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2010 IOMA/IOCA Annual Conference program
2010 IOMA/IOCA Annual Conference highlights
2010 IOMA/IOCA Annual Conference list of participants
IOMA derivatives market survey 2009
International Options Market Association (IOMA) ReportAugust 2010
Member exchanges
IOMA was founded as an association of options markets and clearinghouses around the world. Since 2002, it has been an affiliate of the World Federation of Exchanges (WFE). As of 2010 IOMA’s membership includes:
Every effort has been made to ensure that the information in this survey is accurate at the time of printing, but the Secretariat cannot accept responsibility for errors or omissions.
Athens Derivatives Exchanges
Australian Securities Exchange
BM&FBOVESPA
Bolsa de Comercio de Buenos Aires
Bolsa de Comercio de Santiago
Bombay Stock Exchange
Borsa Italiana
Bourse de Montreal
Budapest Stock Exchange
Bursa Malaysia Derivatives
CME Group
Chicago Board Options Exchange
Eurex Frankfurt
Eurex Zurich
Hong Kong Exchanges and Clearing
IntercontinentalExchange
International Securities Exchange
Johannesburg Stock Exchange
Korea Exchange MEFF
Mercado Mexicano de Derivados
NASDAQ OMX
NASDAQ OMX PHLX
NYSE Euronext
NYSE Liffe
National Stock Exchange of India
New York Mercantile Exchange
Osaka Securities Exchange
Oslo Børs
Singapore Exchange
Taiwan Futures Exchange
Tel-Aviv Stock Exchange
Thailand Futures Exchange
Tokyo Stock Exchange
Warsaw Stock Exchange
Wiener Börse
Zhengzhou Commodity Exchange
IOMA | August 2010 1
Contents
2 IOMA/IOCA in brief 3 2010 IOMA/IOCA Annual Conference program
6 IOMA Annual Conference highlights
7 Speakers’ biographies (A-Z)
19 List of participants
22 2009 Derivatives market survey
Special note: Due to the volcanic eruptions in Iceland sending ash over Europe, the IOMA/IOCA Conference program was affected as some of the speakers could not travel to New York. The IOMA Board kindly stepped up to reorganize the program where/when necessary. We have reprinted the program here as it was on the eve of the Conference, to share the program ideas as they were intended to be developed.
2 IOMA | August 2010
IOMA/IOCA in brief
2002 2003 2004 2005 2006 2007 2008 Source: WFE
18
16
14
12
10
8
6
4
2
0
Options Futures Total
International Association of Options Exchanges and Clearing Houses (IOMA/IOCA)
IOMA was founded an association of options markets and clearinghouses around the world. It includes most of the major exchanges trading options on equities, equity indexes, debt instruments, currencies and commodities. Since its affiliating with WFE in 2002, IOMA has widened its scope to include futures and commodity trading.
IOMA conducts the annual survey of options markets, and maintains a directory of IOMA members. Between annual meetings, a Board of Directors consisting of eight members governs the association.
Membership
Membership in IOMA is open to regulated exchanges and clearinghouses that trade and clear options and futures contracts. Regulated futures exchanges have also belonged and participated for years. New members are elected as part of the annual meeting. Membership in IOMA is automatically included for those exchanges that are members of the WFE.
The International Options Clearing Association (IOCA) meets in conjunction with the IOMA annual meeting. IOCA is not a separate organization; rather it is a section within IOMA that consists of the clearinghouses who are members of IOMA.
For more information visit http://www.world-exchanges.org/ioma
2002-2008 Derivatives volume growth (billion contracts)
IOMA | August 2010 3
New York, 18-21 April
Event hosted by the US members of IOMA/IOCA.
Monday 19 April
Board of Directors meeting
Reserved for the IOMA Board of Directors
Opening the NASDAQ market
IOMA/IOCA Annual Conference opening
Welcome remarks, and IOMA/IOCA update
• Meyer S. Frucher, Vice Chairman, NASDAQ OMX
• Ravi Narain, Managing Director and Chief Executive Officer, NSE India, and IOMA Chairman (excused)
• Richard DuFour, Executive Vice President, CBOE, and IOMA Treasurer
• William Brodsky, Chairman and Chief Executive, CBOE, and WFE Chairman
IOCA panel 1
Risk management, OTC clearing and regulatory reform are the key topics. This first IOCA session sets the scene as to what is happening, and how this fits with what used to be considered the “normal” business developments of handling changing risk profiles, providing new services, all while managing to compete with one another. Today, what messages are being received from regulators, academics, and clients, and how are these to be interpreted?
• Chair: Michael Walinskas, Senior Vice President, Risk Management and Membership, OCC
• Dale Michaels, Managing Director, Credit & Risk Management, CME Group
• Thomas Book, Member of the Executive Board, Eurex Clearing AG
• Christopher Jones, Director, Head of Risk Management, LCH.Clearnet
• Garry O’Connor, CEO, International Derivatives Clearing Group
2009 IOMA survey results and the corresponding financial effects
Review of last year’s industry business, setting the baseline for where IOMA is now.
• Chair: Hugh Freedberg, Chairman NYSE Euronext Liffe and Former IOMA Chairman (excused)
• Didier Davydoff, President, IEM Finance (excused)
• Bernardo Mariano, Analyst, ERDesk
2010 IOMA/IOCA Annual Conference
4 IOMA | August 2010
Indices and product development
Exchanges plan to extend their index futures and options businesses: some are trying to tie up with exchanges in other regions to add offer to their local marketplaces, and to create global indices. What is the state of play on the geographical spread beyond “local,” and does this practice grow the market? How many new products pay off? What concerns do we have about cannibalization?
• Chair: Ravi Narain, Managing Director and Chief Executive Officer, NSE India, and IOMA Chairman (excused)
• Rina Shafir, Senior Vice President, Trading & Clearing Dept., Tel-Aviv Stock Exchange
• Jacques der Megreditchian, Chairman of the Board of Directors, RTS Exchange
• Jae Seung Shim, Executive Director, Derivatives Market Division, Korea Exchange
Fast growing markets
What market segments and products are outpacing the rest, wherever they are in the world? What kinds of products are likely to stay on a fast growth track? These are the fastest growing parts of the exchange industry.
• Chair: Jorge Alegria, Chief Executive Officer, MexDer
• Scot Warren, Managing Director, Equity Index Products and Index Services, CME Group
• Rinjai Chaiyasut, Vice President, The Stock Exchange of Thailand
Tuesday 20 April
IOCA panel 2: Clearinghouses in the OTC space
A question and answer session on developing clearing services: for ICE, the strategy of using joint ventures; for DTCC, an overview of the OTC warehouse; for CCP 12, the possibilities of regulatory changes; and for Tokyo Stock Exchange, the perspective for its clearer to develop services in that marketplace.
• Chair: Marcus Zickwolff, Director, Eurex Operations, Chairman of CCP12 (excused)
• Stewart Macbeth, Managing Director, DTCC
• Takeshi Hirano, Head, Strategic Planning, Clearing and Settlement Department, Tokyo Stock Exchange
• Christopher S. Edmonds, President, ICE Trust
• Michael March, Director of Business Development, LCH.Clearnet Ltd.
Technology arms races and the corresponding changes in trading tools and techniques:
This panel will consider algo and high-frequency trading, as well as at derivative trading engines and the needs of developing exchanges. The capabilities built up are remarkable; it is time for an assessment of the IT side.
• Chair: Gary Katz, President & CEO, International Securities Exchange
• Tony Weeresinghe, Director, Global Development, London Stock Exchange Group; and Chief Executive Officer, Millennium IT
• Edwin Marcial, Chief Technology Officer, IntercontinentalExchange
• Anna Ewing, Executive Vice President and Chief Information Officer, NASDAQ OMX
IOMA | August 2010 5
The exchange strategy after years of consolidation
The strategy session, taking stock of the directions in which the industry may be going.
• Chair: Joseph Gawronski, President, Rosenblatt Securities
• Thomas Callahan, Chief Executive Officer, NYSE Liffe US
• Kevin King, Executive Vice President, Head of Risk Management Division, Hong Kong Exchanges and Clearing Ltd.
• Jeromee Johnson, Head of BATS Options Market
Wednesday 21 April
Welcome remarks by Robert Greifeld, CEO, NASDAQ OMX Group
Financial services reform
Industry leaders, together with regulators, will discuss the significance of potential regulation from an international angle.
• Chair: William J. Brodsky, WFE Chairman
• Theodore Lubke, Senior Vice President, Bank Supervision Group, Federal Reserve Bank of New York
• Maria Velentza, Head of Unit G3 (Securities Markets) - DG Internal Market & Services, European Commission
• Richard Ketchum, Chairman and CEO, FINRA
• Elizabeth K. King, Associate Director, Division of Trading & Markets, US Securities and Exchange Commission (SEC)
Competing client constituencies
With many different types of firms interacting in the markets, what are the expectations and needs of exchanges if the OTC exchange environments were to be rebalanced?
• Chair: John J. Lothian, President & CEO, John J. Lothian Company
• Todd Hohman, Managing Director, Quant Vol Trading, Goldman Sachs
• Mike Curcio, Executive Vice President, President, E*TRADE Securities
• Martin Mannion, Chief Operating Officer, Citadel Execution Services
How exchanges and clearers have operated through the crisis
A review of how the regulatory, legal and rule structures of exchanges enabled them to stay open since mid-2007, unlike virtually any other market segment.
• Chair: Steven Sears, Senior Editor, Barron’s
• Eric Noll, Executive Vice President, Transaction Services, NASDAQ OMX
• Patrick Pearson Head of Financial Markets Infrastructure, European Commission (excused)
6 IOMA | August 2010
2010 IOMA/IOCAAnnual Conference highlightsThe world’s credit market troubles began in early 2007, and successive crises have moved on one by one to other parts of the world’s financial system since. In sharp contrast to other actors, derivatives exchanges and their associated clearers have offered the financial community certainty of execution and transparency of pricing.
The conference examined the business position of clearing houses in this light, their usefulness for prudent speculation and risk management. Risk profiles of market participants have been changing, often rapidly and negatively, yet exchange trading and clearing have functioned without significant disruption. Also, in response to the ongoing crisis environment, this industry has been responding by extending its range of services, including over-the-counter (OTC) trade reporting, bilateral clearing, and central counterparty clearing for more kinds of contracts. More effort than ever has been put into finding margin offsets to reduce costs to customers.
Conference participants looked for a product roadmap: what are different exchange and clearing house plans beyond credit default swaps? How is clearability of these other instruments defined and commonly understood? Indeed, what does “standardized” mean for a contract? On systemic risk, what kinds of “meltdown” scenarios are being contemplated, precisely in order to avoid them? Have there been changes in minimum requirements for clearing house membership in the course of the past three years? How does this private-sector industry association view the prospect of public authorities mandating clearing, and how easy a fit would this be relative to the current accepted risk portfolios managed? The idea of forced clearing of OTC contracts which may not be standardized was a source of considerable unease, in fact; OTC works differently and meets its own economic purposes. The two worlds do not easily overlap.
Participants also addressed the question of global financial market reform, for regulated marketplaces and for clearers. It was not evident in April 2010 that there would in fact be effective global coordination going forward; as one example, that very week the United States Congress suddenly put financial questions on its agenda at an accelerated pace, changing the calendar for everyone else, too. Not addressing financial problems across the world on a broadly comparable basis was a cause for further concern, as OTC is precisely the area where the 2007 crisis began; coordination is indispensable for minimizing future problems by reducing the possibilities for regulatory gaps. IOMA leaders were therefore especially pleased to share perspectives on these matters directly with authorities from the United States and European Union.
Meanwhile, as this crisis has evolved, the self-regulatory organization managers have had to look ever more closely at various kinds of fraud issues cropping up, and how to identify them in the midst of often heavy volumes, large price movements, and ever increasing cross-border trading. More time has been spent examining the financial stability of the broker-dealer communities. There is a need for surveillance staff to be able to reconstruct more complex
audit trails. The self regulating organization (SRO) managers and the speakers representing public authorities were in agreement that whether the trading is taking place on- or off-exchange, more transparency is needed and will be mandated.
The information technology front has been equally busy for exchanges this past year as latency has fallen to near zero, processing capacity has risen sharply, and above all the message traffic for derivatives exchanges has exploded. There is in effect something of an IT arms race taking place in the trading sector, though as a result exchanges are able to offer very different kinds of trading services to their customers. In fact, the closing panel session was devoted to listening to different kinds of client constituencies to hear more about their diverse needs, which have to be balanced out against one another within the exchange space at any given point in time. Each kind of client naturally puts its own interest forward, and all must somehow be accommodated.
Given the monetary questions being raised by government economic and financial support in the form of extraordinarily low interest rates and nationalizations or very extensive guarantees being extended, it was thought that futures and options on currencies and interest rates traded on exchange would have a very bright future.
The conference also addressed the question of further exchange consolidation: is it in the offering or will there be a pause after several years of mergers and acquisitions in this sector?
Perhaps the key concluding question had to do with the need to restore the good name of derivatives. The exchange-traded and cleared products have been unfairly tarnished by the contracts traded OTC, with all the economic and social damage they have wrought.
Bob Greifeld addresses the conference participants the 2011 Annual Conference will be hosted by NSE India on 1-4 May 2011. Included within his remarks were the likelihood of U.S. financial reform passing in both houses of Congress as well as a discussion of the latest SEC options pricing proposal.
IOMA | August 2010 7
Speakers’ biographies (A-Z)
Jorge Alegria
Chief Executive Officer, MexDer
Jorge Alegría is Chief Executive Officer of MexDer (Mexican Derivatives Exchange) and he has recently been appointed as Head of the Markets and Information Division of the Mexican Stock Exchange. He previously served as CEO of ABN AMRO Securities (Mexico) and as Executive Vice President at Scotiabank Inverlat. With more than 24 years of experience in the financial sector, he has also served as board member and held various positions at major Mexican firms including: AMIB (Mexican Brokers Association), ASIGNA (Clearing House), Impulsora del Fondo México (Mutual Fund), and the Mexican Stock Exchange.
Mr. Alegría is also a professor at the ITAM (Instituto Tecnológico Autónomo de México), focused on derivatives. He serves as Chairman-elect of the International Options Markets Association (IOMA).
Mr. Alegría earned a finance degree from the ITAM.
Thomas Book
Member of the Executive Board, Eurex Clearing AG
Thomas Book is heading the Clearing, CCP & Strategy department of Eurex and was appointed Member of the Executive Boards of Eurex Frankfurt AG, Eurex Zürich AG and Eurex Clearing AG in December 2006. He has held a number of different leadership and project management positions at Deutsche Börse and Eurex since joining Deutsche Börse Group in October 1995.
Previous to his appointment he was in charge of Trading and Clearing Market Development in cash and derivatives markets for Deutsche Börse Group (December 2005 until December 2006) and Head of Market Development Derivatives Markets, a post which he held from October 2004 until November 2005.
