Sentiment across the global derivatives market rose in Q4 2024 as the industry looks to invest ahead of what is expected to be a busy 2025, according to the SGX Global Market Sentiment Index, a barometer of sentiment from across the global derivatives market.

The Sentiment Index is produced by Acuiti and based on a quarterly poll of Acuiti’s Expert Networks, comprising senior, derivatives-focused executives from hedge funds, asset managers, proprietary trading firms and the sell-side. Each quarter, Acuiti surveys Expert Network members on their outlook for the next three months to compile the index.

This quarter, the index rose to 72 from 68 in Q3 2024. This increase was driven by growing optimism among hedge funds, asset managers and sell-side execution desks. However, sentiment among senior executives overseeing sell-side derivatives clearing businesses and senior proprietary trading executives declined slightly on the previous quarter.

“Q4 2024 saw a meaningful increase in sentiment across the derivatives market,” says Will Mitting, founder of Acuiti. “This was driven in part by volatility in the run up to the US election but also by strengthening confidence in Asia as the market recovered.

“Data for this quarter’s report was collected between 23 September and 15 November, meaning that the results of the US election were only reflected in small sample of the data.

“However, we did see an uptick in sentiment after the election as fears over a disputed election did not come to bear. We will see the full impact of the market’s response to the results of the US election in the Q1 2025 Index report.”

Pol de Win, Head of Global Sales & Origination at SGX Group, said: “Derivatives volumes hit record highs last year as global investors managed risk more efficiently in volatile markets. In 2025, investors will chase higher returns, seeking innovative investments and ways to optimise their portfolios.”

The latest SGX Global Market Sentiment Index Report also looks at investment budgets for 2025 and found that all company types included in the survey, with the exception of asset managers, are planning above average investment in 2025.

Proprietary trading firms were the most likely to have significantly higher investment budgets and were targeting investment in improving latency, market data and algorithmic trading.

Sell-side clearing firms were also planning big technology investments with repo clearing functionality the most common area of investment being planned ahead of the introduction of the SEC’s mandate to clear repo and Treasuries from the end of 2025.

Hedge funds were planning investment in market data, connectivity to new exchanges and risk management. Sell-side execution desks were looking to boost risk management, algo offerings and invest in trading screens.

The next SGX Global Market Sentiment Index Report will be released in March 2025.

To download the full report, please visit https://www.acuiti.io/the-sgx-global-market-sentiment-report-q4-2024/

Source: Acuiti