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Global futures and options trading continued to grow at a healthy rate in the beginning of 2007, with total volume rising 11.8% to 2.13 billion contracts in the first two months of the year. The U.S. derivatives exchanges were especially active. Total U.S. futures and options volume reached 373.61 million contracts in January and February, a 22% increase over the same period in 2006. Most international derivatives exchanges grew at a similar rate, but the overall international volume total grew by only 6% to 1.29 billion contracts, mainly because of a decline in the trading of the Kospi 200 Index option, the world’s most actively traded derivatives contract.
Figures in this article are based on data received from 58 exchanges worldwide. The data include derivatives contracts traded over the counter that were converted into futures through clearing facilities as well as non-traditional products such as Trakrs and binary options. New developments include the merger of the Osaka Mercantile Exchange and the Central Japan Commodity Exchange in January 2007.
A Closer Look at Exchanges
For the first two months of 2007, 15 of the top 20 exchanges recorded an increase in volume, with 14 of them showing doubledigit growth rates.
The Chicago Mercantile Exchange experienced the greatest growth in absolute terms, trading 43.33 million more contracts than in the same period last year. Eurex came in a close second, trading 41.83 million more contracts than last year at this time. ICE Futures had the fastest growth in percentage terms among the top 20 exchanges. The U.K. exchange’s January- February volume more than doubled from a year ago to 22.48 million contracts, thanks mainly to the runaway success of its U.S. crude oil futures contract. The second fastest growing exchange was Brazil’s Bolsa de Mercadorias & Futuros, which reported a 50.5% increase in volume to just under 63 million contracts.
The Chicago Board Options Exchange widened its lead over the International Securities Exchange, trading 122.61 million contracts to ISE’s 106.86 million. Feb. 27 was the busiest day in the CBOE’s 34-year history, with 6.72 million contracts changing hands that day. Neither options exchange grew as rapidly as Brazil’s Bolsa de Valores de São Paulo, where options volume rose 30.4% to 55.91 million contracts.
Among the five exchanges showing a slower start to 2007, China’s Dalian Commodity Exchange had the most negative change. A collapse in the trading of its soy meal futures helped cause a 25.5% decline compared to the same two-month period in 2006. But the decline that had the biggest impact on the overall statistics was the 12.2% decline in the trading of the Kospi 200 options contract. This one contract accounted for nearly 21% of the global trading in listed futures and options during the first two months of the year, even though the volume was down by 61 million contracts from the previous year.
Interest Rate Sector: STIRs Lead the Way
Volume in the interest rate sector rose again in the first two months of 2007, with 548.21 million contracts traded and an overall increase of 18.8% over last year. The largest growth rates were seen among short-term interest rate contracts. CME’s Eurodollar futures continued to show impressive growth, pulling ahead of last year’s volume totals for the January-February period by 28.3% to 89.58 million contracts. The Euronext.liffe 3-month Sterling futures gained substantial ground, rising 64.4% to 19.35 million contracts in January and February. Trading of the One-Day Inter- Bank Deposit futures contracts at Brazil’s BM&F rose 37.3% to 34.47 million contracts. The exception to the trend was the TIIE 28-Day Interbank Rate futures contract at the Mexican Derivatives Exchange, which had roughly the same volume as the previous year.
On the long end of the interest rate curve, trading in Eurex’s Euro-Bund and Euro-Schatz futures rose only 7.5% and 3.1%, respectively, and the Euro-Bobl futures contract actually was down 1% from the same period in 2006. On the other hand, the Chicago Board of Trade’s 10-Year T-Note futures grew 34.9% to 51.86 million contracts traded.
Equity Index Trading: Rapid Growth in Europe and U.S.
Volume in the equity index sector gained only 1.2% over last year, with the decline in the Kospi 200 options contract offsetting rapid growth in the trading of benchmark contracts in Europe and the U.S. Eurex’s DJ Euro Stoxx 50 index options surged 59.5% to 33.96 million contracts in the January-February period. CBOE’s S&P 500 index options increased 39.9% to 19.34 million contracts. Volume in options on CBOE’s exchange-traded funds also showed growth—rising to 22.71 million contracts, which was 56.8% higher than during this timeframe in 2006.
On the futures side, CME’s E-mini S&P 500 index recorded a 26.8% rise to 44.14 million contracts, and the DJ Euro Stoxx 50 index futures showed an impressive 44.85% rise to 35.27 million contracts.
