The World Federation of Exchanges Publishes Annual Derivatives Market Analysis

By: The WFE Focus Team Jun 2021

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, today published its annual derivatives report, analysing trends in the exchange-traded market in 2020.

The key findings of WFE’s analysis are:

  • In 2020, there was a 40.4% increase in derivatives trading volumes, an increase more than three times larger than the year before (11.4%) 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%), APAC (43.4%) and the EMEA region (29.7%).
  • Volumes in both the options and the futures markets rose. The total volume of options increased by 44.1% to 21 billion, while futures volumes rose 37.5% to 25.20 billion. This compares to respective increases of 15.3% and 11.6% in 2019.
  • ETF derivatives rose 65.1%, compared with a fall of 8.8% 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% share of global ETF derivatives volume.
  • Equity derivative contracts increased by 56.5% compared to 18.4% 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% compared to a fall of 3.7% in 2019, single stock futures by 99.6% compared to 16.2% in 2019, stock index options by 42.7% compared to 41.8% in 2019 and stock index futures by 60.4% compared to 18.6% 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% compared to an increase of 2.8% in 2019. The decrease was most pronounced in short term contracts (STIRs). STIR contract volumes fell 59.7%, compared to a decline of 14.9% 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. The report published today is based on data collected from 49 derivatives exchanges worldwide.

 Please click here to read the paper in full.

About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 35% are in Asia-Pacific, 45% in EMEA and 20% in the Americas. WFE’s 57 member CCPs collectively ensure that risk takers post some $800bn (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. WFE exchanges are home to 47,919 listed companies, and the market capitalisation of these entities is over $109 trillion; around $137 trillion (EOB) in trading annually passes through WFE members (at end 2020).

The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.