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A Look into Futures with FlexTrade's Marco Bianchi

Traders Magazine Online News, February 19, 2019

John D'Antona Jr.

Derivatives exchanges across the world achieved record breaking trading volumes in 2018 as market participants on the buy and sell side reacted to shifts in volatility and other risk factors. At the same time, established exchanges are seeking growth opportunities in the digital asset space, new venues are emerging, and initiatives to foster the integration of OTC and listed derivatives markets are advancing.

Against this backdrop, Marco Bianchi, Head of Futures Business Development at FlexTrade Systems, examines major trends, opportunities and challenges facing the buy side, and the demand for sophisticated tools in this growing, but increasingly complex marketplace.

Q:  Derivatives traded on futures and options exchanges across the globe hit an all-time record high of 30. 28 billion contracts, an increase in volume of 20.2 % over 2017, according to data from the Futures Industry Association (FIA).   What stands out to you and what are some of the drivers of this growth?

Marco Bianchi: First, this growth points to the continued widespread adoption of futures and options for risk management and trading across asset classes and investment styles. By year end 2018, open interest in several global benchmark interest rates and equity index futures and options complexes achieved new highs. Growing open interest against a background of rising volumes generally points to greater adoption and more and more players coming into the space. Second, the growth rate of 20.2 % was the fastest since 2010, led by players in Asia-Pacific and Latin America. This shows the global nature of the overall growth, an important indicator of vibrancy for the international derivatives industry and a sign of expanding opportunities for market participants.


Q: What drivers are behind this global growth?

Marco Bianchi: Many different drivers were behind this growth, namely volatility spikes in connection with geopolitical events; market structure evolution such as the emergence of new and alternative benchmarks; regulatory developments such as MIFID II implementation and risks of US-EU divergence; significant macro factors such as uncertainty surrounding Brexit, the shift in central bank policy, the aftermath of U.S. tax reforms, and the uptick in friction over trade tariffs between the US and China. All of these factors generated ongoing needs to manage exposure and capture opportunities by accessing established futures and options liquidity pools across asset classes, fueling growth and expansion. Many of these factors continue to weigh over the markets in 2019.

Q: While the futures and options industry has grown organically, what role is innovation playing in listed derivatives?

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