FIA, Greenwich Associates releases derivatives market study results

FIA released trading and clearing trends in derivatives markets research yesterday. The research examined market sentiment towards several major market structure trends. It also covered capital requirements impact, central clearing adoption, the transition away from Libor, and the implementation of margin requirements on uncleared derivatives.

The study shows insights on financial institutions and commercial end-users views that use derivatives to hedge risks and enhance returns. Market participants view is also uncovered as the key factors in the future growth of the derivatives clearing business.

FIA President and CEO Walt Lukken commented:

Walt Lukken

This study provides a unique snapshot of industry views on several key trends in the derivatives markets. The responses from asset managers, hedge funds and other end-users are especially helpful in understanding the customer perspective on clearing.

The research was conducted by data and analytics provider Greenwich Associates. It was based on nearly 200 market participants’ responses to a questionnaire distributed by the two organizations in the fourth quarter of 2019.

Some of the outcomes of the study include:

  • The majority of the participants in the study express positive attitude for the derivatives markets, with many of them expecting further improvements in liquidity and product usage over the next 12 months.
  • The top answer for the change respondents would like to see from policymakers was reducing barriers to cross-border trading and clearing.
  • There is a consistent change in product usage from bilateral to centrally cleared derivatives across all asset classes as well as a growing demand for further expanding the scope of cleared products.
  • Asset managers, hedge funds and other customers pointed out “reduced counterparty risk” and “increased operational efficiency” as the most important economic incentives to use clearing.

Will Acworth, senior vice president, publications, data and research at FIA stated:

Will Acworth

Through our partnership with Greenwich Associates, we were able to gather feedback from a wide range of market participants and glean some important insights on current issues and concerns in the minds of derivatives market participants. We hope the study will serve as a valuable informational resource for FIA members and their customers.

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