Bloomberg News

Exchange-Traded Derivatives Growth Slowed on Commodities

March 02, 2012

The growth in global exchange-traded derivatives slowed to 11 percent last year as Chinese commodity trading dropped by almost a third.

While almost 25 billion futures and options traded on regulated exchanges in 2011, up from 22 billion contracts the previous year, the expansion lagged a 25 percent growth rate in 2010, the World Federation of Exchanges said in a statement yesterday. The slowdown stemmed from a decrease in commodity trading, said Peter Clifford, deputy secretary general at the Paris-based association that represents 54 stock, options and futures exchanges worldwide.

“That’s why the overall rate is a slower pace,” he said in a telephone interview today. Chinese commodity trading dropped by 32 percent last year, compared with 2010, he said. The WFE will release more details on the trading in April, it said in the statement.

Commodity futures were the only asset class to decrease in overall volume last year, to 2.8 billion from 2.9 billion. Futures and options on currencies, interest rates and equities all rose, according to the WFE. Equity derivatives are the largest group, with 15.7 billion changing hands last year.

“This increase in volumes seems logical given the high volatility of markets in 2011, which may have driven the need for hedging upwards,” Jorge Alegria, chief executive officer of the Mexican Derivatives Exchange and chairman of the International Options Market Association, said in the statement.

CME, ICE Volumes

The two largest U.S.-based futures exchange owners reported record average daily volume in 2011. CME Group Inc. (CME), based in Chicago, said an average 13.4 million contracts per day changed hands last year, up 10 percent from 2010, according to a January statement. Atlanta-based Intercontinental Exchange Inc. said an average 1.5 million contracts traded daily on its three futures exchanges, up 16 percent from the year before.

Worldwide, 11.9 billion futures traded last year and 12.9 billion options were bought and sold, according to WFE.

The World Bank reduced its global growth forecast for this year to 2.5 percent from a June estimate of 3.6 percent, the Washington-based institution said on Jan. 18. It warned that the crisis in Europe and slower growth in developing economies may crimp the world economy further.

To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net.

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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