Derivatives exchanges have reported record volumes for 2024 and demand is set to continue. The industry is investing in post-trade infrastructure to ensure growth is not hampered by inefficiencies and unnecessary operational risk.

Demand for derivative products seems “insatiable” as futures tracking interest rates and equity markets saw record volumes in 2024 according to consultancy Coalition Greenwich’s report, Top market structure trends to watch in 2025.

CME Group reported record annual average daily volume in 2024 for interest rate, agricultural, foreign exchange and metals products.

Historic 2024 for Treasury futures.

Trading volume surged to a fourth consecutive record year, with new ADV highs in all six major benchmarks. pic.twitter.com/axmoZKe1ZH

— CME Group Interest Rates (@Interest_Rates) January 6, 2025

STIR history made, again.

For the second year in a row, #SOFR futures and options volume bested all-time highs. pic.twitter.com/6tVXvRzQfb

— CME Group Interest Rates (@Interest_Rates) January 3, 2025

Ben Jackson, president of ICE, said in a statement that the group’s commodity markets, including energy, and its interest rate derivatives complex all traded at record levels in 2024. Total open interest was up 11% year-on-year and average daily volume increased 24% year-on-year.

Cboe Global Markets reported that total volume across its four US options exchanges was 3.8 billion contracts in 2024, which marked the fifth consecutive record-breaking year. Volume records for the year included Cboe’s proprietary index options product suite trading 1.03 billion contracts; S&P 500 Index (SPX) options trading 784.2 million contracts; Volatility Index (VIX) options reaching 209.2 million contracts; and XSP (mini-SPX) options volume of 17.6 million contracts.

In Europe Eurex, Deutsche Börse’s derivatives platform, reported that the number of traded contracts in 2024 increased 9% to over 2 billion. Interest rate derivatives saw the largest growth with an increase of 26%, followed by equity derivatives with a rise of 16% for the full year.

Product innovation

Catherine Clay, global head of derivatives at Cboe Global Markets, told Traders Magazine that there has been a shift in trading as investors implement more short-dated trading strategies, options-based exchange-traded funds and options on new asset classes into their portfolios.

Coalition Greenwich highlighted that event contracts became official in the US and that volumes exploded before the US.

“Bitcoin and ether futures volume grew, and equity options have gone mainstream with the 0DTE (zero days to expiry) contracts driving volumes even higher,” added Coalition Greenwich. “There is only more to come.”

The full-scale entry of retail into the futures market was also notable according to Coalition Greenwich who said more crypto-related ETFs will increase crypto-ETF options volume. In addition, Coalition Greenwich said there are signs that the market is finally ready for credit futures.

“All of this will unfold against a backdrop of less regulatory red tape that could speed up new product approvals,” added Coalition Greenwich.

Infrastructure investment

This supply and demand dynamic is driving investments in market infrastructure to ensure growth is not hampered by inefficiencies and unnecessary operational risk according to Coalition Greenwich.

The FIA, the industry body for exchange-traded derivatives, set up the Derivatives Market Institute for Standards (DMIST) after the Covid pandemic in 2020 resulted in a massive backlog in processing exchange-traded derivatives and CCPs were asked to extend their clearing windows. 

In June 2023 DMIST published its first final standard, Improving Timeliness of Trade Give-Ups and Allocations. The ’30/30/30’ standard establishes 30-minute timeframes for completing steps in the allocation process and a 30-minute clock from confirming orders to booking trades

In November 2024 post-trade solutions provider OSTTRA and financial technology provider FIS said they would be collaborating to make post-trade processing for exchange-traded derivatives more efficient, and also help market participants meet the new requirements from DMIST.

The OSTTRA network of asset management clients will benefit from receiving real-time clearing status from FIS Connections, which has links to more than 70 global CCPs. As a result, market participants will gain increased transparency into the finality of give-ups and improved exception management capabilities.

Joanna Davies, head of trade processing at OSTTRA, told Markets Media the partnership will also allow OSTTRA’s extensive margin network to use the strength of FIS’s margin advisor solution to provide enhanced transparency, validation and reconciliation for exchange-traded derivatives. In the other direction, FIS will provide the broker network with enhanced operational efficiency via straight through processing of allocation instructions enriched with OSTTRA order IDs directly into the FIS cleared derivatives platform, allowing for increased automation of give-up/give-in processing.

“Expect quicker onboarding, more efficient position transfers and renewed focus on margin optimization,” said Coalition Greenwich.