Traders go all-in on interest
rate derivatives in Q1
Volumes in interest rate futures and swaps reached
new records during the first quarter, with expectations of a rate hike in the US, the end of quantitative easing, and regulation driving trading.
CME Group, which operates the largest interest
rate derivatives exchange, recorded 421.7 million
interest rate futures trades during the quarter, up
12.6% year-on-year. It also saw a record quarterly
average daily volume of 9.2 million interest rate
contracts per day.
Meanwhile, Frankfurt-based Eurex saw around 167
million listed interest rate derivatives traded in the
first three months of the year, up 26.8%.
Traders in both the US and Europe have increased
their use of listed derivatives since November last
year as a way to hedge their risk to anticipated decisions over interest rates from both the US Federal
Reserve and the European Central Bank.
The market making arm of Chicago hedge fund
Two Sigma will buy the options trading unit from
Interactive Brokers’ Timber Hill, in a bid to build out
a position in derivatives.
Timber Hill, founded by billionaire Thomas Pe-terffy, was set to shut down by Interactive Brokers
after 25 years of operation.
However Two Sigma Securities ( TSS) believes it
can reinvigorate the business, with the acquisition
being the final piece to move into options trading
after it purchased the technology from KCG’s options business in 2016.
Two Sigma to acquire
Interactive Brokers’ US
ESMA chief supports
on UK CCPs
The chair of Europe’s securities watchdog has voiced
his support for stricter supervision of clearers of euro-denominated derivatives based outside of the EU.
The EU confirmed last week it will publish proposals
to enhance controls over clearing houses in the UK,
such as LCH and ICE Clear Europe, which dominate
the euro-swaps clearing market.
If approved, it will be up to the European Securities and Markets Authority (ESMA) to carry out the
“We need a mechanism to supervise third country
entities. I am happy with the EU communication that
will table a legal proposal looking at enhancing the su-
pervision of third country CCPs,” said Steven Maijoor,
chair of ESMA, at the ISDA Annual General Meeting.