Expected volatility in the fourth quarter of 2016 likely will drive US futures trading volume to a record 3.4 billion contracts for the year. Meanwhile, the number of FCMs continued to shrink, as two more left the business, bringing the total to 68 at the end of August 2016, according to Tabb’s Tom Lehrkinder.
A slower than expected third quarter resulting from uncertainty around the US presidential election, coupled with a seemingly endless summer, brought down Q3 2016 futures volumes close to 2015 levels. Q3 2016 volume totaled 834 million contracts, a 5.4% decrease from Q2 2016 and flat versus the same period in 2015. With anticipated interest rate increases and the surprise US presidential election driving volatility, however, 2016 futures trading volume still is projected to reach a record 3.4 billion contracts.
Projected 2016 volumes were muted during the summer months, with equity futures estimates lagging full-year 2015 by 5%. At the end of Q3, Interest Rate, Energy, Metals, and Ags/Commodities remain ahead of last year, while FX futures are tracking for a flat 2016.
As with futures, options on futures suffered through a quite post-Brexit summer. Nonetheless, options on futures volume is projected to jump to a record 836 million contracts, which represents an 11% increase year-over-year. Metals are leading the charge, with a projected increase of 23% over 2015.
With summer finally over, volatility futures trading enjoyed the second busiest month of 2016 in terms of volume. September 2016 saw volume jump to 6.4 million contracts, second only to the 7.1 million contracts traded in a Brexit-aided June 2016.
It was a mixed bag for US swap futures, as Eris Exchange saw a spike in volume of 71% in Q3 2016, while CME rose 1%. Meanwhile, the number of Futures Commission Merchants (FCMs) in the US fell to 68 at the end of August 2016. The concentration of customer assets held by the top 10 FCMs remained in a tight range, at close to 75%.
