Well, it’s happened. The West isn’t the center of the derivatives universe anymore. In a year where China surpassed Japan as the second largest economy in the world, the Asia-Pacific region is now the largest for exchange traded derivatives.
The Asia-Pacific region surpassed North America as the largest market for exchange traded derivatives volume for the first time, and accounted for 37.5 percent of the global exchange traded derivatives volume in the first half of 2010, according to today’s mid-year volume report from the Futures Industry Association. The region collectively traded 4.2 billion contracts, up from 2.7 billion a year earlier.
Asia-Pacific outpaced North America’s exchanges, which reported 3.6 billion contracts traded in the first six months of the year, accounting for 32.7 percent of the total world volume. Europe traded 2.4 billion contracts, a 21.5 percent marketshare and Latin America traded 776 million contracts, or 6.9 percent of the total pie. The real question is, what does all this mean? Is this the end of Chicago’s reign as the derivatives capital of the world, as exchange officials are so proud of saying? Is this the latest in a series of economic blows to Europe’s financial hubs in London, Frankfurt and so on?
Of course not. Let’s face it, some of these contracts in Asia are puny. But it does show in interesting trend that the Asia-Pacific region is growing quickly and the demand for exchange traded products is there – largely generated from domestic participants in India, China, Korea and other Asian markets.
A couple of other numbers that are worth noting are that there is growth among all regions in exchange traded derivatives from January through June this year. Asia Pacific topped the list with a 52 percent volume growth over the prior year. North American volumes rose 15 percent and Europe’s volumes rose 24 percent. Those are signs that the market is indeed springing back from a rather dismal down year in 2009.
And where is some of that growth coming from? Yep, Asia-Pacific. Bob Ray, managing director of international products and services at CME Group, said last week at the Swiss Futures & Options Association meeting in Interlaken, that Asia is a major driver of growth area in terms of customers and volumes. In fact, he expects to double his staff in London and Singapore to more than 250 by the end of 2012 to address the demands of that market.
What the numbers show is the ongoing global shift toward Asia-Pacific. But they also show the tremendous growth potential for CME, NYSE Euronext, Nasdaq OMX and Eurex.
To see the full report from FIA, click HERE.