Listed interest rate derivatives and commodities futures and options have been identified as the best performing asset classes for proprietary trading firms in the first half of 2022 as fears of a recession and soaring inflation caused volatility across global markets, according to the latest Acuiti Proprietary Trading Managers’ Insight Report.
• Some 58% of proprietary trading firms says commodities have been exceptionally or very profitable in the first six months of 2022, with over 50% saying the same about listed interest rates
• Over half of proprietary trading firms report strong profitability in crypto trading in H1 2022, despite the recent crash in cryptocurrency prices
• Sustained volatility has proved of benefit to the majority of proprietary trading firms with 76% reporting above average performance in the first six months of the year
Listed interest rate derivatives and commodities futures and options have been identified as the best performing asset classes for proprietary trading firms in the first half of 2022 as fears of a recession and soaring inflation caused volatility across global markets, according to the latest Acuiti Proprietary Trading Managers’ Insight Report.
The report, which is conducted in partnership with Avelacom and is based on a quarterly survey of the Acuiti Proprietary Trading Expert Network – a group of over 100 senior proprietary trading executives from across the globe – found that 58% of firms reported commodities trading to be either exceptionally profitable or very profitable in H1 2022 while over half of respondents said the same for listed interest rates.
Cryptocurrency trading is also reported to have performed well over the period with over half of firms saying they saw strong profitability in that asset class. The recent dramatic falls in crypto prices though, have not deterred traditional proprietary trading firms from entering the market. Overall, 22% of respondents said that they had accelerated plans to enter the market as a result of the recent volatility, while 13% had increased their level of trading, with just 3% deciding to exit the market completely.
Overall, the sustained volatility experienced during the first half of the year has benefitted proprietary trading firms with 76% of Acuiti’s Proprietary Trading Expert Network reporting a better than average six months in terms of performance.
This quarter’s report also analysed technology set ups at proprietary trading firms and found significant levels of inhouse development across a range of functions.
Respondents also gave their views on how well third-party vendors serve the proprietary trading market and found strong demand for more specialist risk management software that reflects the complexities of proprietary trading, especially during times of elevated volatility. Ultra-low latency firms have the most unique requirements towards technology set ups and are on the look out for firms that can cater for their individual needs.
The report also revealed that sentiment among senior proprietary trading executives fell slightly in the last quarter but remained high with managers maintaining their expectations of seeing continued volatility in the second half of the year.
Key Takeaway | Service Providers: With volatility set to remain elevated through H2 increasing the requirement for proprietary traders to hedge and reposition, firms are increasingly seeking assistance from third-party tech vendors who can provide support with tailored solutions, including specialist risk management software.