From 2000 until 2004, Book worked as Senior Project Manager for Strategic Planning. He has been involved in a number of strategic projects at Eurex starting with the integration of DTB and SOFFEX to form Eurex in 1998, up to the merger with the International Securities Exchange that was completed in December 2007.
Book received a diploma in Business Administration at the University of Münster in 1995. He completed a Ph. D. thesis on “Electronic stock exchange trading and global markets” at the University of Giessen in 2000, which was awarded the first prize of Paul Julius Reuter Innovation Award in 2003.
William J. Brodsky
Chairman & Chief Executive Officer, Chicago Board Options Exchange (CBOE)
William J. Brodsky is Chairman and Chief Executive Officer of the Chicago Board options Exchange (CBOE). In October 2008, Brodsky was the first leader of a derivatives exchange to be named Chairman of the World federation of Exchanges (WFE). He previously served as Vice Chairman of the WFE from 2007 to 2008. Brodsky’s election as WFE Chairman marks the culmination of four decades of leadership roles in the U.S. options, futures and securities markets.
As Chairman and CEO of CBOE since 1997, Brodsky has overseen a period of tremendous growth and product innovation at the exchange, as well as the successful transformation of CBOE’s traditional open-outcry, market model into a world-class hybrid trading system. He serves as the industry’s leading advocate in shaping market policy and regulation, and is currently guiding CBOE through demutualization from a membership organization to a for-profit stock corporation.
Prior to joining CBOE, Brodsky served for 15 years at Chicago Mercantile Exchange (CME), where he oversaw the launch of the CME Globex trading system and played a pivotal role in the development and globalization of stock index futures. He joined CME in 1982 as Executive Vice President and Chief Operating Officer and, in 1985, was named President and Chief Executive Officer, a post he held until joining CBOE in February 1997.
Brodsky began his career as an attorney in the securities industry with the firm of Model, Roland and Company in 1968. In 1974, he joined the American Stock Exchange (AMEX) where he became head of options trading in 1976 and served as Executive Vice President for operations between 1979 and 1982. He also served for seven years as the AMEX representative on the board of The Options Clearing Corporation. In 1994, the AMEX honored Brodsky for his role in the development of its options programs.
Brodsky serves as a director of Integrys Energy Group, Inc, an S&P 500 company. He is a member of the Federal Reserve Bank of New York’s International Advisory Committee, the Council on Foreign Relations in New York City, and the Economic Club of Chicago. He is also the former chairman of the International Options Markets Association (IOMA).
He serves on the Kellogg School of Management Advisory Council, as a trustee of Syracuse University and is a member of the Board of Directors of Northwestern Memorial Hospital and chairs its investment committee. Brodsky holds an A.B. degree and J.D. degree from Syracuse University and is a member of the Bar in Illinois and New York.
8 IOMA | August 2010
Thomas Callahan
Executive Vice President & Head of NYSE Liffe U.S., NYSE Euronext
Thomas F. Callahan is Executive Vice President and Head of NYSE Liffe U.S., the U.S. futures exchange of NYSE Euronext.
Prior to joining NYS Euronext, Mr. Callahan was the Head of Global Financial Futures and Options at Merrill Lynch where he was responsible for global listed derivatives for debt, equity, FX and commodity products.
Mr. Callahan held various leadership positions during his 15 year tenure at Me Merrill Lynch, in both New York and London, including: Head of Global Debt Financing, Co-Head of Global Prime Brokerage, Head of European Vanilla Interest Rate Trading and Sales, Head of Global Money Markets Trading, and Senior Trader in ML Government Securities, Inc. Prior to that, Mr. Callahan worked for Prudential Securities, where he began his career in 1992.
He is a 1991 graduate of Harvard University.
Michael J. Curcio
Executive Vice President & President, E*TRADE Securities
As President of E*TRADE Securities, Michael Curcio is responsible for the strategic direction, customer relationships and ongoing management of E*TRADE FINANCIAL’s core domestic retail franchise—including the Company’s investing, trading and banking solutions. With over 20 years’ experience in optimizing the customer experience for financial firms, Mr. Curcio is focused on building the retail business by attracting customer prospects, broadening engagement with existing customers and improving E*TRADE’s product line and service offerings. The work of Mr. Curcio and his team helped E*TRADE close 2009 achieving the Company’s highest level of trades for any year at 197,000 and record brokerage accounts of 2.7 million.
Within the retail business, Mr. Curcio oversees:
• Customer relationship management (sales and service), including continuing service enhancements and educational opportunities
• Development and management of retail products and services, portfolio planning tools, services and guidance for every stage of a customer’s life
• Advanced tools and services for equities, options and futures trading for the Active Trader segment
• Corporate stock plan administration business, which serves 25 percent of S&P 500 companies and serves as an introductory channel for retail brokerage and banking services
• E*TRADE Capital Markets, the company’s market making business
Mr. Curcio joined E*TRADE in 2002 after a 15-year tenure at TD Waterhouse, where he last served as Executive Vice President, Customer Relationship Management. He is former vice chairman of the Philadelphia Stock Exchange Board of Governors. He serves on the Board of Directors for Access Worldwide (AWW) and the Jazz Foundation, and on the Northeastern Regional Board for Operation Hope. Mr. Curcio holds a Bachelor’s degree in Business Administration from State University of New York at Plattsburgh.
Didier Davydoff
President, IEM Finance
Founder of IEM-Finance and of the European Savings Institute (Observatoire de l’Epargne Européenne - OEE) Didier Davydoff had following functions:
• From 1981 to 1988, Associate Director at the Bank of France. His duties included producing Financial Accounts.
• From 1988 to 1994, Director of Research and Market Regulation at the COB (Commission des Opérations de Bourse)
• From 1994 to 1999, Director of Research and Strategy of Paris Bourse. His duties included representing Paris Bourse on the Board of STOXX Ltd (a joint venture of Dow Jones Company, the German, the French and the Swiss stock exchanges)
Didier Davydoff is a member of the advisory panel of financial services experts of the Committee on Economic and Monetary Affairs of the European Parliament.
The European Savings Institute (Observatoire de l’Epargne Européenne) is a not-for-profit association whose mission is to research on savings in Europe. The European Savings Institute has been working among others for the European Central Bank, the European Commission, the OECD.
IEM-Finance is a financial consultancy specialized in market organization, market regulation and financial innovation.
Richard DuFour
Executive Vice President, Chicago Board Options Exchange (CBOE)
Richard DuFour is an Executive Vice President of the Chicago Board Options Exchange. His current responsibilities include strategic planning, research, product development, international relations and the joint venture for trading single stock futures. In previous positions at the CBOE he spearheaded the planning and development of a new trading facility (1980-1984), established The Options Institute (1985) and was responsible for the Exchange’s marketing and public relations activities (1987-1989).
IOMA | August 2010 9
Prior to joining the CBOE in 1980, Mr. DuFour spent ten years in management consulting where he conducted and supervised a wide range of assignments. Areas in which he has conducted studies include strategy development, organizational analysis, financial feasibility, mergers, facilities planning and management information systems. During the period 1976-1980 he was responsible for a $125 million expansion program at Rush-Presbyterian-St. Luke’s Medical Center, a major university medical center in Chicago.
Mr. DuFour holds a bachelor’s degree from Notre Dame University and an MBA from the University of Michigan. He did post-graduate work at the University of Michigan in the Center for Far East Asian Studies. While affiliated with Rush Medical Center he held an appointment as an assistant professor in Health Systems Management and authored a number of articles on the future of the health care industry.
Mr. DuFour serves on the boards of OneChicago and of the Lincoln Park Renewal Corporation. He also serves as Secretary of the International Options Markets Association and is on the Working Committee of the World Federation of Exchanges. He is a member of the Economic Club of Chicago.
Christopher Edmonds
President, ICE Trust
Christopher Edmonds is President of ICE Trust, the wholly-owned credit default swap (CDS) clearing house of IntercontinentalExchange (NYSE: ICE). Mr. Edmonds was named to this post in February 2010. As president of ICE Trust, Mr. Edmonds oversees ICE’s U.S. credit derivatives clearing operations.
Prior to joining ICE, Mr. Edmonds was Chief Executive Officer of the International Derivatives Exchange Group LLC, (IDCG) a clearing house for interest rate swaps. Prior to IDCG, Mr. Edmonds was the Chief Development Officer for ICAP ENERGY LLC. Mr. Edmonds held a variety of positions at ICAP between 2002 and 2008, and at APB Energy LLC between 1997 and 2002. His professional career prior to APB Energy focused on advising businesses on strategic planning in the areas of technology, sales and marketing and operations.
Mr. Edmonds earned a Bachelor of Arts degree in Political Science from the University of Alabama at Birmingham and is Series 3 and Series 30 licensed.
Anna Ewing
Executive Vice President & Chief Information Officer, NASDAQ OMX
Anna Ewing is Executive Vice President and Chief Information Officer of the NASDAQ OMX Group (NASDAQ: NDAQ). At $23.9 trillion, it was ranked the world’s largest exchange in 2008 based on value traded on its markets.
Anna has over 25 years experience in delivering client-focused technology in the financial services industry. In her role at NASDAQ OMX, Anna is responsible Global Software Development, Global IT Services, and Market Technology, which provides a commercial technology offering for 70 exchanges and markets around the world. Integral to Ms. Ewing’s role is overseeing the exchange’s technology roadmap.
Most recently, Ms. Ewing has been the technology architect for NASDAQ OMX’s transformation from a single U.S. cash equities market to an exchange company with 22 markets around the globe, covering all major asset classes. In addition to the OMX merger, Ms. Ewing and her team have re-platformed company acquisitions including BX, formerly the Boston Exchange and NASDAQ OMX PHLX; launched a multi-lateral trading facility in London in just six months; and begun preparation for its Nordic markets to move to the INET platform in the fall of 2009. The Technology team at NASDAQ OMX has supported the launch of dozens of new products across all the company’s business units. All this was accomplished while providing 99.99+% uptime for its markets, which experienced record volumes during the financial crisis.
Prior to joining NASDAQ, Anna was with CIBC World Markets in New York and Toronto, where she served as Managing Director of Global Applications Services and as a founding member of CIBC.com. Before that, Ms. Ewing served as Vice President at Merrill Lynch, where she held various leadership positions within Technology. She is a graduate of Schulich School of Business at York University in Toronto.
Hugh Freedberg
Chairman, NYSE Liffe
Mr. Freedberg is Chairman, NYSE Liffe (designate) and a member of the Board of NYSE Liffe US. He was previously Group Executive Vice President and Head of Global Derivatives, a member of the NYSE Euronext Management Committee and a member of the European NYX Technology Board.
Mr. Freedberg, 63, began his career in financial services in 1975 at American Express, where he started as Marketing and Sales Director before being appointed a General Manager. In this position he was responsible for different markets/regions including UK and Ireland, Benelux, Southern Europe, Middle East and Africa and South East Asia. In 1986 he joined Salomon Inc as Chief Executive of The
10 IOMA | August 2010
Mortgage Corporation. In 1990 he became an Executive Director of the TSB Group and Chief Executive of its Insurance and Investment Services Division. In 1991 he was appointed Chief Executive of the Hill Samuel Banking, Investment & Insurance Group.
Other positions he held at TSB Group included Deputy Chief Executive of the Group from 1991 to 1996 and a Director of Macquarie Bank from 1994 to 1996. From 1996 to 1998 he was a Managing Partner at Korn Ferry International.
Mr. Freedberg is Chairman of the International Options Market Association (IOMA) and a member of The Worshipful Company of International Bankers.
Meyer S. Frucher
Vice Chairman, NASDAQ OMX
Meyer S. (Sandy) Frucher became vice chairman of the NASDAQ OMX Group when NASDAQ completed its acquisition of the Philadelphia Stock Exchange (PHLX) in July of 2008. He was previously chairman and chief executive officer of the Philadelphia Stock Exchange, appointed to the roles at the Philly exchange in June of 1998. Frucher also serves as a member of the board of directors of the Options Clearing Corporation.
Frucher oversaw the demutualization of the PHLX in 2004, the first floor-based exchange in the U.S. to convert from a seat-owned, mutual cooperative institution to a for-profit, shareholding company.
Prior to the PHLX, Frucher served as a management consultant to organizations including World Financial Properties Inc. (formerly Olympia and York). He served as executive vice-president of development for Olympia and York from 1988 to 1996. He served from 1984 to 1988 as president and CEO of the Battery Park City Authority in New York City. Frucher was chief labor negotiator for the state of New York from 1978 to 1983.
He is the founding chairman and current member of the board of the Massachusetts Museum of Contemporary Art.
Frucher received a Bachelor’s degree in Government from Columbia University and earned a Master of Public Administration degree from the John F. Kennedy School of Government, Harvard University.
Joseph Gawronski
President, Rosenblatt Securities
Joe Gawronski is the President and Chief Operating Officer of Rosenblatt Securities, an agency-only institutional brokerage firm founded in 1979. Headquartered in New York City, with a European office in Dublin, the firm represents traditional institutions, quants and portfolio trading customers in all global equity and ETF markets through its trading desk and via direct access to the NYSE floor, a service that it pioneered in the late 1980s. In addition, it has been at the forefront of embracing automation to enhance trading efficiency and the self-sufficiency of the buy-side, from creating DOT for non-member firms over fifteen years ago to offering DMA for ECN access and sophisticated algorithmic tools today. The firm believes that its responsibility lies not only in executing orders that are entrusted to it, but also helping clients identify the best tools for when they are trading themselves, use appropriately the tools selected, and navigate an increasingly complex equity marketplace. The firm accesses all exchanges, ECNs, crossing networks and dark pools that have meaningful liquidity and in its opinion can be safely used without information leakage or gaming. In addition, the firm provides analysis on the exchange and brokerage space to (i) traders to help them make strategic and tactical adjustments to their trading approaches based on market structure changes and new product developments and (ii) portfolio managers and analysts to add the unique, expert insights of a practitioner to their investment considerations.
Joe is formerly a securities lawyer with Sullivan & Cromwell, a Vice President in the equities division with Salomon Smith Barney and COO of Linx LLC, an electronic block trading system. He is an Allied Member of the NYSE, a member of the NYSE Hearing Board, a member of the Advisory Boards of both the Journal of Trading and Wall Street & Technology magazine, a term member of the Council on Foreign Relations and the author or co-author of several published papers on equity market structure and frequent lecturer, moderator and panelist on the topic. He received his B.A. in Public and International Affairs at Princeton’s Woodrow Wilson School and his J.D. from Harvard Law School. Joe can be reached at [email protected].
