The number of exchange-traded derivatives (ETD) traded on exchanges worldwide rose 11% in 2011 to 24 billion contracts, according to data compiled by the World Federation of Exchanges (WFE).
The ETD industry has more than doubled in size since 2006. From 2010 to 2011 alone, the number of ETD contracts traded rose 25%.
Currency ETDs saw the greatest growth last year with 2.7 million contracts traded, a 16% rise over the year before. But equity derivatives were by far the most popular type of ETD, with 15.6 million ETDs traded representing a rise of 13.9% over 2010.
Interest rate derivatives continued to grow in 2011 (+9%) despite low interest rates, no economic growth and credit expansion in some markets, according to WFE.
The only type of ETD to decrease was commodity derivatives, of which the number traded fell 6%. But that was skewed by a 34% decrease in volumes on Mainland Chinese exchanges; if Chinese exchanges are excluded, commodity derivatives actually increased 24%.
This increase in volumes seems logical given the high volatility of markets in 2011, which may have driven the need for hedging upwards, says Jorge Alegria, CEO of the Mexican Derivatives Exchange and chairman of the International Options Markets Association. The relative preference for derivatives built on underlying indices or ETFs, as compared to single stocks, could also factor into the increase.
WFE also gathered statistics on OTC trades cleared by a CCP. In Europe, Africa and the Middle East (EAME) region, OTC trades accounted for 32% of the traded volumes in 2011 and decreased by 1.4%, whereas total exchanges volumes for equity derivatives increased by 11%. OTC commodity derivatives contracts traded on CME Group and ICE, the two main exchanges for the instruments, increased more slowly (+2%) than on-exchange traded contracts (+12%), the group found. Meanwhile, credit default swaps cleared by ICE Trust in the U.S. and ICE Clear Europe increased by 32% last year.
(CG)