Sterling rates futures jump as Britain votes on Europe

As the UK votes on its future within Europe, UK derivatives markets are spiking.

Trading in UK interest rate futures has spiked in the days following the EU referendum due to increased volatility.

Volumes in sterling rates futures traded on ICE Futures Europe has increased 40% year-on-year, with over 15 million contracts traded so far in June.

According to data from ICE, over 1.1 million contracts were traded on 20 and 21 June. 

"Sterling market volatility was not unexpected around the EU referendum. With volume up 40% month to day over last June, ICE Sterling futures and options are being used by investors looking to hedge and protect tail risk," says Chris Rhodes, global head of interest rates, ICE Futures Europe. 

The outcome of the EU referendum is set to have far-reaching impacts not only on UK markets but also on global FX markets.

CME Group has implemented temporary price fluctuation limits to CME FX futures and interest rate derivatives traded on its CBOT platform, as a result of heightened volatility.

Banks are preparing for volatile overnight trading in Australia, Asia and the US, particularly in Eurodollar futures and volatility options trading.

The result of the referendum will also significantly impact the proposed merger between the London Stock Exchange Group and Deutsche Boerse.