IOMA | August 2010 11
Gary Gensler
Chairman, CFTC
Gary Gensler was sworn in as the Chairman of the Commodity Futures Trading Commission on May 26, 2009. Chairman Gensler previously served at the U.S. Department of the Treasury as Under Secretary of Domestic Finance (1999-2001) and as Assistant Secretary of Financial Markets (1997-1999). He subsequently served as a Senior Advisor to the Chairman of the U.S. Senate Banking Committee, Senator Paul Sarbanes, on the Sarbanes-Oxley Act, reforming corporate responsibility, accounting and securities laws.
As Under Secretary of the Treasury, Chairman Gensler was the principal advisor to Treasury Secretary Robert Rubin and later to Secretary Lawrence Summers on all aspects of domestic finance. The office was responsible for formulating policy and legislation in the areas of U.S. financial markets, public debt management, the banking system, financial services, fiscal affairs, federal lending, Government Sponsored Enterprises, and community development. In recognition of this service, he was awarded Treasury’s highest honor, the Alexander Hamilton Award.
Prior to joining Treasury, Chairman Gensler worked for 18 years at Goldman Sachs, where he was selected as a partner; in his last role he was Co-head of Finance.
Chairman Gensler is the co-author of a book, The Great Mutual Fund Trap, which presents common sense investment advice for middle income Americans.
He is a summa cum laude graduate from the University of Pennsylvania’s Wharton School in 1978, with a Bachelor of Science in Economics and received a Master of Business Administration from the Wharton School’s graduate division in 1979. He lives with his three daughters outside of Baltimore, Maryland.
Takeshi Hirano
Head, Strategic Planning, Clearing and Settlement, Tokyo Stock Exchange, Inc.
Takeshi Hirano has been in charge of planning of TSE’s strategy for clearing and settlement area since he started his career in post trade business development at TSE in June 2000. He managed the establishment of Japan Securities Clearing Corporation, the first cross-market clearing house for listed equities in Japanese stock exchanges as Chief Manager of Business Set-up Office. Takeshi has been appointed as a member of variety of relevant committees in the industry with regard to the dematerialization of stock certificates in Japan, as well as an executive committee member of CCP12. He has MBA from Haas School of Business, UC Berkeley.
Todd Hohman
Managing Director, Quant Vol Trading, Goldman Sachs
Todd Hohman focuses on the Quantitative Volatility Trading businesses within the Securities Division of Goldman Sachs. He has spent time in New York, Chicago, Frankfurt and London participating in most local derivatives markets and is currently based in New York. Todd earned a BS and an MBA from the University of Illinois.
Jeromee Johnson
Vice President, Market Development, Head of BATS Options, BATS Exchange
Jeromee Johnson joined BATS Exchange in March 2009 as vice president of market development and head of BATS Options, the newest U.S. equity options exchange.
Previously Mr. Johnson was president of 3D Markets, a nationally recognized provider of software and technology for institutional equity options trading. He was instrumental in designing and launching Archangel, the first “dark pool” trading network in U.S. equity options.
Mr. Johnson is the author of a number of seminal industry titles including “Locating the Invisible: Aggregating Dark Book Liquidity” and “Trading at Light Speed: Analyzing Low Latency Market Data Infrastructure.” He is a frequent speaker at industry events and conferences and a regular fixture in financial media providing expert commentary on trading technology and financial markets regulation.
Prior to 3D Markets, Mr. Johnson was a senior analyst and consultant with TABB Group, the financial markets research and advisory firm. Before TABB, Mr. Johnson was director of product development and professional services for UNX, an agency brokerage and provider of electronic trading tools for institutional investors. He holds Series 4, 7, 24, 63 and 65 licenses.
12 IOMA | August 2010
Christopher Jones
Director, Head of Risk Management, LCH.Clearnet
Chris joined LCH in 1993 on the credit and membership side before assuming responsibility for credit in 1997. He moved into market risk and the development of new risk techniques for new services in 1998 and was heavily involved in the development of SwapClear and RepoClear in 1999. He developed the new VaR model (LCHC ERA) for cash equities in 2002 before assuming responsibility for the whole risk management department across both market and credit risk in 2003. Since that time he has implemented the ‘ground breaking’ default management arrangements for SwapClear as well as managing the defaults of Lehmans and near defaults of Refco and Enron. He has also developed new VaR algorithms for OTC interest rate swaps. He is currently chairman of the EACH Risk Management Committee.
He is married with two children and when he has the time is a keen golfer, surfer and snowboarder.
Gary Katz
President & Chief Executive Officer, International Securities Exchange
Gary Katz is President and Chief Executive Officer of the International Securities Exchange (ISE) and is a co-founder of the Exchange. Prior to assuming his current position, Mr. Katz served as Chief Operating Officer of ISE.
Mr. Katz is one of the principal developers of ISE’s unique options market structure - an auction market on an electronic platform. He is named as inventor or co-inventor on six patents that ISE has received or applied for relating to its proprietary trading system and technology.
Before joining ISE at its inception, Mr. Katz served from 1997 to 1998 as President and co-founder of K-Squared Research, LLC, a financial services consulting firm. From 1986 until 1997, he held several positions in the Options and Index Products Division at the New York Stock Exchange where he became Managing Director. During his tenure at NYSE, Mr. Katz also was a co-founder of The Options Industry Council, a trade group dedicated to promoting the equity options sector through the education of the investing public. Prior to 1986, Mr. Katz was an actuary with the Equitable Life Assurance Company and is an Associate of the Society of Actuaries.
Mr. Katz formerly was an Adjunct Professor of Statistics at the Stern School of Business, New York University, where he conducted classes in business mathematics applications and also taught classes in options strategies and pricing at the New York Institute of Finance. Mr. Katz has an MS in Statistics with Distinction from New York University and a BA from Queens College.
Mr. Katz serves on the Executive Board of Eurex and also represents ISE on the Board of Directors of The Options Clearing Corporation. He is also a member of the Board of Directors of Direct Edge Holdings, LLC.
Richard Ketchum
Chairman and Chief Executive Officer, FINRA
Richard Ketchum, 56, has been chief executive officer of NYSE Regulation, Inc., since 2006. He is a member of the NYSE Regulation board of directors and the NYSE Group Operations Committee.
Mr. Ketchum is also chairman of the board of the Financial Industry Regulatory Authority (FINRA). He also serves as chairman of the regulatory committee of the World Federation of Exchanges.
Mr. Ketchum had served as the first chief regulatory officer of the New York Stock Exchange since March 8, 2004. From June 2003 to March 2004, Mr. Ketchum was General Counsel of the Corporate and Investment Bank of Citigroup Inc., and a member of the unit’s planning group, Business Practices Committee and Risk Management Committee.
Previously, he spent 12 years at NASD and the NASDAQ Stock Market, Inc., where he served as president of both organizations.
Prior to working at NASD and NASDAQ, Mr. Ketchum was at the U.S. Securities and Exchange Commission for 14 years, eight of those as director of the division of Market Regulation.
Mr. Ketchum earned his J.D. from the New York University School of Law in 1975 and his B.A. from Tufts University in 1972. He is a member of the bar in both New York and the District of Columbia.
Elizabeth K. KingAssociate Director, Division of Trading and Markets, U.S. Securities and Exchange Commission
Elizabeth King is an Associate Director in the Division of Trading and Markets at the U.S. Securities and Exchange Commission. In this position, she directs the development of policy and regulatory recommendations for the Commission’s program for oversight of U.S. exchange-traded options and new derivative products, as well as the other U.S. securities exchanges and FINRA. She also is also responsible for developing and coordinating the Commission’s policy recommendations regarding the OTC derivatives markets. Ms. King joined the staff in 1993. Prior to joining the Commission, Ms. King was an associate at the law firm of Shaw, Pittman, Potts & Trowbridge. Ms. King has a J.D. from the University of Pennsylvania and an A.B. from Duke University.
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Kevin KingExecutive Vice President, Head of Risk Management Division, Hong Kong Exchanges and Clearing
Kevin joined Hong Kong Exchanges and Clearing Ltd. (HKEx) as EVP Head of Risk Management Division on March 31, 2008. HKEx operates the centralized securities and derivatives markets in Hong Kong and is also responsible for the front line regulation of listed issuers and for market surveillance. The Risk Management Division is responsible for the risk management functions within HKEx and is made up of 3 departments: Cash Clearing Risk Management; Derivatives Clearing Risk Management and ERM & Surveillance respectively.
Kevin has 33 years of broad based risk management and finance experience including corporate finance, risk management advisory and exchange/clearing house risk management. Before joining HKEx he was Vice President Risk Management for OMX Nordic Exchange in Stockholm, Sweden for 8 years. Prior to that he worked primarily in banking and investment banking in New York and Stockholm.
Kevin has a Bachelor of Arts-Economics from St. Lawrence University and a Masters Degree in Business Administration-Finance from Fordham University Graduate School of Business. Kevin is a member of the Global Association of Risk Professionals and the Professional Risk Managers’ International Association and is also a member of the Executive Committee of CCP 12.
John J. Lothian
President & Chief Executive Officer, John J. Lothian Company
John J. Lothian is the founder of MarketsWiki.
He is also a futures broker, newsletter editor and publisher, Commodity Trading Advisor (CTA) and industry consultant. Lothian is the president & CEO of John J. Lothian & Company, Inc., a National Futures Association member CTA. John is also the president of the Electronic Trading Division of The Price Group.
He is the editor and publisher of the John Lothian Newsletter and publisher of Environmental Markets Newsletter.
He is a 1983 graduate of Purdue University in West Lafayette, Indiana and holds a Bachelor of Science degree in General Management/Finance and a Bachelor of Arts in Mass Communications/Journalism.
John is Scoutmaster of Boy Scout Troop 117 of Elmhurst, IL and District Chairman of Potawatomi Trails District of Three Fires Council, Boy Scouts of America. He is also a referee with American Youth Soccer Organization.
Theodore Lubke
Senior Vice President, Bank Supervision Group, Federal Reserve Bank of New York
Theo Lubke is a Senior Vice President in the Bank Supervision Group at the Federal Reserve Bank of New York where he oversees efforts to improve the resiliency of the OTC derivatives infrastructure and heads the Financial Infrastructure Department. Prior to that, he managed the supervisory relationships with large, complex foreign banking organizations.
Prior to joining Bank Supervision, Mr. Lubke headed the Electronic Payments Function, where he managed the New York Fed’s Fedwire operations. Previously, he had been in the Research Group where his work primarily focused on risk management of wholesale payment and settlement systems. During that time, he represented the New York Fed on committees at the Bank for International Settlements coordinating the G-10 effort to reduce foreign exchange settlement risk and developing core principles for the design and oversight of payment systems.
Before joining the New York Fed in 1995, he worked on the staff of the National Economic Council at the White House. Previously, he had worked as an investment banking analyst at Lehman Brothers.
Mr. Lubke holds a B.A. from Harvard College and a Master of Public Policy from Harvard University’s Kennedy School of Government.
Stewart Macbeth
Managing Director, DTCC
Macbeth comes to DTCC with more than 15 years of OTC derivatives industry experience. He was most recently managing director, global head of operations risk and business architecture at UBS, a position he held since 2007. From 1996 to 2002, he ran fixed income derivatives operations globally for the firm; managing credit derivatives support activities, which also included designing and implementing settlement and confirmation applications. In 2002, he became global head of all OTC derivatives operations, at which time he assumed responsibility for equity derivatives.
Prior to UBS, Macbeth was at KPMG in London, in their financial services practice, where he qualified as a Chartered Accountant. He earned a Bachelor’s degree in mathematics from Nottingham University and a Masters degree from the University of London.
14 IOMA | August 2010
Martin Mannion
Chief Operating Officer, Citadel Execution Services
Martin Mannion is Chief Operating Officer of Citadel Execution Services (CES) of North America based in Chicago. CES is part of Citadel Securities and offers broker dealers a wide range of order routing and execution services across equities and all listed options products. Citadel’s automated model provides immediate access to all U.S. options exchanges. Citadel Securities is one of the largest liquidity providers in Equities & Options in The United States.
Mr. Mannion currently sits on the boards of DirectEdge Holdings, an electronic trading system for U.S.-listed equities, and EASDAQ, which owns and operates Equiduct Systems Ltd., an electronic exchange for European equities.
Prior to joining Citadel in 2004, Mr. Mannion spent 4 years at the NASDAQ Stock Market in the Transaction Services group.
Mr. Mannion holds a Bachelor’s of Arts in International Affairs from George Washington University in Washington, DC.
Michael March
Director of Business Development, LCH.Clearnet Ltd.
Michael March is Director, Business Development at LCH.Clearnet.
The Business Development team has been instrumental in the development of OTC cleared products. Starting with the introduction of a clearing service for interbank interest rate swaps in 1999, the team has gone on to develop OTC services in repo and bonds, energy, freight and emissions. More recently it has been involved in developing clearing services for Nodal Exchange, the new US power market and the new Hong Kong Mercantile Exchange (HKMEx).
He joined London Clearing House in September 1999, having spent some twenty five years working in credit and political risk securities. After 20 years as a specialist insurance broker, he joined Bank Austria in 1995, where he led the bank’s development of the then revolutionary concept of alternative risk transfer, specializing in the creation of support schemes for derivatives exchange clearing functions. From 1999 to 2008, he was Director of Corporate Communications for the Group.
Edwin Marcial
Chief Technology Officer, IntercontinentalExchange
Edwin Marcial has served as Chief Technology Officer of IntercontinentalExchange (NYSE: ICE) since its establishment in May 2000 and as a Senior Vice President since November 2002. Mr. Marcial is responsible for systems development and ICE’s overall technology strategy. He also oversees the software design and development initiatives of ICE’s information technology professionals in the areas of project management, software development and quality assurance.
Mr. Marcial has nearly two decades of experience building large-scale information technology systems in the energy industry. Prior to joining ICE, Mr. Marcial was on the software development team at Continental Power Exchange (CPEX), an electronic spot market for electric power. Before joining CPEX in 1996, Mr. Marcial led design and development teams at GE-Harris, building software application for the company’s energy management systems.
Mr. Marcial earned a Bachelor of Science degree in Computer Science from the College of Engineering at the University of Florida.
Bernardo Mariano
Analyst, ERDesk
Bernardo is an analyst at ERDesk covering exchanges and trading technology firms in the cash, derivatives, energy, and FX markets in the US, Europe, Asia, and Latin America. He has also has an extensive experience structuring private deals for the acquisition of mutual exchanges. Prior to joining ERDesk Bernardo worked as a Director for Instinet and later, CEO of Reuters’ Bondex. Bernardo has regularly been quoted in the media, including The Wall Street Journal, Financial Times, Traders Magazine, Brazil Economic, Traders Magazine and others. He holds an MS in Economics from The University of Illinois and a MIA in Finance from Columbia University.
