The Latest Derivatives Industry Statistics Explained
The derivative market is expected to grow with a CAGR of 3.9% from 2021 to 2028.
This statistic indicates that the derivative market, which involves financial instruments whose value is derived from an underlying asset, is projected to experience a Compound Annual Growth Rate (CAGR) of 3.9% from 2021 to 2028. A CAGR of 3.9% implies that the market is anticipated to expand steadily at an average annual rate of 3.9% over this time period. This growth rate signifies the expected overall increase in the size and activity of the derivative market, reflecting potential opportunities for investors, financial institutions, and other market participants to capitalize on the evolving landscape of derivative products and services.
The total notional amount of OTC derivatives at the end of June 2021 was $582 trillion.
The statistic stating that the total notional amount of over-the-counter (OTC) derivatives at the end of June 2021 was $582 trillion represents the sum of the face value of all OTC derivative contracts outstanding at that point in time. OTC derivatives are financial instruments whose value is derived from underlying assets, such as stocks, bonds, commodities, or interest rates. The notional value of these derivatives indicates the total exposure or risk associated with these financial instruments, but it does not represent the actual amount of money changing hands. The large magnitude of $582 trillion reflects the substantial scale of the OTC derivatives market and the potential financial impact that these contracts can have on the global financial system.
Interest rate derivatives accounted for 81% of OTC derivatives in June 2021.
This statistic indicates that within the over-the-counter (OTC) derivatives market in June 2021, interest rate derivatives comprised the majority, accounting for 81% of all OTC derivatives traded during that period. Interest rate derivatives are financial instruments whose value is based on the interest rates of underlying assets such as bonds or loans. The high proportion of interest rate derivatives in the OTC derivatives market suggests that market participants were primarily engaging in transactions related to interest rates, possibly to manage interest rate risks, speculate on interest rate movements, or for other financial strategies. This statistic highlights the significance of interest rate derivatives in the broader financial landscape and the importance of monitoring trends within this segment of the market.
In 2021, Europe has the highest share in the derivatives market.
The statistic “In 2021, Europe has the highest share in the derivatives market” indicates that, among all regions, Europe held the largest portion of the global derivatives market in the year 2021. Derivatives are financial instruments whose value is derived from an underlying asset or group of assets, and they are commonly used for risk management and speculation. The fact that Europe had the highest share implies that the region was actively engaged in derivatives trading and likely played a significant role in shaping market dynamics and trends during that time. This statistic suggests that Europe may have had a strong presence in derivative products, reflecting the region’s robust financial markets and economic activities in the derivatives space.
During Q4 2020, the average daily volume of futures and options was over 42 million contracts in the US derivatives markets.
The statistic indicates that during the fourth quarter of 2020, the US derivatives markets experienced a high level of trading activity, with an average daily volume exceeding 42 million contracts for futures and options combined. This figure reflects the significant level of engagement and participation in these financial instruments by market participants during that period. A high average daily volume typically indicates active trading and liquidity in the markets, which can be influenced by various factors such as economic conditions, market volatility, and investor sentiment. Overall, the statistic highlights the robust activity in the US derivatives markets during the specified timeframe and implies a heightened level of interest and trading among investors.
Equity derivative underliers accounted for 12% of outstanding OTC derivatives in H1 2021.
This statistic indicates that equity derivative underliers constituted 12% of the total outstanding over-the-counter (OTC) derivatives for the first half of 2021. Equity derivatives are financial instruments whose value is derived from the price of underlying equities or stock indices. The fact that equity derivatives accounted for 12% of the total OTC derivatives market suggests that they play a significant role in the overall derivatives landscape during this period. This statistic highlights the importance of equity derivatives and their impact on financial markets, indicating that a considerable portion of derivative trading activity involves equity-based instruments.
The total notional value of OTC derivative contracts outstanding in the first half of 2021, was $582 trillion.
The statistic that the total notional value of OTC derivative contracts outstanding in the first half of 2021 was $582 trillion indicates the volume and scale of these financial instruments in the global markets. OTC (over-the-counter) derivatives are financial contracts that are traded directly between parties rather than on a centralized exchange. The notional value represents the total value of the underlying assets that the derivatives are based on, rather than the actual monetary value at risk. The large notional value of $582 trillion highlights the extensive use of OTC derivatives for risk management, investment, and speculation purposes on a global scale, underlining the importance and complexity of these financial instruments in the modern financial system.
