Futures Trading Surges in 2016

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U.S. futures markets are more robust than ever. Futures trading will increase 12 percent in 2016, a significant surge that will push volumes to a record 3.6 billion contracts this year, according to an August 2016 TABB Group report. TABB’s U.S. Futures Market Review Q2-2016 also predicts similar growth in most other futures markets.

Futures Market

TABB’s forecast of 3.614 billion contracts in 2016 translates to an eye-catching 12.4 percent rise in the total annual U.S. futures volume. “Projected 2016 volumes are up across all market sectors, with the energy, metals, ags/commodities and equities sectors all tracking for double-digit increases," says TABB senior analyst Tom Lehrkinder. By comparison, between 2014 and 2015, the market’s annual volume had increased only 1.2 percent, from 3.175 billion contracts in 2014 to 3.214 billion in 2015, according to TABB.

Options on Futures Market

The TABB report also calls attention to a striking increase in the options on futures trading. TABB forecasts a record 871 million options on futures contracts in 2016, a 15.2 percent rise in volume. By comparison, the total annual U.S. options on futures contracts rose from 696 million in 2014 to 756 million in 2015, an 8.6 percent rise in volume.

VIX and Swap Futures Markets

U.S. volatility futures volume increased dramatically in June 2016, according to the report. The number of contracts soared to 7.1 million, making it the second most active month since VIX trading began in 2008.

 

TABB notes that swap futures is the only lagging futures market. Volumes at both the CME and ERIS exchanges have declined. Compared to Q2 2015, CME volumes dropped 16 percent in Q2 2016, and ERIS volumes plunged 21 percent in Q2 2016.

Growth in Asian Futures

Futures trading is also increasing in markets abroad. For example, in August the Singapore Exchange (SGX) announced growth in its ASEAN-5 futures market. SGX ascribed the increase in the number of contracts to the escalating interest in Southeastern Asian economies, primarily due to economic reforms and stimulus efforts in Indonesia, Malaysia and Thailand.

Causal Factors

Analysts attribute the surges in U.S. futures markets to three key factors: the fall-out from England’s Brexit vote, uncertainties about the U.S. presidential election, and concerns about an expected Federal Reserve announcement on an interest rate increase.

Volatility in the oil markets has also led to a substantial increase in the trading of energy futures and options. For example, the Chicago Mercantile Exchange has seen a 21 percent rise in volume, year on year, in 2016.

© 2017 by Kevin Feather -

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