Key findings:
- Revenue and outlook improve in wake of US rate volatility
- Sellside posts strongest performance
- European firms under the most pressure
Revenues among market participants in the global derivatives market generally improved in May the latest Acuiti Derivatives Insight Report has found.
The Acuiti Derivatives Insight Report is compiled from anonymous submissions from Acuiti’s network of hundreds of senior derivatives executives from across the world.
After a difficult April in which just 16% of respondents reported month-on-month revenue growth, the industry bounced back in May with 39% of respondents reporting an overall increase in revenues and 15% reporting significant growth.
This was driven by respondents who worked at non-bank FCMs, 70% of which reported higher month-on-month revenues. Banks also performed better than in April.
Much of the growth came from the US where volatility in the interest rates market drove volumes to near record highs. All five of the fastest growing contracts in May were CME or CBOT contracts with four of those interest rate products.
This provided a significant boost to sellside clearing firms with banks and non-bank FCMs based in the US reporting strong revenue growth.
However, proprietary trading firms and CTAs experienced a mixed month in the US and a poor month in Europe with 43% of respondents from European prop firms reporting a decline in revenues.
“What the latest report shows is not just how volumes are directly correlated to revenues among clearing firms as you would expect but also that higher volumes do not necessarily mean higher revenues for proprietary trading firms,” said Will Mitting, managing director of Acuiti.
“The June report finds that several interest rate options trading firms in the US had a poor month despite higher volumes suggesting they were caught out by the sudden moves in the market in the wake of more cautious statements from the Fed.”
Expectations for increases in revenues have risen with 55% of respondents predicting improved conditions over the next three months.
The number of respondents predicting a significant increase has nudged up to 10% from 8% last month while those predicting significant declines has dropped substantially from 9% to 3%.
To download the report and apply to join the Acuiti network and get the opportunity to participate in next month’s Acuiti Derivatives Insight Report, visit acuiti.io
