For the first time since 2004, the number of exchange-traded derivatives worldwide decreased in 2012, dropping by 15% to 21 billion, according to preliminary data from the World Federation of Exchanges (WFE).
The WFE reports that in 2012, there were 21 billion derivative contracts (11 billion futures and 10 billion options) traded on exchanges worldwide, which is a decrease from the 25 billion traded in 2011.
The biggest drop was in currency derivatives, down 22.5% from the previous year. Although, the WFE notes that this partly reflects a comparison with very high volumes registered in recent years.
Equity derivatives saw a 19% decline, which, the WFE says, “mirrors the decline in the value of cash equities and is probably explained by the significant decrease in volatility observed in 2012.” It notes it’s also partly explained by a change in the size of Korea Exchange KOSPI 200 contracts. When those contracts are excluded, the decrease is just 7.5%.
The volume of interest rate options and futures traded also decreased significantly, down 15%, it notes. “Factors generally seen as unfavorable for interest rates derivatives (low interest rates environments, no economic growth and credit expansion) continue to prevail in certain regions and could explain that trend,” it suggests.
The WFE also says that trading in other derivatives, such as exotic options and futures, REIT derivatives, dividend and dividend index derivatives or contracts for difference (CFDs) was down 6.2% year over year.
On the upside, commodity derivatives were the only segment that experienced an increase in 2012, up 19%.