Following a year of high volatility and record trading volumes, derivatives exchanges are poised for a strong start to 2021, Moody’s Investors Service says.

In a new report, the rating agency said that data from the U.S.-based Options Clearing Corp. indicated that U.S. options trading volumes reached record levels in December 2020, ending a year that had seen “a number of all-time highs” in trading action.

These high volumes are positive for the large U.S. exchanges with derivatives businesses, such as Cboe Global Markets, Inc., Intercontinental Exchange, Inc. and Nasdaq, Inc., it said.

“The data suggest that U.S. exchanges focused on equity derivative products are poised to report robust earnings from this source in the fourth quarter of 2020 and put 2021 volumes on a strong footing,” Moody’s said in its report.

While the exchanges have been diversifying their businesses, trading volumes remain a core source of revenue, it said.

“Exchange operators, especially those that also operate significant central counterparty clearing houses, benefit when market participants trade more frequently, including when hedging risks using options and futures contracts,” it said.

Additionally, derivatives trading is more profitable for the exchanges than “the commoditized and highly competitive” cash equities trading business, it noted.