US Futures Volume on Target for Record Year

Expected volatility in the second half of 2016 will drive US futures trading volume to a record 3.6 billion contracts for the year. But it’s been another disappointing quarter for swap futures.

Expected volatility in the second half of 2016 resulting from anticipated interest rate increases and the US presidential election will drive US futures trading volume to a record 3.6 billion contracts for the year. Q2 2016 volume totaled 882 million contracts, a 4.6% decrease from Q1 2016 but a 13.4% increase from the same period in 2015.

Projected 2016 volumes are up across all market sectors, with the Energy, Metals, Ags/Commodities and Equities sectors all tracking for double-digit increases. Interest-rate futures volume also has been strong and is on track for an 8 percent year-over-year increase.

Options on futures volume is projected to increase to a record 871 million contracts, which represents 15% increase year-over-year. Positively impacted by a sharp rise in volatility across multiple sectors, Q2 2016 options on futures volume predictably tracked the increase in futures volume.

Thanks to Brexit, volatility futures trading enjoyed the second busiest month ever in terms of volume. June 2016 saw volume jump to 7.1 million contracts, second only to the 7.5 million contracts traded in October 2014. On the flip side, it’s been another disappointing quarter for swap futures, with volumes reported by the CME Group and the Eris Exchange falling 20% and 21%, respectively.

Meanwhile, the number of Futures Commission Merchants (FCMs) in the US held steady, totaling 70 FCMs at the end of Q2 2016, with the addition of one and the exit of another. The concentration of customer assets held by the top 10 FCMs remained in a tight range, at close to 75%.

For a comprehensive look at trends in the futures and options on futures markets in the US, as well as recent activity in swap and volatility futures products, please contact TABB Group for information on our latest research, the Q2 2016 US Futures Market Review, which includes volume and open interest broken down into various sectors and categories and provides a ranking of the top 25 FCMs as determined by customer segregated balances held on their books.

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