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Options Continue to Lead Derivatives Volume Uptrend, but Q2 Lags, FIA Data Show

Suzanne Cosgrove

Suzanne Cosgrove


Global futures and options volumes continued to trend higher in the first half of 2021 compared to both 2020 and 2019, with growth largely driven by options trading, according to Futures Industry Association data released late Tuesday.

Exchange-traded futures and options volume was up 32.1% compared with the total logged in the first six months of 2020, with 28.9 billion contracts traded in the first half of 2021. Just over half of the volume in the latest period was in options, with 14.5 billion contracts, which represented a 50.2% gain over the number of options traded from January through June of 2020.

Trading volume in futures and options was down 5% in the second quarter compared with the first quarter, but is still on an upward trajectory begun in 2019, said Will Acworth, senior vice president of FIA publications, data and research.

Total open interest data — regarded as a gauge of institutional trading patterns — hit 1.1 billion contracts at the end of the second quarter, unchanged from first-quarter 2021.

Reviewing the FIA research report in a webinar on Wednesday, Acworth and Julian O’Leary,  chief operating officer of London-based G. H. Financials, attributed the first-half 2021 gains in options trading to continued retail interest in the equity sector. Equity-related volume has tripled in the last five years, Acworth said. June single-stock options set a trading volume record with 956 million contracts, he noted, which was more than three times the number of contracts traded in June 2019.

Looking at the latest data, individual equity (single-stock) volume was up 72.5% in the first half of 2021 compared with the same period in 2020, and equity index volume was up 32%. In contrast, trading in energy futures and options was down 25.4% and volume in interest rate contracts was down 4.2%.

Open interest in individual equity contracts was up by a more modest 36.2%, and open interest in equity index futures and options fell by 17.5%. 

Brazil, India and China were derivative volume leaders in the latest period, with volume data in Europe a more mixed picture. Eurex, for example, saw its volume slide by 16.5% in the first six months of 2021, although open interest was down just 1.3%, according to the FIA report.

Once again, the National Stock Exchange of India was ranked as the No. 1 global exchange by volume, trading 6.6 billion contracts traded in the first half of the year, a 76.8% increase from the same period of 2020. Brazil’s B3 was the second largest exchange by volume, with 4.16 billion contracts, up 52.2%. CME Group was No. 3 with 2.49 billion.

Other notable exchange data included trading volume at China’s Zhengzhou Commodity Exchange, which was ranked No. 7. The Chinese exchange saw its total volume increase by more than half on a year-over-year basis, to 1.29 billion contracts, a gain Acworth attributed to its coal, mineral and plastics contracts.

Asked if contract size played a part in the relatively outsized performance of some global exchanges versus others, O’Leary said that was true “in some cases,” but not all. It was not the case for the No. 2-ranked exchange B3, he said, which offers products ranging from equities to spot commodities to interest-rate futures contracts.

However, looking at the energy contracts, Acworth noted that while the Brent Oil futures contract traded at the Moscow Exchange saw its volume outpace that of Nymex (WTI) Light Sweet Crude Oil futures and ICE Brent Crude Oil futures during the latest six-month period, the MOEX offering is essentially a micro contract at 10 barrels per contract compared with the others.

O’Leary also addressed the relatively slow growth of exchange-traded Sterling Overnight Index Average (SONIA) futures, which are set to replace the legacy 3-month sterling contracts after the planned end of LIBOR on December 31, 2021. “No one really wants to be the first mover, “ he said of the transition. “If you can wait until the last moment, you probably will.”  










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