Total exchange-traded derivatives contracts traded worldwide in 2020 was almost 30 billion contracts.
The statistic stating that the total number of exchange-traded derivatives contracts traded worldwide in 2020 was nearly 30 billion highlights the substantial scale and significance of derivative trading activities in the global financial markets during that year. Exchange-traded derivatives are financial instruments where the value is derived from an underlying asset, and their widespread use reflects the role of derivatives in managing risk, speculation, and investment strategies. The high volume of contracts traded underscores the liquidity and depth of the derivatives markets, providing market participants with opportunities to hedge against risks and make investment decisions. The statistic also indicates the robust activity and participation of investors and traders in global financial markets, contributing to price discovery, market efficiency, and overall economic growth.
In 2019, NYSE had 6.87% of the global exchange-traded derivative volumes.
The statistic that in 2019, the New York Stock Exchange (NYSE) accounted for 6.87% of the global exchange-traded derivative volumes indicates the market share held by NYSE in the trading of derivative financial instruments worldwide during that year. Derivatives are financial contracts whose value is derived from an underlying asset, and they are often used for hedging risks or speculation. The fact that NYSE held nearly 7% of the global market share suggests that it is a significant player in the global derivative markets, competing with other major exchanges around the world. This statistic highlights NYSE’s importance and influence in the global financial landscape when it comes to trading derivative products in 2019.
Firms based in North America traded the most OTC derivatives in 2020, with a participation of around 39%.
The statistic indicates that in 2020, firms located in North America engaged in the highest volume of trading of over-the-counter (OTC) derivatives relative to firms in other regions, accounting for approximately 39% of the total OTC derivatives market activity. OTC derivatives are financial instruments traded directly between parties, outside of formal exchanges, and are commonly used for hedging risks and portfolio management. The dominance of North American firms in OTC derivatives trading may be influenced by factors such as the size and sophistication of financial markets in the region, the presence of major financial institutions, and regulatory frameworks that may encourage or support derivatives trading activities.
The value of global OTC derivatives dropped by 3.8% in the first half of 2021 from H2 2020.
The statistic stating that the value of global over-the-counter (OTC) derivatives declined by 3.8% in the first half of 2021 compared to the second half of 2020 indicates a decrease in the overall notional value of these financial instruments traded off-exchange between two parties. This decline could possibly be influenced by a variety of factors, such as changing market conditions, economic uncertainties, regulatory changes, or shifts in investor sentiment. It suggests that there may have been reduced trading activity or a decrease in the use of OTC derivatives during this period, potentially reflecting adjustments in market participants’ risk management strategies or investment preferences. Understanding these fluctuations in OTC derivatives values is important for assessing the state of global financial markets and monitoring potential risks in the financial system.
The gross market value of global OTC derivatives was estimated at $11.6 trillion at the end of 2020.
The statistic stating that the gross market value of global OTC (over-the-counter) derivatives was estimated at $11.6 trillion at the end of 2020 refers to the total value of all outstanding OTC derivative contracts as of that time. OTC derivatives are financial contracts that are negotiated directly between two parties, rather than being traded on a centralized exchange. The gross market value represents the sum of the positive and negative values of these contracts, reflecting the potential exposure to financial risk in the event of counterparty default. This statistic highlights the significant scale of the global OTC derivatives market and its importance in the broader financial landscape, underscoring the need for effective risk management and regulation in this complex financial sector.
Interest rate contracts accounted for almost 60% of the total remaining maturity of 1-5 years in H1 2021.
This statistic suggests that interest rate contracts, which are financial instruments used to manage interest rate risk, comprised a significant portion of the total outstanding financial contracts with a remaining maturity of 1-5 years during the first half of 2021. Specifically, nearly 60% of all contracts within this maturity range were related to interest rates. This indicates that a substantial portion of market participants in this period were actively engaging in hedging or speculating on interest rate movements within the near to medium term. The prominence of interest rate contracts within this maturity bucket highlights the importance and impact of interest rate fluctuations on financial markets and the strategies employed by market participants to manage associated risks.
Credit default swaps (CDS) contracts on sovereigns accounted for 22% of the total notional amount of single-name CDS contracts in 2020.
