Trading activity in US futures contracts increased 3.7% in 2014 due to a surge in interest rate trading, which was in stark contrast to other asset classes, according to research from TABB Group.
Market volatility towards the end of the year spurred a wave of trading in interest rate futures in the US, with volumes rising more than 16% compared to the previous year.
This pattern saw CME experience its most active day and month of all time during October. Trading was especially concentrated on its Eurodollar contract.
Equity, FX and energy products fared differently though, according to the research. While the latter two declined in activity, equity-linked derivatives only rose 2% in volumes, which came as a surprise as the S&P 500 index gained 13% throughout the year.
“Both brokers and exchanges also continued to struggle to find ways to monetise the equity business following lower margins and higher costs associated with supporting electronic trading developments,” wrote Matt Simon, principal and head of futures research at TABB Group.
“Going forward, profit margins will need to be assessed through either pricing increases or through new tangential revenue based on capturing market share via other parts of the business.”
Though trading activity in the US has been growing gradually over the past few years, the growth has not been as substantial as witnessed between 2001 and 2011.
Moving into 2015, TABB observes that the futurisation of traditionally bilateral fixed income markets could boost futures volumes.