Jacques Der Megreditchian
Chairman of the Board of Directors, RTS Exchange Chief Business Officer, Troika Dialog
In 2003 Jacques Der Megreditchian became Member of the RTS Board of Directors, bringing with him nearly 20 years’ experience in investment banking and brokerage, in both Western and Russian capital markets. In 2004 Mr. Der Megreditchian was elected Chairman of the RTS Board of Directors. Since 2006 Mr. Der Megreditchian has been a Member of the Board of Directors of the National Association of Stock Market Participants (NAUFOR).
IOMA | August 2010 15
Jacques Der Megreditchian holds a position of Chief Business Officer of Troika Dialog being in charge of all business divisions including global markets, investment banking, asset management, private banking, alternative investments and merchant banking. Previously from 2000 to 2009, Mr. Der Megreditchian was the Head of Global Markets at Troika Dialog.
Prior to Troika, from 1996 to 2000, Mr. Der Megreditchian was Deputy General Manager of Societe Generale in Moscow, where he was in charge of capital markets and investment banking. From 1993 to 1996, he was Chief Representative in Russia for Credit Commercial de France (CCF). He handled major advisory assignments during Russia’s early privatization programs and served as the Director of the Framlington Russian Investment Fund, a Luxembourg-based open-ended mutual fund (SICAV).
Prior to working in Russia, Mr. Der Megreditchian built a solid and diverse track record with CCF in Europe. From 1991 to 1993, he served as Deputy General Manager in Brussels where he was in charge of securities trading operations. From 1986 to 1991, he worked in the bank’s Paris division, first as a Dealer in the Treasury Department, then as an Interest Rate Dealer and then as Head of both Fixed Income (French market) and Proprietary Trading (North American and European markets). He initially joined CCF as an Equity Analyst in Paris in 1985.
Jacques Der Megreditchian graduated from European Business Institute, Paris in 1984 and from French Center for Financial Analysis (CFAF), Paris in 1987.
Dale Michaels
Managing Director, Credit & Risk Management, CME Group
Dale Michaels was appointed Managing Director, Credit & Risk Management of CME Group in August 2007. He is responsible for managing CME Clearing’s exposure to counterparty risk, including monitoring market volatility, setting minimum performance bond requirements, enhancing CME’s risk management systems and building new and enhanced margin algorithms.
Previously, Michaels served as Director, Risk Management of CME since 2001. During his tenure, he has played a key role in CME’s efforts to establish its historic clearing agreement with the Chicago Board of Trade® (CBOT®), including responsibility for margining issues, cross-margining agreement changes and development of new risk management tools. He also is responsible for the integration of NYMEX risk management and margins in conjunction with CME Group’s acquisition of NYMEX. Michaels most recently led CME Clearing’s development of financial safeguards and margin methodologies for clearing credit default swaps.
Michaels joined CME in 1995 as an Investigator in the company’s market regulation area. He joined the Clearing House’s Risk Management area in 1996 as a Risk Management Analyst, and he has held numerous roles and leadership positions in Risk Management since that time. Before joining CME, Michaels worked as a Treasury bond futures and options trader and as a Staff Economist and Financial Analyst at CBOT.
Michaels earned a bachelor’s degree in finance and economics from Illinois State University and a MBA degree in finance from DePaul University. He also holds a Chartered Financial Analyst designation.
Ravi Narain
Managing Director & Chief Executive Officer, National Stock Exchange of India
Name in Full: Ravi Narain
Date of Birth: August 19, 1955
Present Position: Managing Director and CEO, National Stock Exchange of India Limited (NSE)
Address: “Exchange Plaza”, Bandra - Kurla Complex,
Bandra (E), Mumbai - 400 051, India.
Education: Degrees in Economics from Cambridge University, UK and Business Administration (Finance) from the Wharton School, University of Pennsylvania, USA.
Positions:
• Part of the core team which established the NSE.
• Prior to joining NSE, worked at senior level positions with the Industrial Development Bank of India (IDBI).
• Chairman of National Securities Clearing Corporation Ltd. (NSCCL) and NSE.IT Ltd.
• As a Director on the Boards of the National Securities Depository Ltd. (NSDL) and National Commodity & Derivatives Exchange Ltd. (NCDEX)
• Associated with various committees of the Securities & Exchange Board of India (SEBI) and the Reserve Bank of India (RBI).
• Member of the core team which did the initial work for the establishment of the market regulator the Securities and Exchange Board of India (SEBI).
16 IOMA | August 2010
Eric Noll
Executive Vice President, Transaction Services, NASDAQ OMX
Eric W. Noll oversees the trading operations of all U.S. Transaction Services business including The NASDAQ Stock Market, NASDAQ OMX BX, NASDAQ OMX PHLX, The NASDAQ Options Market, The NASDAQ OMX Futures Exchange and strategic investments including International Derivatives Clearing Group. In addition, he is responsible for NASDAQ OMX Europe, the London-based multilateral trading facility.
Mr. Noll joined NASDAQ OMX from Susquehanna International Group, LLP where he served as Managing Director of SFG, and as Associate Director and Global Head of Strategic Relationships for SIG since 1994. During his time at Susquehanna, Eric oversaw all the exchange relationships, created the investment banking department, developed an institutional equity research department and was responsible for all options and equity order flows for the market-maker operation. He also managed new businesses, strategic investments including technology, investment banking, and private equity focused businesses, as well as acquisitions and international alliances.
Prior to his time at Susquehanna International Group, Mr. Noll held positions at the former Philadelphia Stock Exchange and The Chicago Board Options Exchange. He has a Master of Business Administration from the Owen Graduate School of Management at Vanderbilt University with a Finance Concentration and a Bachelor of Arts with a double major in Economics and Government from the Franklin and Marshall College. Mr. Noll is a Trustee of Franklin and Marshall College and is a Member of the Board of Visitors of the Owen Graduate School of Management.
Garry O’Connor
Chief Executive Officer, International Derivatives Clearing Group
Garry N. O’Connor is the Chief Executive Officer of IDCG.
Prior to joining IDCG, Mr. O’Connor spent seventeen years in the Investment Banking industry, pricing and managing interest rate derivative portfolios. He has held senior positions in Sydney, Tokyo, Hong Kong and New York with Bankers Trust and then Merrill Lynch.
During his time at Merrill Lynch, Mr. O’Connor held a number of roles managing interest rate derivatives risk including:
• leading the Australasian interest rate derivatives trading operation out of Sydney;
• leading the Japanese Yen swaps desk out of Tokyo;
• and establishing and managing a USD interest rate trading business in Hong Kong.
Most recently he was charged with establishing a North American presence in the European derivatives markets. At Bankers Trust, Mr. O’Connor managed interest rate, foreign exchange, and commodities risk in Auckland and in Sydney. He was also responsible for price making and risk management activities in Australian and New Zealand interest rate derivatives.
As the CEO of IDCG, Mr. O’Connor has testified on Capitol Hill, met with government regulators and spoken at numerous industry forums on the need for central counterparty clearing and the benefits of extending clearing to all markets participants. He previously served as IDCG’s Chief Product Officer and remains responsible for designing and implementing IDCG’s cleared interest rate derivative products. He has used his experience as an interest rate trader to design IDCG’s product specifications to be economically equivalent to over the counter market.
Mr. O’Connor received a BCom (Hons) from Otago University in 1992.
Steven M. Sears
Options Editor, Senior Special Writer, Barron’s
Steven M. Sears is the Options Editor for Barron’s and Barrons.com, the online component of The Dow Jones’ business and financial weekly publication. He writes the “Striking Price,” and “Striking Price Daily” columns, which focus on options trading, the stock market and investment trends.
In his career at Dow Jones, Mr. Sears has pioneered coverage of the options markets for Dow Jones Newswires, The Wall Street Journal and Barrons.com. He also has served as Director of Corporate Affairs at the International Securities Exchange, and as Senior Advisor to the Chairman of the Philadelphia Stock Exchange.
Mr. Sears is a member of the Economic Club of New York.
Rina Shafir
Senior Vice President, Trading & Clearing Department, Tel-Aviv Stock Exchange
Ms. Rina Shafir was born in 1963. She was nominated for her current position in January 2009.
Prior to joining the TASE, between the years 2005-2008, Ms. Shafir served as the CEO of Impact Investment Portfolio Management Ltd (Union Bank Group). From 1995 through 2005 she was the head of Union Bank’s Securities and Investment Consultancy Department. Between the years 1985-1995, Ms. Shafir has held various positions within the Israeli capital market.
IOMA | August 2010 17
Education:
1986 - Tel-Aviv University - B.A. in Economics (cum laude)
1989 - Tel-Aviv University - MBA (majored in Finance)
In addition, Rina Shafir is a member of the Haifa Music Center Board of Directors.
In 2006 Ms. Shafir received “The woman of the year” award from “Neta” - women in management, technology and business.
Jae Seung Shim
Executive Director, Derivatives Market Division, KRX
Jae Seung Shim was born in Daejeon, South Korea on August 23, 1959. He had worked for securities company and investment advisory firm over ten years until he moved to the Kofex (Korea Futures Exchange) in 1999. Since 2005, he has been working for the KRX (Korea Exchange), which was established with the merger between Kofex and KSE (Korea Stock Exchange). He was appointed to the Executive Director of Derivatives Market Division, KRX in 2009. Now he is responsible for the development of derivatives products and clearing & settlement of KRX.
Mr. Shim graduated from Yonsei University in Korea in 1981 and earned his MBA from the Graduate School of Yonsei University in 1985.
Maria Velentza Head of Unit G3 (Securities Markets) - DG Internal Market & Services, European Commission
Maria Velentza is the head of unit of the Securities Markets of the European Commission. She was born in Athens, Greece and has the Greek nationality. She’s a graduate of the German School of Athens and studied law at the University of Athens. She continued her post-university studies (DEA en Droit Communautaire) in European Law in Paris, Sorbonne (Paris II). She qualified as a lawyer in Greece in 1990. She has been working in the Commission since 1991 as a legal advisor in various sectors: enterprise policy (focusing small and medium sized enterprises); freedom of establishment and free movement of professionals and services; banking, insurance and payment systems ; better regulation, contract law, precautionary principle, late payments directive; pharmaceuticals She has been working in her current unit since October 2002. At present, her main responsibility are institutional and legal aspects of the securities markets, regulatory policy (for instance in the context of the “MIFID”, Market Abuse and Prospectus directives), Credit Rating Agencies, international discussions in the field of securities (e.g. on mutual recognition) and supervisory convergence. She is fluent in Greek, German, French, English and Spanish and she understands Italian and Portuguese. She has acquired some basic knowledge in Dutch and Swedish.
Michael Walinskas
Senior Vice President, Risk Management and Membership, OCC
Mr. Walinskas is a senior vice president in charge of Risk Management and Membership for The Options Clearing Corporation (OCC). Prior to his current position, Mr. Walinskas led Strategy and Business Development for OCC. He is also a former executive director of the Options Industry Council, an industry cooperative led by OCC. Mr. Walinskas joined OCC in 1999.
Mr. Walinskas served on the staff of the Securities and Exchange Commission (SEC) from 1990 to 1999. As a former associate director within the SEC’s Division of Market Regulation, Mr. Walinskas played a key role in the development of SEC policy on many important equity and derivatives markets issues, and served as a manager responsible for regulatory oversight of the U.S. stock and options exchanges.
Mr. Walinskas received a J.D. degree from Georgetown University and a B.A. degree from the University of Maryland.
Scot E. Warren
Managing Director, Equity Index Products & Index Services
Scot E. Warren has served as Managing Director, Equity Index Products & Index Services of CME Group since February 2010. He is responsible for overseeing the company’s equity product line and index services business. Prior to assuming his current role, Warren most recently served as Managing Director, Equity Products since joining CME Group in 2007.
Warren also serves as CEO of CME Group Index Services LLC, a joint venture company between CME Group and Dow Jones, which continues to do business as Dow Jones Indexes and includes the Dow Jones Industrial Average as well as approximately 130,000 index properties.
Before joining CME Group, Warren gained more than 16 years of equity trading management experience. He most recently served as Vice President, Manager Trading and Business Analysis, Goldman Sachs and Co. While at Goldman, Warren managed their equity wholesaling to broker dealers and developed businesses strategies that analyzed client and product profitability and business performance. Prior to joining Goldman Sachs, he managed equity and option execution and clearing businesses for ABN AMRO in Chicago and was a senior consultant for Arthur Andersen & Co. for financial services firms.
He earned a bachelor’s degree in accounting from Pennsylvania State University and a master’s of science degree in financial markets and trading from the Illinois Institute of Technology Stuart School of Business.
18 IOMA | August 2010
Tony WeeresingheDirector, Global Development, London Stock Exchange Group; and Chief Executive Officer, Millennium IT
Personal profile
Founder CEO of Millennium Information Technologies
• Built a very innovative company with many patents
• Grew the company from 12 to 450 employees today
• Implemented the 1st event driven stock exchange in the world in 1977
• Interview by world business review Host Caspar Wienberger (Former United States Secretary of Defense
• Chairman, Forbes Magazine) for innovative technology on distributed Fault Tolerance.
• Was the first to raise international venture capital for a Sri Lankan software company.
• Was the 1st company to build a Campus style development center in Sri Lanka.
• Was the 1st to introduce voice over IP solutions in Sri Lanka.
• Prestigious Customers as ICAP and Amex for the trading system.
• Introduced technology for a very creative cost cutting operation and employment productivity tools at the company
• Created a unique culture in the company where the attribution is less than 5%
• Chairman and founder of E-Channelling the 1st e-commerce company in Sri Lanka.
• Responsible for giving the vision and building the World’s fastest trading system today.
• Merged with London Stock Exchange after winning the automation project to change all automation in the London Stock Exchange group.
• Awarded Presidential award of Sri Lanka Sikhamani (This is given to the outstanding contribution made to the country, it is given only to 200 living citizen’s)
Position
• CEO and Managing Director, Millennium Information Technologies Limited: Jan. 1996 - Present
• CEO & President, Millennium IT (USA) Inc: Sep 2001 - Present
• Director of Business Development & Executive Committee Member, London Stock Exchange Group: Sep 2009 - Present
• CEO, Open Systems Computerland: 1994 - Dec. 1995
• Country Manager Oracle, Data Management Systems Ltd: 1991 - 1993
• Software Manager, Data Management Software Limited: 1984 - 1985
Marcus Zickwolff
Executive Director, Eurex Group
Since July 2007, Marcus Zickwolff has been Head of Trading & Clearing System Design of Deutsche Börse AG’s derivatives exchange Eurex in Frankfurt. He is responsible for the design and implementation management of the Eurex® system for trading and clearing of derivatives as well as of the CCP system for clearing of securities and the central Risk Engine system.
