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Global FX Trading on Exchanges Rose 142% in 2010: FIA

The volume of foreign exchange derivatives contracts traded on global exchanges rose 142% last year to 2.40 billion contracts, according to a survey published last week by the Futures Industry Association.

This was partly due to a rapid increase in the trading of retail-sized currency futures on exchanges in India, the FIA says. The first of these contracts was introduced in late 2008 on the National Stock Exchange of India and MCX-SX, the stock exchange subsidiary of the Multi Commodity Exchange of India.

In 2010, the dollar-rupee contract traded on MCX-SX had a volume of 821.3 million contracts, making it the second most actively traded contract among all derivatives exchanges in the world. The dollar-rupee contract traded on NSE came in third with a volume of 705.3 million in 2010.

“The dollar-rupee contracts are based on $1,000, which is about 10 times smaller than the typical contract size at the Tokyo Financial Exchange, the region’s largest market in terms of foreign exchange futures, and about 100 times smaller than a typical foreign exchange contract at CME Group, the largest foreign exchange futures market in the world. In effect, the huge volume is partly a function of their small size, but even if discounted by a factor of 10, there is no doubt that India is now home to a very large retail market for foreign exchange futures,” the FIA says in its annual survey, which examines trading volume in the global listed derivatives markets.

Looking at derivatives across asset classes, the report says 22.3 billion futures and options contracts changed hands during 2010, an increase of 25.6% compared to 2009.

For the first time ever, Asia Pacific accounted for the largest share of global volume traded during 2010. Total volume on the derivatives exchanges in that region of the world reached 8.86 billion contracts in 2010, an increase of 42.8% from the previous year. Exchanges in South Korea, China and India accounted for the majority of the volume in this region. North America, which had the largest share in 2009, came in second with 7.17 billion contracts traded in 2010, up 12.8% from the previous year.

The Korea Exchange was once again the world’s largest exchange by volume, due mainly to the continuing popularity of its Kospi 200 stock index options. The exchange’s total volume in 2010 was 3.75 billion contracts, up 20.8% from the previous year.

Coming in second was CME Group, which includes the Chicago Board of Trade and the New York Mercantile Exchange. CME’s total volume in 2010 rose 19% to 3.08 billion contracts. Eurex, which includes the International Securities Exchange, was third with 2.64 billion contracts. NYSE Euronext, which includes the Liffe derivatives markets in Europe and the US as well as the Arca and Amex options markets in the US, was fourth with 2.15 billion contracts, and the National Stock Exchange of India was fifth with 1.62 billion contracts.

The 2010 volume survey shows that the industry-wide rate of growth has returned to the levels seen before the financial crisis in 2008 and 2009. Its data covers 78 exchanges in 36 countries.

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