"Volatility to last months" - traders

Traders expect the current levels of market volatility to last months rather than weeks, according to a new study.

Some 44% of respondents to the latest Acuiti monthly survey expect the current period of heightened market activity to last months rather than weeks.

This compares to 41% who expect the volatility to last a matter of weeks and some 8% that expect the current conditions to last for only days longer.

The world’s derivatives markets have been trading at unprecedented levels in recent weeks as the spread of the coronavirus has spooked investors.

The survey, conducted between March 2 and 13, found nine in ten firms surveyed globally had taken action to mitigate the impact of the spread of the virus.

Of those that had taken action, 63% expected the measures to be in place for more than a month with less than a third saying they would be in place for two weeks to one month.

The medium term outlook is mixed however, with only two in five respondents predicting improved conditions over the next three months.

“The derivatives industry is doing its job in these incredibly difficult times,” said Will Mitting, managing director of Acuiti, the intelligence firm that conducted the research.

“As investors, corporates and end-users reposition their risk exposures and portfolios, executives across the derivatives industry are working around the clock to keep the markets liquid and operational.”

The monthly Acuiti Derivatives Insight Report is based on submissions from Acuiti’s network of over 550 senior executives in the global derivatives markets.

The chief executive of Hong Kong Exchanges and Clearing Charles Li called on Wednesday upon exchanges to “rise to the challenge” presented by the coronavirus outbreak.

CME Group chief executive Terry Duffy issued on Tuesday a strongly worded statement that shortening US trading hours would “make no sense” after US Treasury secretary Steven Mnuchin said he was considering that step.