This statistic indicates that sovereign CDS contracts, which are instruments used to hedge against the risk of default by a government or sovereign entity, comprised 22% of the total notional value of single-name CDS contracts traded in 2020. This suggests that a significant portion of the market for CDS contracts focused on protecting investors against the credit risk associated with sovereign debt defaults. The prominence of sovereign CDS contracts highlights the perceived importance of managing risk related to government debt in the financial markets, as well as the potential impact of economic and political factors on sovereign creditworthiness.
EMEA (Europe, the Middle East, and Africa) accounted for 40% of the global foreign exchange (FX) gross market value in 2020.
The statistic indicates that in 2020, the region encompassing Europe, the Middle East, and Africa collectively accounted for 40% of the global foreign exchange (FX) gross market value. This suggests that a significant portion of FX trading activities worldwide, including buying, selling, and exchanging currencies, took place within the EMEA region. The statistic highlights the economic importance and influence of EMEA in the global FX market, indicating that it is a key player in shaping currency exchange rates and overall market dynamics.
North American firms accounted for 39% of single-name credit default swaps (CDS) contracts in 2020.
The statistic indicates that North American firms were involved in 39% of all single-name credit default swaps (CDS) contracts in 2020. This means that nearly two-fifths of the total CDS market activity for individual entities involved North American firms either as buyers or sellers of these financial instruments. Credit default swaps are derivative contracts that provide insurance against the default of a specific borrower or issuer of debt. The high percentage of North American firms participating in this market suggests that there is significant risk management and speculation activity related to credit risks associated with entities in North America.
Asian firms comprised 9% of the global credit default swaps (CDS) contracts in 2020.
The statistic that “Asian firms comprised 9% of the global credit default swaps (CDS) contracts in 2020” indicates the proportion of CDS contracts in terms of market exposure that were held by Asian firms relative to the rest of the world. A credit default swap is a financial derivative that allows investors to hedge against the risk of a borrower defaulting on a bond or loan. The fact that Asian firms held 9% of global CDS contracts suggests that these firms, most likely major financial institutions and corporations in Asia, were actively engaged in managing credit risks associated with debt instruments. This statistic reflects the growing importance of Asian markets in the global financial landscape and their role in managing credit risk.
The amount of gross credit exposure after netting and collateral was $2.4 trillion at the end of 2020.
The statistic “The amount of gross credit exposure after netting and collateral was $2.4 trillion at the end of 2020” refers to the total exposure faced by a financial institution from its credit counterparties after taking into account the impact of netting agreements and collateral received. Gross credit exposure represents the maximum potential loss that a financial institution could incur if all its counterparties were to default simultaneously without any netting or collateral mitigating the risk. By factoring in the effects of netting agreements, which allow offsetting positive and negative exposures among counterparties, and collateral received, which reduces the credit risk, the net credit exposure is reduced to $2.4 trillion, reflecting a lower level of actual risk faced by the institution. This figure is crucial for assessing the overall credit risk exposure and financial stability of the institution.
Commodity derivatives were under 1% of global OTC derivatives in the first half of 2021.
This statistic indicates that commodity derivatives comprised less than 1% of the global over-the-counter (OTC) derivatives market during the first half of 2021. Commodity derivatives are financial instruments that derive their value from underlying commodities such as gold, oil, or agricultural products. The fact that they represent a very small portion of the OTC derivatives market suggests that investors and financial institutions are predominantly trading other types of derivatives, such as interest rate swaps or credit default swaps. This could be due to a variety of factors including market preferences, risk management strategies, or economic conditions influencing trading activities in different sectors.
The total notional amount of OTC derivatives reported by non-financial institutions was $14 trillion in H1 2021.
The statistic indicates that in the first half of 2021, non-financial institutions were involved in over $14 trillion worth of Over-The-Counter (OTC) derivatives. OTC derivatives are financial contracts that are traded directly between two parties without going through an exchange. Non-financial institutions refer to organizations that are not primarily engaged in financial activities, such as manufacturing companies or technology firms. This large notional amount highlights the significant role non-financial institutions play in the OTC derivatives market, potentially using these instruments to manage risks associated with fluctuations in interest rates, currency values, or commodity prices. The immense value involved underscores the importance of understanding the use and implications of OTC derivatives for both the individual institutions and the overall financial system.
References
0. – https://www.fia.org
1. – https://www.www.statista.com
2. – https://www.www.fia.org
3. – https://www.www.bis.org
4. – https://www.www.databridgemarketresearch.com
5. – https://www.stats.bis.org