In 1992 Marcus joined the Information Technology Section of Deutsche Terminbörse (DTB). After contributing decisively to Deutsche Börse´s reorganization and the incorporation of DTB, Marcus was responsible Program Manager for the successful launch of the first Xetra® Releases from 1995 to 1997. Xetra® is the electronic trading system of Deutsche Börse Group’s cash market. As Head of the Xetra® Market and Product Development Department he worked for the business development of the cash market, which included the introduction of a CCP for equities in 2002. From 2003 Marcus led a group-wide System Design Department within Deutsche Börse AG’s Functionality Division covering trading, clearing, settlement and securities financing systems.
Since April 2007, Marcus is Secretary of the European Association of Central Counterparty Clearing Houses (EACH) and joined the Executive Committee of CCP12 - the Global Association of Central Counterparties - as of April 2008.
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WFE IOMA/IOCA membersMrs. Adriana SanchesEquity Products ManagerBM&FBOVESPA S.A.
Mrs. Angela ValderramaVice PresidentBolsa de Valores de Colombia S.A.
Mr. Mohamed Dzaiddin Hj AbdullahChairmanBursa Malaysia Berhad
Mr. KS ChongChief Executive OfficerBursa Malaysia Derivatives Berhad
Mr. Sree Kumar Ck NayarGeneral ManagerBursa Malaysia Derivatives Berhad
Mr. William BrodskyChairman & Chief Executive OfficerChicago Board Options Exchange
Mr. Richard DuFourExecutive Vice PresidentChicago Board Options Exchange
Ms. Carol KennedyVice President, Corporate CommunicationsChicago Board Options Exchange
Mr. Dale MichaelsManaging Director, Credit and Risk ManagementCME Group
Mr. Scot WarrenManaging Director, Equity Index Products and Index ServicesCME Group
Mr. Thomas KrabbeDirector, Corporate Finance - International CME Group
Mr. Nicholas Guy ReynoldsonDirector, Business DevelopmentCME Group
Mr. Sam CoadyManaging Director, Corporate FinanceCME Group
Mr. Chris LaRosaDirector, Association RelationsCME Group
Mr. John PietrowiczManaging Director, Business Development & Corporate FinanceCME Group
Mr. David ShulerManaging Director, Alliance and Venture ManagementCME Group
Mr. Sean KeatingManaging Director, NYMEX OperationsCME Group
Mr. Joe RaiaManaging Director, Energy & Metals ProductsCME Group
Mr. Paul HuguesSr. Business Development AnalystCME Group
Mr. Andreas PreussDeputy Chief Executive Officer Deutsche Börse AG
Mrs. Sujata WirschingEurex Clearing AG
Mr. Thomas BookMember of the Executive BoardEurex Clearing AG
Mr. Marcus ZickwolffExecutive DirectorEurex Group
Mr. Richard KetchumChairman & Chief Executive OfficerFINRA
Mr. Kevin KingExecutive Vice President, Head of Risk Management DivisionHong Kong Exchanges and Clearing
Mr. Christopher S. EdmondsPresidentICE Trust U.S. LLC
Mr. Thomas FarleyPresident/Chief Operating OfficerICE Futures, U.S.
Mr. Edwin MarcialChief Technology OfficerIntercontinentalExchange ICE
Mr. David KrellChairmanInternational Securities Exchange - ISE
Mr. Gary KatzPresident & Chief Executive OfficerInternational Securities Exchange - ISE
Mr. Thomas AscherChief Strategy OfficerInternational Securities Exchange - ISE
Mr. Jae Seung ShimExecutive Director, Derivatives Market DivisionKorea Exchange
Mr. Sukho JungSenior Vice PresidentKorea Exchange
Mr. Michael MarchDirector of Business DevelopmentLCH.Clearnet Limited
Mr. Christopher JonesDirector, Head of Risk ManagementLCH.Clearnet Limited
Mr. Tony WeeresingheDirector, Global DevelopmentLondon Stock Exchange Group
Mr. Ignacio SolloaDeputy Chief Executive OfficerMEFF
Mr. Jorge AlegriaChief Executive OfficerMercado Mexicano de Derivados (MEXDER)
Mr. Igor MarichMICEX
Mr. Robert GreifeldChief Executive OfficerNASDAQ OMX Group
Mr. Meyer S. FrucherVice ChairmanNASDAQ OMX
Ms. Anna EwingExecutive Vice President & Chief Information OfficerNASDAQ OMX
Mr. Eric NollExecutive Vice President, Transaction ServicesNASDAQ OMX
Mr. Michael BeaverManaging DirectorNASDAQ OMX
Mr. Charles MackDirectorNASDAQ OMX
Mr. Bryan ChristianNASDAQ OMX
Mr. Barry NobelTransaction ServicesNASDAQ OMX PHLX
Mr. Tom WittmanPresidentNASDAQ OMX PHLX
Mr. Ben CraigPresidentNASDAQ OMX Futures Exchange
List of participants
20 IOMA | August 2010
Mr. Michael WestAVP - US OptionsThe NASDAQ Stock Market
Mr. Ravi NarainManaging Director & Chief Executive OfficerNational Stock Exchange of India Limited
Mr. Thomas F. CallahanExecutive Vice President and Head of NYSE Liffe U.S. NYSE Euronext
Mr. Edward BoyleExecutive Vice President, OptionsNYSE Euronext
Mr. Hendrik KoppeDirectorNYSE Euronext
Mr. Hugh FreedbergChairmanNYSE Liffe
Mr. Jesper von ZweigbergkSenior Vice President, Head of DerivativesOslo Børs
Dr. Jianyu ChenDerivatives DeptShenzhen Stock Exchange
Mr. Jilin LiuDeputy Director, IT Engineering DeptShenzhen Stock Exchange
Mr. Yufeng WangIT Engineering DeptShenzhen Stock Exchange
Mr. Hong ZhaoSystem Operation DeptShenzhen Stock Exchange
Mr. Sheng ZouAssistant PresidentShenzhen Stock Exchange
Mrs. Agnes SiewSenior Vice PresidentSingapore Exchange
Dr. Rinjai ChaiyasutVice PresidentStock Exchange of Thailand
Mr. Steve WangPresident & Chief Executive OfficerTaiwan Futures Exchange (TAIFEX)
Mr. Chin-Ho LiaoJunior AssociateTaiwan Futures Exchange (TAIFEX)
Mr. Chao-Zon YangSenior Executive Vice PresidentTaiwan Stock Exchange Corp.
Ms. Shan-Ling HeAssociateTaiwan Stock Exchange Corp.
Ms. Ming-Chieh HsuehAssociateTaiwan Stock Exchange Corp.
Ms. Rina ShafirSenior Vice President, Trading. & Clearing Dept.Tel-Aviv Stock Exchange
Ms. Sharon LavyDerivatives Unit ManagerTel-Aviv Stock Exchange
Mr. Stewart MacbethManaging DirectorThe Depositary Trust & Clearing Corporation
Mr. Michael WalinskasSenior Vice President, Risk Management and MembershipThe Options Clearing Corporation (OCC)
Mr. Takeshi HiranoHead, Strategic Planning, Clearing and Settlement Dept.Tokyo Stock Exchange, Inc.
Mr. Tsuyoshi OtsukaRepresentative and Deputy General Manager, NY Rep. OfficeTokyo Stock Exchange, Inc.
Mr. Adam MaciejewskiMember of the Management BoardWarsaw Stock Exchange
Mrs. Beata JaroszMember of the Management BoardWarsaw Stock Exchange
Mr. Jing ZhangAssistant PresidentZhengzhou Commodity Exchange
Mr. Xueqin WangSenior Specialist of R&D DepartmentZhengzhou Commodity Exchange
Mr. Guangpo JiSenior Specialist of R&D DepartmentZhengzhou Commodity Exchange
Mr. Chao ZhangDirector of Clearing DepartmentZhengzhou Commodity Exchange
Other WFE affiliates, and correspondents Dr. Ghaleb MahmassaniVice ChairmanBeirut Stock Exchange
Mr. Kuo-Huei NingSenior Executive Vice PresidentGreTai Securities Market
Ms. Yu-Ting ChenGreTai Securities Market
Mrs. Ha Nguyen Thi VietDirector of Research & Development DepartmentHoChiMinh Stock Exchange
Mrs. Thanh Pham Thi NgocSenior Officer-International Cooperation DepartmentHoChiMinh Stock Exchange
Mr. Joseph RizzelloChief Executive OfficerNational Stock Exchange
Mr. Donald CalvinDirectorNational Stock Exchange
Mr. Jacques der MegreditchianChairman of the Board of Directors RTS Exchange
Mr. Andrey SalaschenkoDirector of Dept of Interaction with Authorities and OrganizationsRTS Exchange
IOMA | August 2010 21
Speakers and guestsMr. John MathiasConsultantAequitas Associates
Mr. Steven M. SearsOptions Editor, Senior Special WriterBarron’s
Mr. Jeromee JohnsonVice President, Market DevelopmentHead of BATS OptionsBATS Exchange, Inc.
Mr. Andre CapponPresidentThe CBM Group, Inc.
Mr. Stephan MignotManaging DirectorThe CBM Group, Inc.
Mr. Gary GenslerChairmanCFTC
Mr. Gaolong HanExecutive Vice PresidentChina Securities Depositary and Clearing Corp. Ltd - Shenzhen
Mr. Guobiao XieChina Securities Depositary and Clearing Corp. Ltd - Shenzhen
Mr. Andrew KolinskyPresidentCitadel Execution Services
Mr. Martin MannionChief Operating Officer Citadel Execution Services
Mr. Bernardo MarianoAnalystERDesk
Mr. Michael CurcioExecutive Vice President and President, E*TRADE Securities
Ms. Cora KlenaSr. Manager, Corporate CommunicationsE*TRADE Securities
Mr. Noel DalzellVice PresidentE*TRADE Securities
Ms. Maria VelentzaHead of Unit G3 (Securities Markets), DG Internal Markets & ServicesEuropean Commission
Mr. Patrick PearsonHead of Financial Markets InfrastructureEuropean Commission
Mr. Theodore LubkeSenior Vice President, Bank Supervision GroupFederal Reserve Bank of New York
Mrs. Judith HardtSecretary GeneralFederation of European Securities Exchanges - FESE
Mr. Todd HohmanManaging Director, Quant Vol TradingGoldman Sachs
Mr. Didier DavydoffPresidentIEM Finance
Mr. Garry O’ConnorChief Executive OfficerInternational Derivatives Clearing Group
Mr. John J. LothianPresident & Chief Executive OfficerJohn J. Lothian Company
Mr. Kevin GouldPresidentMarkit
Mr. Adam KanslerGeneral CounselMarkit
Ms. Karen WuertzSenior Vice President, Planning & DevelopmentNational Futures Association
Mr. Ireneusz LazorExecutive Vice PresidentPolish Power Exchange
Mr. Joseph GawronskiPresidentRosenblatt Securities Inc.
Mr. Justin SchackDirectorRosenblatt Securities Inc.
Mr. Jianchuan LiShenzhen Securities Communication Co. Ltd
Ms. Munizeh MajidProgram Officer (Safe Member Exchanges Affairs)South Asian Federation of Exchanges
Mr. Kevin McPartlandSenior AnalystTABB Group
Mr. Joshua GiordanoNew York RepresentativeTokyo Commodity Exchange
Ms. Elizabeth K. KingAssociate Director, Division of Trading & MarketsU.S. Securities and Exchange Commission
WFEMr. Thomas KrantzSecretary General
Ms. Sibel YilmazCorporate Communications Manager
22 IOMA | August 2010
2009 Derivatives market survey
Conducted by WFEWith the help of Didier Davydoff and Grégoire Naacke IEM Finance
May 2010
IOMA | August 2010 23
24 Introduction
24 Offers of derivatives
27 The global derivatives market
29 Exchange and products trends 30 A – Equity products
44 B – Interest rate products
51 C – Currency products
55 D – Commodity derivatives
62 Gathering statistics on retail trading
63 Clearing of derivatives transactions
65 Conclusion
Contents
Every effort has been made to ensure that the information in this survey is accurate at the time of printing, but the Secretariat cannot accept responsibility for errors or omissions.
24 IOMA | August 2010
Introduction
This report is the result of the annual survey conducted by the World Federation of Exchanges for the International Options Markets Association (IOMA) derivatives exchanges. This report deals with the trading of derivatives products and covers 52 exchanges. Some of these exchanges trade in a wide range of derivatives contracts, while many specialize in a single area of the market. The survey results were analyzed into seven groups representing underlying assets:
• Single equity
• Equity indices
• Exchange Traded Funds
• Short-term interest rates (STIR)
• Long-term interest rates (LTIR)
• Currencies
• Commodities
The survey was compiled from questionnaire responses sent by IOMA members as well as data from exchange websites. The authors wish to thank exchanges which responded to the questionnaire and especially to exchange staff who gave further assistance in response to enquiries.
The report begins with an overview of the offering of exchanges in terms of listed products. The section “The Global Derivatives Market” describes the overall developments in derivative volumes. The section “Exchange and Product Trends” examines volumes and value at each exchange within each major product type. It shows changes from 2008 for all exchanges. The study ends with “Concluding Remarks”, which raise further questions for consideration.
Offers of derivatives
The financial crisis has slowed the pace of financial innovation and in 2009 few exchanges have added new classes of underlyings to their offerings of listed products. Only the Tel-Aviv Stock Exchange started trading in single equity options. Whereas several exchanges introduced stock futures in previous years, this trend stopped and one exchange withdrew these products. Some changes also occurred in the listing of STIR derivatives, with the Singapore Exchange dropping the options and Budapest Stock Exchange adding futures. Osaka Stock Exchange newly listed FX margin contracts and some exchanges already active in currency derivatives launched new products, for example six “E-micro” currency pairs were newly proposed by CME group to retail investors with contract sizes divided by ten compared to standard currency futures. Eventually, the most significant move was the introduction of ETF options in Asia, a class of products which was previously a specificity of the American markets (the only exception being Eurex): two Japanese exchanges, Osaka Stock Exchange and Tokyo Stock Exchange introduced ETF options.
All three time zones have grown during the decade. Even though the Americas time zone is still the largest region (although much less than before), the Asia - Pacific time zone share has grown significantly, while the EAME (Europe - Africa - Middle East) area has almost remained stable.
IOMA | August 2010 25
The average for the number of different product lines (excluding exotic products) is 4.5 and the median is 4. The Australian Securities Exchange is the only exchange whose offers include all classes. At the other end of the spectrum, 10 exchanges offer only one class of products, the majority being Asian exchanges offering commodity futures.
Exchanges have numerous projects for launching new types of contracts. Among exchanges that have answered the question relating to their prospects for listing new products, 13 said they did plan on offering new products outside of their current asset classes during 2010 while 15 said the opposite. Most frequently cited classes of products are equity derivatives and exotic derivatives like futures and options on renewable energy certificates. The Warsaw Stock Exchange has the most numerous projects, including equity and currency options, commodities futures, metal futures and exotic futures.
