The World Federation of Exchanges publishes annual derivatives market analysis

The World Federation of Exchanges (The WFE), the global industry group for exchanges and CCPs, has published its annual derivatives report, analysing trends in the exchange-traded market in 2020.

According to the report, in 2020, there was a 40.4 per cent increase in derivatives trading volumes, an increase more than three times larger than the year before (11.4 per cent) and greater than the surge during the financial crisis of 2007-2008. The increase is attributed to the need to manage risk under the heightened  levels of uncertainty and  volatility produced by  the Covid-19 pandemic.

The share of total volume per region remained largely the same and the increase in volumes was seen across all regions: the Americas (42.0 per cent), APAC (43.4 per cent) and the EMEA region (29.7 per cent). 

Volumes in both the options and the futures markets rose. The total volume of options increased by 44.1 per cent to 21 billion, while futures volumes rose 37.5 per cent to 25.20 billion. This compares to respective increases of 15.3 per cent and 11.6 per cent in 2019.

ETF derivatives rose 65.1 per cent, compared with a fall of 8.8 per cent in 2019. This was due to a rebound in the ETF options market. As in previous years, the Americas was the region where almost all ETF derivatives trade took place, with a 99.9 per cent share of global ETF derivatives volume.

Equity derivative contracts increased by 56.5 per cent compared to 18.4 per cent in 2019, and this was the common trend across all classes of equity derivatives. At the end of 2020, volumes amounted to just under 25.98 billion contracts. 

Single stock options volumes rose by 56.0 per cent compared to a fall of 3.7 per cent in 2019, single stock futures by 99.6 per cent compared to 16.2 per cent in 2019, stock index options by 42.7 per cent compared to 41.8 per cent in 2019 and stock index futures by 60.4 per cent compared to 18.6 per cent in 2019. 

Per underlying asset class, interest rates contracts bucked the trend. While equity, commodity and currency derivatives all saw significant increases in volumes, interest rate derivatives volumes fell 11.9 per cent compared to an increase of 2.8 per cent in 2019. The decrease was most pronounced in short term contracts (STIRs). STIR contract volumes fell 59.7 per cent, compared to a decline of 14.9 per cent in long term interest rates (LTIR) contracts in 2020.

The WFE analysis and report is based on the WFE’s annual survey of the derivatives markets operated by its members, affiliates, and other exchanges that voluntarily submit data.