financial instruments chart, derivaties

Global derivatives trading jumped in response to the market volatility touched off by the Covid-19 crisis, according to a new report from the World Federation of Exchanges (WFE).

The trade group for the exchange industry reported that derivatives trading volume surged by 40.4% in 2020, which was more than triple the rise in volume the previous year, when trading activity rose by 11.4%.

The jump in trading last year was greater than during the global financial crisis, the WFE said.

It noted that the increase in volume was driven by the need to manage risk amid heightened market uncertainty and volatility due to the pandemic.

Both the options and the futures markets saw trading volumes rise in 2020, the report noted. Options trading increased by 44.1% and futures trading was up by 37.5%, it said.

The ETF options market rebounded in 2020, the WFE said, noting that trading in ETF derivatives rose by 65.1% during the year, after an 8.8% decline in 2019.

Equity derivatives trading increased by 56.5% in 2020, it said.

In particular, the volume in single stock options was up by 56% and single stock futures trading rose by 99.6%. Index options trading was up by 42.7% during the year, and index futures trading increased by 60.4%.

“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 WFE said.