CBOE intends to launch new dividends, volatility and variance derivatives, following the introduction in 2006 of the VIX options which have been increasingly traded. After having launched Euro STOXX dividend index futures in 2008, Eurex also announced dividend futures on individual stocks while NYSE Liffe will launch CAC 40 dividend futures.
Several exchanges announced or started trading in new commodities derivatives:
• CME Group has projects on GSCI crude oil and gold.
• Johannesburg Stock Exchange on gold, platinum, sweet crude oil futures.
• Eurex launched agricultural futures (mainly potatoes), gold and silver derivatives.
• BM&FBOVESPA will register OTC trades in flexible options on soybean futures.
• TAIFEX launched gold options on January 19th, 2009, and also have new product.
Products added or dropped during 2009
Added Dropped
Stock options Tel-Aviv Stock Exchange
Stock futures MexDer
ETF options Osaka Stock Exchange, Tokyo Stock Exchange
STIR options Singapore Stock Exchange
STIR futures Budapest Stock Exchange
26 IOMA | August 2010
Number of product lines
0 1 2 3 4 5 6 7 8 9 10 11 12
List of product lines
• Single stock options• Single stock futures• Stock index options• Single index futures• ETF options• STIR options• STIR futures• LTIR options• LTIR futures• Currency options• Currency futures• Commodity options• Commodity futures
RTSRofex
MICEXZhengzhou Commodity Exchange
Tokyo Grain ExchangeShanghai Futures Exchange
One ChicagoDalian Commodity Exchange
Central Japan Commodity ExchangesBoston Options Exchange
Multi Commodity Exchange of India (incl. MCX-SX)Tokyo Financial Exchange Inc.
NYSE Arca OptionsMercado a Término de Buenos Aires
London Metal ExchangeICE Futures EuropeICE Futures Canada
Buenos Aires Stock ExchangeBombay Stock Exchange
NYSE AmexNASDAQ OMX PHLX
Wiener BörseWarsaw Stock Exchange
Turkish Derivatives ExchangeThailand Futures Exchange (TFEX)
Oslo BørsInternational Securities Exchange (ISE)
Bursa MalaysiaBorsa Italiana
Athens DerivativesTel-Aviv Stock Exchange
Singapore ExchangeOsaka Stock Exchange
MEFFICE Futures U.S.
Tokyo Stock Exchange GroupNational Stock Exchange of India
Chicago Board Options Exchange (CBOE)TAIFEX
NASDAQ OMX Nordic ExchangesHong Kong Exchanges
Budapest Stock ExchangeMexDer
Korea ExchangeMontréal Exchange
EurexCME Group
NYSE Liffe (European markets)Johannesburg Stock Exchange
BM&FBOVESPAAustralian Stock Exchange
IOMA | August 2010 27
The global derivatives market
16.6 billion derivative contracts were transacted in 2009 on exchanges worldwide (7.8 billion futures and 8.8 billion options). The financial crisis translated into a slight decline compared to 2008 (16.4 billion contracts). Such stabilization is a break in the trend of uninterrupted growth recorded in all previous years since 1998.
Options Futures
7.8
8.8
2009 worldwide derivatives volume
16.6 billion contracts traded
Derivatives volume growth (billion contracts)
18
16
14
12
10
8
6
4
2
0
Options Futures Total
2003 2004 2005 2006 2007 2008 2009
28 IOMA | August 2010
For the first time, the futures market stopped growing in 2009. The growth rate was slightly positive for options (+3%) but was at his lowest level since 2004.
In previous years, the variation of global activity of derivatives exchanges was heavily influenced by the weight of the Korea Exchange in equity index options trading. In 2009, KOSPI 200 options traded on the Korean market still accounted for a huge share (18%) of global trading of derivatives on all underlying classes but their growth rate was at a similar level as the rest of the market.
Derivatives volume growth rate
40
30
20
10
0
Options Futures Total
11% 10%
20%
10%
3%
15% 16%
34%
28%
13%
-0.34%
1%
9%
13%
19%
23%
11%
5%
2004/03 2005/04 2006/05 2007/06 2008/07 2009/08
IOMA | August 2010 29
Exchange and products trends
For the first time trading volumes of equity derivatives decreased in 2008 due to a small growth rate of options while futures showed a negative growth rate.
As in 2008, negative growth rates were observed in all groups of interest rate products.
Currency derivatives surged (+48%), driven by futures traded in India.
Eventually, the growth of commodity derivatives accelerated. Two Chinese exchanges, the Dalian Stock Exchange and the Shanghai Futures Exchange, strongly contributed to this growth. Alone they represented more than half of the global number of contracts traded in commodity futures.
2003
Contracts traded by product group (billion contracts)
Equity and interest rate Currency and commodity
Equity Interest rate Currency Commodity
12
10
8
6
4
2
0
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2005 2006 2007 200920082004
2009 volume and 2009/2008 growth rate
Single stock Stock index ETF STIR LTIR Currency Commodities
Contracts traded (millions)Options 3 374 3 869 955 397 78 37 132
Futures 501 1 928 - 1 006 896 923 2 515
Growth rate of contracts tradedOptions 2% 5% 11% -9% -33% -37% -14%
Futures -39% -16% - -21% -29% 75% 54%
30 IOMA | August 2010
A – Equity products
Equity products still represent the dominant share of derivatives trading although their relative weight slightly decreased in 2009 to 64% (against 67% in 2008). In 2009 equity derivatives developed during a period of declining volatility after record levels observed at the end of 2008.
Global equity indices volatility
Dow Jones Nikkei 225 Dow Jones STOXX 600
120%
100%
80%
60%
40%
20%
0%
Feb. 05 Jun. 05 Oct. 05 Feb. 06 Jun. 06 Oct. 06 Feb. 07 Jun. 07 Oct. 07 Feb. 08 Jun. 08 Oct. 08 Feb. 09 Jun. 09 Oct. 09 Feb. 10
(Annualized volatility of global indexes over 20 days)
IOMA | August 2010 31
For the first time since 2002, the traded volumes in stock futures and stock index futures decreased in 2009. Stock options and index options (including ETF options) grew at a slow pace.
2003
Equity products volume growth (billion contracts)
Options Futures
Stock options Stock futures Index & ETF options Index futures
6.0
5.0
4.0
3.0
2.0
1.0
0
2005 2006 2007 200920082004
2.5
2.0
1.5
1.0
0.5
0.0
32 IOMA | August 2010
(1): Excluding OTC business registered on the exchange(2): Including options on ETF(3): Excluding REPOs(4): Including LEPOs
2009/2008 % Change in stock options volume
% -75 -25-50 0 25 50 75 100 125 150
4 576
844
649
94
56
41
27
5
2
1
0
-1
-1
-2
-11
-13
-20
-21
-22
-24
-26
-33
-41
-44
-44
-63
2
Stock options
In 2009, the growth rate of trading volumes was insignificant following a decrease in 2008. This stabilization of the market represents a break after several years of tremendous growth.
The United States continues to dominate the stock options market, with four of the world’s five most active exchanges (ISE, CBOE, NASDAQ OMX PHLX and NYSE Arca Options).
In South America, BM&FBOVESPA surged in 2009 (+56%) and became the third biggest exchange in the world for its trading volumes. Petrobas and Vale options remain the most actively traded stock options in the world.
In Europe, Spain experienced one of the strongest growths (+94%) but on all other European exchanges volumes decreased or remained stable.
Most of the high growth rates in 2009 were observed in the Asia-Pacific region, whilst on the most important exchange in this region for stock options, namely the Hong Kong Exchange, volumes decreased 13%. Volumes remained much smaller in Asia than in the Americas and Europe.
Korea Exchange TAIFEX
Tokyo Stock Exchange Group MEFF(1)
BM&FBOVESPA NYSE Amex
National Stock Exchange of India Chicago Board Options Exchange (CBOE)
Borsa Italiana NYSE Arca Options
Buenos Aires Stock Exchange NYSE Liffe (European markets)(1)
Montréal Exchange(1)
International Securities Exchange (ISE) Australian Securities Exchange ((incl. SFE)(4)
Hong Kong Exchanges(1)
Johannesburg Stock Exchange NASDAQ OMX PHLX
Boston Options Exchange(2)
Osaka Stock Exchange Eurex(1)
NASDAQ OMX Nordic Exchanges MexDer
Wiener Börse Oslo Børs
Athens Derivatives Exchange(3)
ALL EXCHANGES
IOMA | August 2010 33
(1): Excluding OTC business registered on the exchange (2): Including options on ETF (3): Including LEPOs
NB: Notional values are not available for ISE, Buenos Aires, NYSE Amex, NYSE Arca Options, NASDAQ OMX PHLX.
Stock options notional value (USD trillions)Stock options contract volume (millions)
2000 400 600 800
6972
2020
2525
43
18
48
178
143
197
121
271
538
350
604
687
29
36
42
138
142
146
171
274
426
547
635
672
2008
2009
Stock options contract volume by geographical zone (millions)
2008 2009
3 500
3 000
2 500
2 000
1 500
1 000
500
0
Americas Asia - Pacific Europe - Africa - Middle East
2 7892 902
78 80
487 421
0.50.0 1.0 1.5 2.0 2.5 3.0
2008
2009
0.010.00
0.010.01
0.040.02
0.040.06
0.110.07
0.070.08
0.050.09
0.170.13
0.260.20
0.460.33
0.880.35
2.72
00.50.40
0.860.93
2.19
Other exchanges
Borsa Italiana
Buenos Aires Stock Exchange
NASDAQ OMX Nordic Exchanges
MEFF(1)
Hong Kong Exchanges(1)
Boston Options Exchange(2)
NYSE Liffe (European markets)(1)
Eurex(1)
NYSE Amex
NYSE Arca Options
NASDAQ OMX PHLX
BM&FBOVESPA
Chicago Board Options Exchange (CBOE)
International Securities Exchange (ISE)
Other exchanges
TAIFEX
Boston Options Exchange(2)
MEFF(1)
Borsa Italiana
Montréal Exchange(1)
National Stock Exchange of India
Hong Kong Exchanges(1)
Australian Securities Exchange (incl. SFE)(3)
NYSE Liffe (European markets)(1)
Eurex(1)
NASDAQ OMX Nordic Exchanges
BM&FBOVESPA
Chicago Board Options Exchange (CBOE)
34 IOMA | August 2010
(1) Excluding OTC business registered on the exchange (2) Including OTC business registered on the exchange
Several exchanges include a registration facility for OTC trades. In Europe, MEFF recorded very rapid growth of its OTC processing services on individual stock options (+156%), but NYSE Liffe recorded a decline of its OTC processing services (-29%).
Stock options: OTC trades processed by exchanges
Contracts traded (millions)OTC contracts processed by exchanges as a percentage of
total contracts traded (OTC+ on-exchange)
2009 2008 Growth rate Contracts tradedNotional value of contracts traded
Number of trades
Eurex 158 152 4% 52% 53% 3%
Hong Kong Exchanges 5 7 -16% 12% 8% NA
NYSE Liffe (Bclear) 29 41 -29% 17% 28% 0%
MEFF 34 13 156% 49% 43% 8%
Montréal 0.17 0.20 -16% 1% NA 0%
The most actively traded stock options in the world
Underlying equity Exchange
Contracts traded(millions)
Marketshare
Option premium(USD billion)
2009 2008 2009 2008 2009 2008
Vale R Doce PNA BM&FBOVESPA 265.5 130.0 7.4% 3.7% 14.5 6.9
Petrobras PN BM&FBOVESPA 260.8 210.2 7.2% 6.0% 12.7 14.5
Citigroup Inc. CBOE 67.2 19.6 1.9% 0.6% 5.0 5.9
Citigroup Inc. ISE 54.9 20.9 1.5% 0.6% NA NA
Bank of America CBOE 40.5 11.9 1.1% 0.3% 4.7 3.6
Bank of America ISE 28.3 NA 0.8% NA NA NA
General Electric Company CBOE 26.2 14.2 0.7% 0.4% 2.3 4.3
Citigroup Inc. NASDAQ OMX PHLX 22.0 NA 0.6% NA NA NA
General Electric Company ISE 17.4 9.1 0.5% 0.3% NA NA
ING NYSE Liffe 17.2 23.2 0.5% 0.7% 2.6 7.3
Allianz Eurex 16.1 (1) 54.0 (2) 0.4% 1.5% 2.4 (2) 9.1 (2)
Bank of America NASDAQ OMX PHLX 15.7 NA 0.4% NA NA NA
Apple Inc. ISE 15.6 20.1 0.4% 0.6% NA NA
Apple Inc. CBOE 13.4 20.6 0.4% 0.6% 6.4 6.2
JP Morgan CBOE 12.8 NA 0.4% NA 2.6 NA
Wells Fargo & Company ISE 12.7 NA 0.4% NA NA NA
Royal Dutch Shell NYSE Liffe 10.9 12.6 0.3% 0.4% 1.9 3.2
UBS Eurex 10.6 (1) 12.9 (2) 0.3% 0.4% 1.1 (2) 6.7 (2)
Schweizerische Rückversicherung Eurex 10.3 (1) 9.5 (2) 0.3% NA 0.4 (2) NA
Mittal Steel NYSE Liffe 10.1 NA 0.3% NA 2.7 NA
IOMA | August 2010 35
% -60 -20-40 0 20 40 60
3 698
220
148
105
40
36
6
-13
-26
-27
-29
-44
-58
-63
-80
-100
-39
80 100 120
Stock futures
After having grown more rapidly than other segments of the derivatives market in previous years, the stock futures market declined in 2009. The annual growth rate was negative (- 39%).
The stock futures market remains located in both the Europe Africa region and in the Asia Pacific region. Due to a fivefold decrease of trading volumes on the Johannesburg Stock Exchange, the Europe Africa region was overtaken by the Asia Pacific region. The relative decrease of volumes on National Stock Exchange of India was offset in this region by the surge of the Australian Securities Exchange. In North America the only exchange offering this class of products for trading is One Chicago where volumes remained modest.
