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Two-thirds of buy-side investors expect increase in futures trading volumes

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With the derivatives markets working through new rules, market structure changes and a wave of uncertainty, many across the capital markets industry believe the futures markets will benefit.

TABB Group conducted a survey of more than 40 traditional asset managers and found that 70 per cent of the participants said they expect their listed futures trading volumes to increase over the next 12 months with 82 per cent saying that growth will be driven by increased market volatility and rising interest rates.
 
According to TABB principal Matt Simon, head of futures research, and research analyst Luther Zhao, co-authors of “Futures Industry Poll: The Buy-Side Assessment,” the impact of Federal Reserve policy will result in increased interest rate futures volumes with the potential to change underlying cash bond market participation. 
 
“These buy-side firms also see expanding their use of futures in equity-related products and expect to increase their activity in equity options by as much as 89 per cent and ETFs by 65 per cent,” says Simon.
 
The survey suggests that futurisation of swaps will gain additional traction in 2015 with 29 per cent of those surveyed  expecting to use exchange-traded swap futures as an alternative to traditional OTC swaps.
 
The buy side needs increased regulatory guidance from their FCMs to understand the impact of new rules and how they will affect overall trading operations in the future.
 
Buy-side firms are generally not putting pressure on FCMs to lower execution rates but there is rising pressure from asset managers wanting lower clearing rates, says TABB.

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