In contrast, trading of Nikkei 225 futures, the benchmark for Japan’s equity markets, moved in the other direction. The number of Nikkei 225 futures traded at the Singapore exchange declined 1.8% to four million contracts, while volume at the Osaka Securities Exchange—the home market for this contract—fell 21% to 2.55 million contracts.
Energy Sector: Oil Contracts on the Rise
The energy sector was one of the hottest sectors at the beginning of the year. January- February volume in energy futures and options was up 50% to 82.63 million contracts worldwide.
The New York Mercantile Exchange’s crude oil contract, which converted to full electronic trading in August 2006, was especially active. Volume in that contract soared 75.7% to 19.46 million contracts. Volume also grew rapidly for the ICE Brent crude oil futures, up 51.4% to 9.75 million contracts. However, the largest gain was seen in the ICE WTI crude oil futures, which was launched in February 2006. Volume in the first two months of 2007 reached 8.6 million contracts, equivalent to 30% of total trading in futures on this benchmark grade of crude oil. In contrast, trading of the Tokyo Commodity Exchange’s gasoline futures contract sank 59.2% to 1.12 million contracts.
Foreign Exchange: Turkish Derivatives Exchange Pulls Ahead
Volume in the foreign currency sector grew 41.6% to 44.70 million contracts in January-February 2007. BM&F’s U.S. Dollar contract led the sector for the second year in a row with a 51.4% increase to 10.97 million contracts. It was followed by CME’s Euro FX contract, which rose 22% to 6.73 million contracts.
The fastest growing foreign currency contract was the Turkish Derivatives Exchange U.S. Dollar contract, which recorded a 304.7% increase to 1.1 million contracts. And the EUR/HUF contract on the Budapest Stock Exchange recorded a total of 0.52 million contracts, up 0.41 million contracts from the same period last year.
On the options side, volume in BM&F’s U.S. Dollar option contract doubled to 2.37 million contracts. The Tel- Aviv Stock Exchange Shekel-Dollar Rate options contract—the most actively traded foreign exchange option at the beginning of 2006—rose only 6.5% to 1.33 million contracts.
Agricultural The agricultural sector was responsible for a total of 83.66 million contracts at the start of 2007, up 12.4% from the same timeframe last year. Two of the sector’s contracts returned an impressive triple-digit gain: the Shanghai Futures Exchange reported a 217.6% increase in the trading of its rubber futures to 6.85 million contracts, and the Zhengzhou Commodities Exchange reported a 189.7% increase of strong gluten wheat futures to 3.29 million contracts. In contrast, the Dalian Commodity Exchange, China’s largest commodity futures exchange by volume, did not perform as well. Volume in corn futures, its flagship contract, grew only 9.1% to 10.42 million contracts, and volume in its soy meal futures fell 57.67% to only 3.26 million contracts.
The CBOT’s agricultural contracts benefited from greater adoption of electronic trading as well as interest in biofuels. Volume in its corn contract surged 68.7% to 10.28 million contracts, while volume in its soybean contract rose by 35.5% to 4.60 million contracts.
Global futures and options volume in the metals sector showed modest growth in the beginning of 2007, with a 10% increase to 38.71 million contracts. The London Metal Exchange’s primary aluminum contract topped the metals charts thus far this year with 7.35 million contracts traded, up 13.72%. The Multi Commodity Exchange of India traded 2.42 million copper futures contracts, up from almost nothing the previous year, while volume in LME’s copper futures slid 6.7% to 3.29 million contracts In the precious metals sector, Nymex pulled ahead of Tocom, with 3.39 million contracts compared to Tocom’s 2.73 million last year. And the CBOT showed considerable growth, as trading of its 100 oz. gold contract jumped 311% to 2.11 million contracts.
|Top 20 Derivatives Exchanges by VolumeFutures, options on futures, and options on securities, in millions of contracts|
|Top 20 Derivatives Contracts by VolumeIn millions of contracts**Excludes contracts based on individual equities |
|WTI Crude Oil Futures Volume at Nymex and ICE |
Global Futures and Options Volume by SectorIn millions of contracts
Top 20 Commodities Futures and Options Contracts by VolumeIn millions of contracts* OTC contracts cleared at Nymex ** Began trading on Feb. 3, 2006
Rebecca Holz is assistant editor of Futures Industry Magazine.