2009/2008 % Change in stock futures volume
(1): Excluding OTC business registered on the exchange (2): Including CFDs (3): Excluding REPOs (4): Including Stock Index and ETF Futures
(1): Excluding OTC business registered on the exchange (2): Including CFDs (3): Excluding REPOs (4): Including Stock Index and ETF Futures
Stock futures contract volume (millions)0 200100 300 400 500
7
4
4
16
4
12
46
431
5
3
5
7
11
137
45
86
69 142
226161
Other exchanges
One Chicago(4)
Athens Derivatives Exchange(3)
NASDAQ OMX Nordic Exchanges
Borsa Italiana
Korea Exchange
MEFF(1)
Johannesburg Stock Exchange
Australian Securities Exchange (incl. SFE)(2)
National Stock Exchange of India
2008
2009
Stock futures notional value (USD billions)0 250 500 750 1 000
Other exchanges
NYSE Liffe (European markets)(1)
NASDAQ OMX Nordic Exchanges
Budapest Stock Exchange
Athens Derivatives Exchange(3)
Korea Exchange
Johannesburg Stock Exchange
Borsa Italiana
MEFF(1)
National Stock Exchange of India
2008
2009
4
-4
9
1
7
6
6
45
90
1 001
32
26
5
3
5
6
13
30
59
968
48
2
Thailand Futures Exchange (TFEX)(1)
Korea ExchangeBorsa Italiana
Australian Securities Exchange (incl. SFE)(2)
Warsaw Stock ExchangeAthens Derivatives Exchange(3)
Hong Kong Exchanges(1)
Budapest Stock ExchangeMEFF(1)
Wiener BörseOne Chicago(4)
Eurex(1)
National Stock Exchange of IndiaOslo Børs
NASDAQ OMX Nordic ExchangesNYSE Liffe (European markets)(1)
Johannesburg Stock Exchange MexDer
ALL EXCHANGES
36 IOMA | August 2010
Stock futures contract volume by geographical zone (millions)
2008 2009
700
600
500
400
300
200
100
0
Americas Asia - Pacific Europe - Africa - Middle East
4 3
307340
509
158
Regarding stock futures traded over-the-counter (OTC) and registered on the Exchanges in Europe, NYSE Liffe (Bclear) recorded rapid growth (+64%), while annual growth for both Eurex and MEFF was negative (-10% and -25% respectively).
On Eurex, OTC trades represented a near totality of the overall trading volumes in stock futures.
Stock futures: OTC trades processed by exchanges
Contracts traded (millions)OTC contracts processed by exchanges as a percentage of
total contracts traded (OTC+ on-exchange)
2009 2008 Growth rate Contracts tradedNotional value of contracts traded
Number of trades
Eurex 117 130 -10% 99.8% 99.7% 55%
NYSE Liffe (Bclear) 198 121 64% 99% 99.5% 68%
MEFF 30 39 -25% 40% 41% 3%
IOMA | August 2010 37
(1): Excluding OTC business registered on the exchange (2): Excluding REPOs (3): Including LEPOs (4): Volatility index options
Index options
Like the equity options market, index options have experienced a slowdown in the growth of traded volumes after several years of rapid growth. Nonetheless, the annual growth rate remained positive (+5% and +3% excluding figures for Korea).
Trends in 2009 varied considerably between markets in the western and eastern regions of the globe.
Volumes continued to increase in Korea, where 76% of the global volumes were traded in 2009. The number of traded contracts more than doubled on the National Stock Exchange of India and on the Thailand Futures Exchange (TFEX). The National Stock Exchange of India thus became the second market in the world in terms of number of contracts traded. The S&P CNX Nifty Index Options ranks second in the list of the most actively traded index options in the world, behind the KOSPI 200. But given the small size of this contract, it ranks much lower in term of value of the option premium paid. Positive growth rates in volumes were also observed on the Hong Kong Exchanges (+18%), the Australian Securities Exchange (+17%) and the Osaka Stock Exchange (+9%).
In North America, Europe and Africa, all exchanges except the Warsaw Stock Exchange showed negative growth rates. Despite a fall of 25% of its volume traded, the Dow Jones Euro STOXX 50 option ranks third in term of number of contracts exchanged and first for the value of premium paid. The historical SP 500 options traded on CBOE remain the second most active contract in the world for the value of premium paid. Furthermore some innovative products are still progressing despite the market turmoil. The most significant is the volatility index option (VIX) that CBOE launched in 2006. VIX options regularly win market shares and in 2009 it was ranked eighth in the list of the most actively traded index options in the world (against twelfth in 2008).
In South America, BM&FBOVESPA continued to grow rapidly.
% -60 -20-40 0 20 40 60 80 100 120
113
109
33
18
17
9
6
-12
-14
-14
-14
-15
-20
-22
-23
-23
-24
-25
-26
-28
-28
-28
-29
-30
-33
-47
-51
-53
-55
28
National Stock Exchange of India Thailand Futures Exchange (TFEX)
BM&FBOVESPA Warsaw Stock Exchange Hong Kong Exchanges(1)
Australian Securities Exchange (incl. SFE)(3)
Osaka Stock Exchange Korea Exchange
Montréal Exchange Athens Derivatives Exchange(2)
NYSE Liffe (European markets)(1) Chicago Board Options Exchange (CBOE)(4)
Tokyo Stock Exchange Group Eurex(1) TAIFEX
MexDer ICE Futures U.S.
Tel-Aviv Stock Exchange Bombay Stock Exchange
International Securities Exchange (ISE) NASDAQ OMX Nordic Exchanges
Wiener Börse CME Group
Johannesburg Stock Exchange Borsa Italiana
NASDAQ OMX PHLX MEFF(1)
Singapore Exchange NYSE Amex
Oslo Børs ALL EXCHANGES 5
2009/2008 % Change in index options volume
38 IOMA | August 2010
Index options contract volume (millions)
Other exchanges
Johannesburg Stock Exchange
International Securities Exchange (ISE)
NASDAQ OMX Nordic Exchanges
CME Group
Osaka Stock Exchange
NYSE Liffe (European markets)(1)
Tel-Aviv Stock Exchange
TAIFEX
Eurex(1)
Chicago Board OptionsExchange (CBOE)(2)
National Stock Exchange of India
Korea Exchange
0 100 200 300 400 500 600 700
37
15
18
18
44
32
44
81
98
120
259
2 7662 921
151
27
10
13
14
32
35
37
62
76
96
223
321
2008
2009
Index options notional value (USD trillions)
0 10 20 30 40
2008
2009
0.90.7
0.30.6
1.10.7
2.21.4
2.81.6
5.73.1
7.33.6
25.116.6
42.840.3
(1: Excluding OTC business registered on the exchange (2): Volatility index options
NB: Notional values are not available for ISE and Osaka Stock Exchange.
Index options contract volume by geographical zone (millions)
2008 2009
3 500
3 000
2 500
2 000
1 500
1 000
500
0
Americas Korea Exchange Europe - Africa - Middle EastAsia - Pacific (excl. Korea Exchange)
336 277
2 7662 921
293289 229442
0.71.4
Other exchanges
Hong Kong Exchanges (1)
TAIFEX
National Stock Exchange of India
Tel-Aviv Stock Exchange
NYSE Liffe (European markets)(1)
Eurex(2)
CME Group
Chicago Board Options Exchange (CBOE)(4)
Korea Exchange
IOMA | August 2010 39
(1): Excluding OTC business registered on the exchange (2): Including OTC business registered on the exchange
Regarding stock index options traded OTC and registered on exchange, the Hong Kong Exchanges with a 71% increase registered the fastest annual growth rate.
Stock index options: OTC trades processed by exchanges
Stock exchange
Contracts traded (millions)OTC contracts processed by exchanges as a percentage of
total contracts traded (OTC+ on-exchange)
2009 2008 Growth rate Contracts tradedNotional value of contracts traded
Number of trades
BM&FBOVESPA 1.1 1.0 18% 37% 44% 12%
Eurex 306 395 -22% 76% 76% 6%
Hong Kong Exchanges 3 1 90% 35% 33% 1%
NYSE Liffe (Bclear) 26 23 11% 41% 53% 0%
MEFF 3 6 -52% 38% 38% 2%
The most actively traded index options in the world
Underlying index Exchange
Contracts traded (millions)
Market sharein 2009
Option premium(USD billions)
2009 2008 Total Ex. Korea 2009 2008
Kospi 200 Korea Exchange 2 921 2 766 69.4% 227.1% 202.1 257.9
S&P CNX Nifty Index NSE India 321 151 7.6% 25.0% 24.9 17.1
Euro Stoxx 50 Eurex 300(2) 401(2) 7.1% 23.3% 431.2(2) 740.8(2)
S&P 500 CBOE 155 179 3.7% 12.0% 403.5 621.3
TAIFEX TAIFEX 72 93 1.7% 5.6% NA NA
TA 25 Tel-Aviv Stock Exchange 62 81 1.5% 4.8% 18.0 29.3
Nikkei 225 Osaka Stock Exchange 35 32 0.8% 2.7% 55.5 48.6
Volatility Index Options CBOE 33 26 0.8% 2.6% 5.2 5.2
FTSE 100 (incl. Index FLEX Options) NYSE Liffe(2) 33 31 0.8% 2.5% 76.3 90.7
S&P 500 and E-MINI S&P 500 CME Group 28 39 0.7% 2.2% 3 219.6 NA
DAX Eurex 25(1) 105(2) 0.6% 2.0% 86.4(2) 133.7(2)
AEX NYSE Liffe(2) 25 28 0.6% 1.9% 19.4 33.5
40 IOMA | August 2010
Index futures
As for single stock futures, the number of stock index futures traded decreased significantly in 2009 (-16%).
In the Americas, trading decreased 18%. In the United States, the world’s biggest exchange in terms of volumes traded, namely CME Group, experienced one of the biggest decreases (-21%). However, CME Group still accounted for 37% of global volumes. On the contrary, the number of trades increased 132% on ICE Futures U.S, but this exchange is still a minor player for this class of contracts in the US. In Canada, the growth rate was negative (-12%). In South America, volumes decreased, by 5% on the biggest exchange, BM&FBOVESPA, but increased 4% on MexDer.
In the Europe, Africa and Middle East region, volumes decreased 16%. The sharpest decrease was observed on Eurex (-23%) so that the market share in Europe of this Exchange dropped from 65% in 2008 to 60% in 2009. The second most active exchange in the region, namely NYSE Liffe, decreased 12%. Four exchanges had positive growth rates in 2009, namely Tel-Aviv Stock Exchange, Turkish Derivatives Exchange, Warsaw Stock Exchange and Wiener Börse.
In Asia, volumes remained stable. The two biggest exchanges, National Stock Exchange of India and Osaka Stock Exchange had negative growth rates (-3% and -1% respectively) but the decrease was much less pronounced than the one observed on other large exchanges for index futures. Moreover, three Asian exchanges showed vivid growth, the Taiwan Futures Exchange, the Thailand Futures Exchange and the Korea Exchange. The latter climbed to third place in the world for the notional value of its trading.
(1): Excluding OTC business registered on the exchange (2): Including CFDs (3): Excluding REPOs (4): Volatility index futures
% -100 -25-75 -50 0 25 50 75 100
294
132
61
30
25
20
9
7
4
0
-1
-2
-3
-5
-5
-12
-13
-13
-14
-15
-16
-16
-19
-19
-20
-21
-23
-32
-89
-100
-13
2009/2008 % Change in index futures volume
Tel-Aviv Stock Exchange ICE Futures U.S.
Turkish Derivatives Exchange TAIFEX
Korea Exchange Thailand Futures Exchange (TFEX)
Warsaw Stock Exchange Wiener Börse
MexDer Chicago Board Options Exchange (CBOE)(4)
Osaka Stock Exchange Hong Kong Exchanges(1)
National Stock Exchange of India BM&FBOVESPA
Australian Securities Exchange (incl. SFE)(2) Montréal Exchange
Johannesburg Stock Exchange Singapore Exchange
NASDAQ OMX Nordic Exchanges Tokyo Stock Exchange Group
NYSE Liffe (European markets)(1)
Athens Derivatives Exchange(3)
MEFF(1)
Borsa Italiana Budapest Stock Exchange
CME Group Eurex(1)
Bursa Malaysia Oslo Børs
Bombay Stock Exchange ALL EXCHANGES
IOMA | August 2010 41
(1): Excluding OTC business registered on the exchange (2): Including CFDs
NB: Notional values are not available for ICE Futures US and Singapore Exchange.
Index futures contract volume (millions)
Other exchanges
Warsaw Stock Exchange
Tokyo Stock Exchange Group
Johannesburg Stock Exchange
BM&FBOVESPA
NASDAQ OMX Nordic Exchanges
ICE Futures U.S.
TAIFEX
Hong Kong Exchanges(1)
Singapore Exchange
Turkish Derivatives Exchange
Korea Exchange
NYSE Liffe (European markets)(1)
Osaka Stock Exchange
National Stock Exchange of India
Eurex(1)
CME Group
0 200 400 600 800
59
12
19
19
30
39
17
32
43
60
40
66
101
131
202
439
42
13
16
17
29
34
39
41
42
52
65
83
85
130
196
336
708
2008
2009
898
Index futures notional value (USD trillions)
2008
2009
Other exchanges
Turkish Derivatives Exchange
Johannesburg Stock Exchange
Montréal Exchange
BM&FBOVESPA
Borsa Italiana
MEFF(1)
Australian Securities Exchange (incl. SFE)(2)
National Stock Exchange of India
TAIFEX
Tokyo Stock Exchange Group
Osaka Stock Exchange
Hong Kong Exchanges(1)
NYSE Liffe (European markets)(1)
Korea Exchange
Eurex(1)
CME Group
0 10 20 30 40 50
0.80.2
0.10.2
0.50.3
0.60.4
0.70.5
1.10.6
1.30.7
1.00.8
0.90.8
1.01.2
2.11.4
5.3
2.8
8.2
5.6
29.2
54.6
3.5
4.1
4.7
6.0
15.9
33.3
Index futures volume by geographical zone (millions)
2008 2009
1 000
800
600
400
200
0
Americas Asia - Pacific Europe - Africa - Middle East
571
952
575
782
684
571
42 IOMA | August 2010
OTC registration of stock index futures decreased everywhere except for NYSE Liffe (Bclear) (+52%).
ETF options
Trading on ETF options increased 11% in 2009. The ETF options market remains mainly a US market, with very low volumes in Europe (Eurex and NYSE Liffe) and in Asia. This reflects the uneven development of the underlying market of ETFs which first appeared at the beginning of the 1990’s in the US, and only ten years later in Europe. Moreover, the European market is still fragmented with several issuers competing on the same product. For example, there are 32 different ETFs on the Dow Jones Euro STOXX 50 index.
In the United States, ETF options decreased less than index options in 2009. Volumes decreased 16% on CBOE (against 19% for index options), 9% on the International Securities Exchange (against 26% for index options) and 2% on NYSE Amex (against 53% for index options). The third most active exchange in the United States for ETF options trading, namely NYSE Arca options, increased 1%.
ETF options are also traded on BM&FBOVESPA and Montréal Exchange, but volumes are very small compared to the United Sates.
