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Exchange-traded derivatives trading volumes decrease 15 per cent in 2012

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The number of exchange-traded derivatives (ETD) worldwide decreased in 2012 for the first time since 2004, falling by 15 per cent to 21 billion, according to statistics compiled by the World Federation of Exchanges (WFE).

The WFE, which annually conducts a survey on derivative markets, found that in 2012, 21 billion derivative contracts (11 billion futures and 10 billion options) were traded on exchanges worldwide – a decrease from the 25 billion traded in 2011.

The full WFE report on derivatives markets will be available following the annual IOMA conference held this year in Busan, South Korea, from 5 to 8 May 2013.
The drop in equity derivatives (-19 per cent) mirrors the decline in the value of cash equities and is probably explained by the significant decrease in volatility observed in 2012. It is also partly explained by the size changing of the KRX (Korea Exchange) KOSPI 200 contracts, the weight of which is very significant. When those contracts are excluded from the statistics, the decrease becomes less pronounced (-7.5 per cent).

The volume of interest rate options and futures traded also decreased significantly (-15 per cent). Factors generally seen as unfavourable for interest rates derivatives (low interest rates environments, no economic growth and credit expansion) continue to prevail in certain regions and could explain that trend.

The highest decrease in 2012 (-22.5 per cent) was seen by currency derivatives, but was partly due to the comparison with very high volumes registered in recent years. Contracts traded in India still account for a large part of volume (60 per cent) and primarily explains the 2012 decrease as well as the huge increases observed in recent years. In other countries the volumes increased by three per cent in 2012.

The only segment that experienced an increase in 2012 was commodities (+19 per cent), which overcame the interest rate and the currency derivatives markets in terms of number of traded contracts. This increase in volumes was partly, but not only, explained by Mainland Chinese exchanges that experienced a 34 per cent increase and that accounted for 41 per cent of the global volumes in 2012.

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