The Gateway to Algorithmic and Automated Trading

TABB Group - US futures, options on futures hit record volumes in 2015

First Published 10th March 2016

US futures and options on futures volumes have doubled in the past 10 years. But not all of the trends in the markets have been positive, as the number of Futures Commission Merchants continued its steady decline and further consolidation looks likely. By Tom Lehrkinder, TABB Group.

The 2015 US futures and options on futures markets ended on an up­tick, as both markets recorded record yearly totals in 2015. Four of the past five years have seen futures volumes finish above 3 billion contracts, and the 2015 total of 3.21 billion futures contracts is almost double the 1.65 billion futures contracts traded in 2005. Options on futures volumes have shown a similar growth rate, as volumes have more than doubled in the past 10 years, from 368 million contracts in 2005 to 756 million in 2015.

Full­year 2015 volume on US futures rose 1% despite a weak fourth quarter, when concerns around the Chinese economy coupled with the lack of conviction in the interest rate complex tempered trading. Meanwhile, options on futures volume increased 9% in 2015, as market participants look to a less expense outlet to hedge their positions.

Not all the trends around futures in 2015 were positive, however. The number of Futures Commission Merchants (FCMs) has been on a downward slide since 2007, when there were 154 FCMs serving the industry. At the end of 2015, that number had fallen to 72, after losing yet another FCM in November. The decline has been steady, and consolidation may continue as the parent companies of FCMs take a critical look at their profitability potential in the post ­Dodd­Frank era.

Market volatility is often linked to volume, and contract volume was up 2% in 2015 compared to 2014, mirroring the trend in futures. Volumes on interest rate swap futures traded on the CME and the Eris Exchange both fell in the fourth quarter of 2015, reflecting the weakness in the interest rate space heading into 2016.

TABB Group's US Futures Market Review is produced quarterly and examines recent trends in US ­listed futures and options on futures markets. Coverage topics include volumes and open interest analysis, asset type usage and trends, and an overview of FCMs, including market share detail.

As part of the report, TABB also has developed its own "Major Indicators," including technology innovation, regulatory focus, and trading activity. For information on the US Futures Market Review, please contact TABB Group.