in
the European interest rates markets, which fell 19% in terms of
volume traded with 506.1m contracts changing hands in the first
six months of the year.
Eurex experienced a decline of 17% in
interest rate volumes to 240.5m, while volumes on
ICE’s Liffe dropped by 25% to 246.1m.
Eurex’s bund future fell
16.5% to 89.3m contracts traded, the bobl dropped 13.9% to
61.2m contracts, and the schatz declined 24.2% to 40.8m.
Similarly volumes for Liffe’s
3 month Euribor future dropped by 42% to 81.4m contracts
traded. On Swedish-based Nasdaq OMX interest rate volumes also
fell 28.8% to 8.9m.
The decline in interest rate volume led to
double digit percentage decline on both Eurex and Liffe in the
first half of the year.
This came despite two record days of
trading in the sterling contract during the period with 2.9m short sterling futures
traded on June 13, surpassing the previous record set on
February 12 by nearly 900,000.
However, products that are linked to the UK are showing
signs of life.
Liffe’s 3 month short
sterling future saw a number of daily volume records after
hawkish announcements from the Bank of England’s
Mark Carney over an interest rate rise.
Trading of the short sterling future
increased 17% to 89.1m contracts in June.
This mirrors similar encouraging
signs in the US. CME’s flagship Eurodollar
contract helped the exchange buck the negative trend with
306.8m contracts changing hands, up 17.4% against the 259m
traded in the previous year, with 69m of that in June 2013.
In both the US and Europe, volatility and
volume in the interest rate products were centred on statements
from central bankers but there are signs of more general
uncertainty returning to the market.
Despite the growth in STIRs in the US
longer term government bond futures on Chicago Board of Trade
(CBOT) saw a dip in volumes.
Frequent bearish statements on interest
rates from the Federal Reserve since March calmed trading in
long term interest rate products.
The 10 year treasury bond future fell 10%
to 164.5m contracts, and the 30 year treasury bond future
dropped nearly a quarter to 43.9m.
The CBOT’s Deliverable Swap
Future continues to grow its liquidity with 136,000 contract
changing hands in June, a record month for the contract.
Equity Index sector:
Last year equity index products in Asia
saw a surge in volumes, this year however is a different story.
As a result of the deceleration of 'Abenomics’ in
Japan, volatility in Nikkei index derivatives took a hit.
At the Osaka Securities Exchange, which is
now part of the Japanese Exchange Group (JPX), trading in
regular size Nikkei 225 futures dropped 41% to 21m contracts,
and the mini Nikkei 225 futures also fell 38% to 89.9m
Similarly at the Singapore Exchange the
Nikkei 225 future, which last year was its most active
contract, volumes almost halved to 12.9m contracts and is now
its second most trading product.
On the CME and Eurex, the two largest
index exchanges in the US and Europe, both saw a decline of
6.6% and 6.1% to 312.8m and 331.7m respectively.
The E-Mini S&P 500 future, the most
active index futures on CME, dropped by 16.6% to 205.5m. On
Eurex, the Euro Stoxx 50 Index future and option contract both
declined 9% and 7% to 133m and 111.9m respectively.
However the Eurex KOSPI option, which is
traded on Eurex in a cross-market deal with the Korean
Exchange, saw a notable increase of 22.7% to 11.9m contracts
However, volumes on the Chicago Board
Options Exchange (CBOE) traded more contracts than the previous
year despite the low volatility environment.
The growth in equity index transactions on
the exchange can largely be attributed the performance of its
volatility index (VIX) options, which grew 17% to 85.6m.
During the first half of the year, the
exchange increased the trading hours for VIX products with the
aim of attracting more international traders.
Global commodities volumes slightly
declined in the first half of the
year, with total contracts traded in the segment down by almost
4% to 1.78bn, however, new launches in China offset declines
Energy volumes dropped by almost a fifth
to 628.7m contracts.
In Asia energy contracts transactions fell
by 29% to 99.3m, while in the US volumes dropped by 19% to
375.5m and in Europe they fell by 13% to 153.9m.
Global uncertainty plagued the market
during the first half of the year, especially in the oil and
power markets where volatility hit near record lows.
Stricter regulatory scrutiny of
bank’s involvement in the physical commodities
market combined with the low volatility in their impact on
In the US, ICE Futures US and the New York
Mercantile Exchange, the world’s two largest
energy exchanges, saw volume declines of 26.6% and 10.5%
respectively to 178.8m and 195.5m contracts.
ICE Futures US was hit by a dip in trading
on its Henry Financial LD1 monthly future where volumes dropped
27.8% to 73.9m.
At the exchange group’s
European arm, ICE Futures Europe, total volumes dropped by 15%
to 149.5m as it saw less demand for its oil products.
The Brent crude oil monthly future fell
9.6% to 73.4m, its Gasoil monthly future dropped 20% to 26.8m,
and the WTI crude oil future also dipped 17.8% to 14.8m
In contrast, agricultural derivatives
offset the drop in energy trading, as demand especially in the
US and Asia boosted volumes by 23% to 639m contracts traded
Turbulent weather during the first three
months of the year in the US led to more need for hedging in
the agriculture sector.
Agricultural contracts were up 3.6% on
CBOT to 121.5m, after its corn future increased 8.7% to 37.5m
traded, soybean futures were up 10% to 23.4m traded, as were
wheat futures by 22.3% to 17m traded.
The largest growth in agricultural
contracts came from China, and especially the Zhengzhou
Commodity Exchange (ZCE) where volumes more than doubled to
Rapeseed meal futures experienced a surge
in activity where the number of contracts traded almost tripled
to 148.9m contracts.
Furthermore on the Shanghai Futures
Exchange (SFE), volumes were up 63% to 47.9m contracts due to
the performance of its only agricultural contract, natural
Elsewhere in China, the Dalian Commodity
Exchange remained the top exchange for agricultural derivatives
despite witnessing a drop of 6% to 217.2m contracts.