ICE hits Sonia trading volume record as UK rates rebound

Intercontinental Exchange (ICE) last week hit volume records for its UK interest rate derivatives as traders returned to the market after the carnage caused by the “mini-budget” in September last year.

ICE futures and options referencing the UK Sterling Overnight Index Average (SONIA) rate hit a record 1.147 million contracts traded on February 2, beating the previous record of 1.065 million lots traded on June 16 last year. Sonia futures also hit a record 979,561 contracts traded, 19% higher than the previous record on September 23. Open interest overall is up by a third since the start of the year to 2.76 million contracts, ICE data says.

“The record trading in SONIA reflects a return of confidence by investors to U.K. interest rate markets following the impact of the mini-budget in 2022,” Chris Rhodes, president of ICE Futures Europe, said in a statement. “As the benchmark for pricing and risk managing UK interest rate risk, SONIA futures and options markets are benefiting from the measures taken last year to bolster liquidity. The record volumes, together with the growth in Euribor volumes over the past year, are creating an exciting European rates environment for traders.”

Average daily volume in Euribor futures and options in the year to February 3 was 1.55 million contracts, 42% higher than the same period last, with open interest up 23% over the period at 16.27 million lots. Euribor contracts made up 3.5 million of the 4.7 million short term interest rate derivatives listed on ICE that exchanged hands in February, data from ICE shows.

Separately, ICE reported a 9% increase in ADV across derivatives last month, at 6.3 million contracts. The January increase comprised a 24% year-on-year increase in its financials segment, at 2.4 million lots. That included a 44% boost to Euribor volume on average, and an 18% jump in SONIA contracts, it said.

The exchange saw a slight rebound in its commodities segment, with 3.84 million lots traded a day on average, versus 3.786 million lots in the same month last year. Energy trading, which declined slightly during the period, was boosted by a 19% year-on-year increase in natural gas trading, including a 24% jump in US gas and a 4% boost in the use of Dutch Title Transfer Facility (TTF) contracts.

Speaking on an earnings call to present 2022 results on Thursday, ICE president Ben Jackson said the listing of new TTF futures on its London-based venue would offer an alternative in the event that the new European Market Correction Mechanism is triggered.

Rival CME Group last week reported a 12% decline in January trading volume as demand for equity derivatives came off record levels seen last year.