2009/2008 % Change in ETF options volume
Stock index futures: OTC trades processed by exchanges
Stock exchange
Contracts traded (millions)OTC contracts processed by exchanges as a percentage of
total contracts traded (OTC+ on-exchange)
2009 2008 Growth rate Contracts tradedNotional value of contracts traded
Number of trades
Eurex 59 73 -19% 15% 12% 0%
Hong Kong Exchanges 1 2 -14% 3% 3% 0%
NYSE Liffe (Bclear) 8 5 52% 9% 10% 0%
MEFF 0.7 1.3 -49% 7% 10% 0%
% -100 -25-75 -50 0 25 50
Australian Securities Exchange (incl. SFE)
BM&FBOVESPA
Montréal Exchange
NYSE Arca Options
NYSE Amex
Hong Kong Exchanges
Chicago Board Options Exchange (CBOE)
International Securities Exchange (ISE)
NYSE Liffe (European markets)
Eurex
ALL EXCHANGES
1 300
174
11
1
-2
-2
-16
-9
-73
-99
4 100
IOMA | August 2010 43
NB: Notional values are not available for NYSE Amex, NYSE Arca Options and ISE.
* Including CBOE, ISE, NYSE Arca, NYSE Amex and NASDAQ OMX PHLX
The most actively traded ETF options in the United States
Contracts traded(millions)
Marketshare
2009 2008 2009 2008
S&P 500 ETF Options 348 321 49.6% 37.8%
PowerShares QQQ ETF Options 148 222 21.1% 26.1%
Financial Select Sector SPDR ETF Options 88 120 12.6% 14.1%
iShares Russell 2000 ETF Options 73 152 10.5% 17.9%
iShares MSCI Emerging Markets ETF Options 44 35 6.2% 4.1%
ETF options contract volume (millions)
Other exchanges
Montréal Exchange
NYSE Amex
NASDAQ OMX PHLX
NYSE Arca Options
International Securities Exchange (ISE)
Chicago Board Options Exchange (CBOE)
0 100 150 200 250 300 350
00
13
7977
NA175
146148
301
330
274
277
2008
2009
ETF options contract value (USD billions)
Other exchanges
Montréal Exchange
Chicago Board Options Exchange (CBOE)
0 500 1 000 1 500 2 000 2 500
3.20.8
1.819.6
2 4081 655
2008
2009
ETF options contract volume by geographical zone (millions)
2008 2009
1 000
800
600
400
200
0
Americas Asia - Pacific Europe - Africa - Middle East
0.12
856
0.12
955
0.340.01
44 IOMA | August 2010
B – Interest rate products
Trading in all types of interest rate products diminished in 2009 for the second consecutive year.
Overall, traded volumes were down 23%, the largest decline for the year being on long term interest rate options.
STIR options and futures
Since the last quarter of 2008 Short Term Interest Rate derivatives have been evolving in a context of near-zero Central Banks’ interest rates.
The market decline for STIR derivatives accelerated in 2009, with options decreasing 9% and futures down 21%. However, the two largest markets showed contrasting trends. The Eurodollar options and futures traded on CME Group decreased sharply, 30% and 27% respectively. Meanwhile, the contracts traded on NYSE Liffe either increased slightly (options: +2%) or decreased less (futures: -12%). NYSE Liffe overtook CME Group as the world’s most active market for STIR options. The fall in liquidity of STIR options traded on CME Group translated into a 39% decrease of the open interest at the end of 2008 compared to the end of 2007. Open interest only partly recovered in 2009. Open interest also fell on futures in 2008, but it returned to normal levels on Eurex, while it worsened on CME Group.
Most trading in the CME Group is concentrated on Eurodollar futures which remain the most active STIR contracts in the world despite a fall from 597 million to 437 million contracts. Eurodollar options are also still the most active STIR options globally, but the Euribor options follow just behind.
The resistance of the NYSE Liffe options is attributable to the Three Months Euribor and Euribor Mid Curve contract which grew by more than 20% while Three Months Sterling contracts declined. Conversely, the Euribor futures declined while sterling futures remained stable.
Other markets offering STIR options include BM&FBOVESPA whose options more than doubled in 2009 while futures diminished. On MexDer the LTIR introduced in 2007 overtook STIR futures.
All other exchanges where STIR options are traded declined.
2003
Interest rate products volume growth (billion contracts)
Futures Options
STIR futures STIR options LTIR futures LTIR options
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
2005 2006 2007 200920082004
IOMA | August 2010 45
a) STIR options
NB: Notional values are not available for Tokyo Financial Exchange Inc.
% -100 -25-75 -50 0 25 50 75 100 125
Chicago Board Options Exchange (CBOE)BM&FBOVESPA
NASDAQ OMX Nordic ExchangesNYSE Liffe (European markets)
Montréal ExchangeCME Group
Australian Securities Exchange (incl. SFE)Tokyo Financial Exchange Inc.
ALL EXCHANGES
385
111
86
2
-17
-30
-87
-97
-9
2009/2008 % Change in STIR options volume
229
STIR options contract volume (millions)
Other exchanges
NASDAQ OMX Nordic Exchanges
BM&FBOVESPA
CME Group
NYSE Liffe (European markets)
3000 100 200
11
21
187
45
161
190
2008
2009
20
STIR options notional value (USD trillions)
Other exchanges
Montréal Exchange
CME Group
NYSE Liffe (European markets)
3000 100 200
2008
2009
0.250.03
0.260.21
229161
234221
STIR options contract volume by geographical zone (millions)
2008 2009
300
250
200
150
100
0
Americas Asia - Pacific Europe - Africa - Middle East
2
250
0
206187 191
46 IOMA | August 2010
b) 2009/2008 % Change in STIR futures volume
% -100 -90 -80 -70 -60 -50 -40 -30 -20 -10 0
BM&FBOVESPA
NYSE Liffe (European markets)
NASDAQ OMX Nordic Exchanges
Montréal Exchange
Australian Securities Exchange (incl. SFE)
CME Group
MexDer
Bursa Malaysia
Tokyo Financial Exchange Incl.
Eurex(1)
Singapore Exchange
TAIFEX
Hong Kong Exchanges(1)
ALL EXCHANGES
-35
-10
-12
-18
-23
-25
-32
-42
-21
-43
-71
-89
-89
(1): Excluding OTC business registered on the exchange
NB: Notional values are not available for Tokyo Financial Exchange Inc. and NASDAQ OMX Nordic Exchange.
STIR futures notional value (USD trillions)
Other exchanges
Montréal Exchange
BM&FBOVESPA
Australian Securities Exchange (incl. SFE)
NYSE Liffe (European markets)
CME Group
0 200100 300 500400 600
2008
2009
1.60.9
97
98
2417
438335
599439
STIR futures contract volume (millions)
Other exchanges
Montréal Exchange
Tokyo Financial Exchange Incl.
NASDAQ OMX Nordic Exchanges
Australian Securities Exchange (incl. SFE)
MexDer
BM&FBOVESPA
NYSE Liffe (European markets)
CME Group
0 100 200 300 400 500 600
21
108
22
17
24
62
189
342
598
13
14
18
42
170
302
438
2008
2009
-27
IOMA | August 2010 47
STIR futures contract volume by geographical zone (millions)
2008 2009
1 000
900
800
700
600
500
400
300
200
100
0
Americas Asia - Pacific Europe - Africa - Middle East
47
859
31
658
359316
LTIR options and futures
Among all classes of products, the decline of long term interest rate products was the worst in 2009. The crisis of confidence triggered by Lehman’s collapse had a very significant negative impact on the liquidity of the market. The global open interest in LTIR options and futures at the end of 2008 had fallen 45% and 35% respectively compared to the end of 2007. The market went through a quieter period over 2009 but the open interest in futures did not increase significantly during the year and the increase of 22% in the open interest in options was not sufficient to recover to the levels observed before the crisis.
This unfavorable trend mainly reflects the situation of the largest markets, Eurex and CME Group, where options traded declined 32% and 36% respectively, while futures declined 4% and 33% respectively. Meanwhile, smaller market places grew rapidly: Johannesburg Stock Exchange, NYSE Liffe, and ASX for options; Bursa Malaysia, Korea Exchange and Johannesburg Stock Exchange for futures.
Despite the decline of their recorded volumes, EUREX and CME Group still hold an overwhelming market share for LTIR derivatives trading globally, amounting to 93% for options and 89% for futures. The Euro-Bond futures on Eurex and the 10 Year Treasury Note futures on CME kept their leading position globally although volumes decreased by more than one quarter for the second consecutive year.
In the Americas, LTIR options are also traded on the Montréal Exchange, the Buenos Aires Stock Exchange and CBOE but volumes are low. As far as LTIR futures are concerned, volumes traded on other exchanges in the Americas decreased in Montréal, on BM&FBOVESPA and on MexDer.
In the Europe, Africa and Middle East region it is also worth noting that the surge in the number of LTIR futures recorded on the Johannesburg Stock Exchange in 2008 continued in 2009 with a 174% increase in volumes.
In the Asia Pacific region, only two exchanges list LTIR options, namely the Tokyo Stock Exchange and the Australian Securities Exchange: the latter recorded a sharp increase (especially in terms of notional value) while the former remained stable. As for futures, the Korea Exchange continued its momentum from the previous year, while ASX, Singapore Exchange and Tokyo Stock Exchange recorded lower volumes again.
48 IOMA | August 2010
a) LTIR options
2009/2008 % Change in LTIR options volume
% -100 -25-75 -50 0 25 50 75 100 125
Johannesburg Stock Exchange Chicago Board Options Exchange (CBOE)Australian Securities Exchange (incl. SFE)
Tokyo Stock Exchange GroupEurex(1)
CME GroupMontréal Exchange
Buenos Aires Stock ExchangeALL EXCHANGES
174
62
56
-0.38
-32
-36
-47
-52
-33
(1): Excluding OTC business registered on the exchange
(1): Excluding OTC business registered on the exchange
NB: Notional values are not available for Tokyo Stock Exchange Group.
LTIR options contract volume (millions)
0 20 40 60 80 100
0.1
1
2
14
98
0.5
2
2
10
63
2008
2009
LTIR options notional value (USD trillions)
Other exchanges
Eurex(1)
CME Group
0 10 20 30 40
0.22008
2009
0.1
22
4727
LTIR options contract volume by geographical zone (millions)
2008 2009
120
100
80
60
40
20
0
Americas Asia - Pacific Europe - Africa - Middle East
4
98
5
63
1410
Other exchanges
Australian Securities Exchange (incl. SFE)
Tokyo Stock Exchange Group
Eurex(1)
CME Group
IOMA | August 2010 49
b) LTIR futures
(1): Excluding OTC business registered on the exchange
(1): Excluding OTC business registered on the exchange
NB: Notional values are not available for Singapore Exchange, NASDAQ OMX Nordic Exchange.
50
220
2009/2008 % Change in LTIR futures volume
% -100 -25-75 -50 0 25
148
29
26
20
-1
-4
-13
-16
-28
-29
-31
-33
-36
-78
-81
-29
LTIR futures contract volume (millions)
0 100 200 300 400 500 600 700
1.0
0.8
3
7
8
11
16
26
39
536
615412
0.8
0.7
3
5
6
7
20
25
34
383
2008
2009
LTIR futures notional value (USD trillions)
0 50 100 150 200
0.14
0.69
2
3
5
10
86
165
0.06
0.47
2
3
4
7
59
97
2008
2009
Bursa Malaysia Turkish Derivatives Exchange
MEFF(1) Korea Exchange
Johannesburg Stock Exchange MexDer
NYSE Liffe (European markets) Australian Securities Exchange (incl. SFE)
Singapore Exchange Montréal Exchange
Eurex(1)
NASDAQ OMX Nordic Exchanges CME Group
Tokyo Stock Exchange Group TAIFEX
BM&FBOVESPA ALL EXCHANGES
Other exchanges
Singapore Exchange
MexDer
Montréal Exchange
NASDAQ OMX Nordic Exchanges
Tokyo Stock Exchange Group
Korea Exchange
NYSE Liffe (European markets)
Australian Securities Exchange (incl. SFE)
Eurex(1)
CME Group
Other exchanges
Montréal Exchange
Korea Exchange
Australian Securities Exchange (incl. SFE)
NYSE Liffe (European markets)
Tokyo Stock Exchange Group
Eurex(1)
CME Group
50 IOMA | August 2010
LTIR futures contract volume by geographical zone (millions)
2008 2009
700
600
500
400
300
200
100
0
Americas Asia - Pacific Europe - Africa - Middle East
67
626
62
420
571
414
IOMA | August 2010 51
C – Currency products
Due to the very rapid development of currency futures in India, currency derivatives experienced the highest growth rate in 2009 (+63%) when compared to other segments of the derivatives market. However, when National Stock Exchange of India and Multi Commodity Exchange of India are excluded from the statistics, the growth rate of traded volumes in 2009 is negative (-10%).
With 37 million contracts traded in 2009, currency options remain the smallest segment of organized markets.
Currency products volume growth (billion contracts)
2003
Futures Options
Currency futures Currency options
1.0
0.8
0.6
0.4
0.2
0
0.10
0.08
0.06
0.04
0.02
0.0
2005 2006 2007 200920082004
52 IOMA | August 2010
a) Currency options
The growth rate of currency options volumes was negative in 2009 for all the stock exchanges except Montréal Exchange.
With 58% of traded currency options worldwide, BM&FBOVESPA remains the leading exchange for this category of product in terms of contract volumes. Nevertheless, contracts are smaller than those traded on CME Group which dominates the market in terms of notional value.
In the Europe, Africa and Middle East region, the most active exchange was the Tel-Aviv Stock Exchange with 8.1 million contracts traded in 2009.
There is no trading on currency options in the Asia Pacific region at present.
2009/2008 % Change in currency options volume
50% -100 -25-75 -50 0 25
-3
-19
-26
-29
-49
-68
-80
-87
-37
Currency options contract volume (millions)
0 5 10 15 20 25 30 35
0.5
1.7
0.4
5.5
3.9
5.6
11.0
30.6
0.3
0.3
0.4
0.7
1.2
4.5
8.1
21.6
2008
2009
Currency options notional value (USD billions)
Other exchanges
BM&FBOVESPA
CME Group
0 250 500 750
2008
2009
76
2817
851643
NB: Notional values are not available for ISE, Johannesburg Stock Exchange, NASDAQ OMX PHLX, Tel-Aviv Stock Exchange.
26Montréal Exchange
NYSE Liffe (European markets)
CME Group
Tel-Aviv Stock Exchange
BM&FBOVESPA
Budapest Stock Exchange
NASDAQ OMX PHLX
International Securities Exchange (ISE)
Johannesburg Stock Exchange
ALL EXCHANGES
Other exchanges
International Securities Exchange (ISE)
NYSE Liffe (European markets)
Johannesburg Stock Exchange
NASDAQ OMX PHLX
CME Group
Tel-Aviv Stock Exchange
BM&FBOVESPA
IOMA | August 2010 53
Currency options volume by geographical zone (millions)
2008 2009
50
40
30
20
10
0
Americas Europe - Africa - Middle East
42
28
17
10
b) Currency futures
Regarding currency futures, the most significant feature of 2009 was the surge of Indian exchanges: Multi Commodity Exchange of India, which began trading in October 2008, and the National Stock Exchange of India. Both exchanges rose to the forefront of global trading only a few months after this product line was launched. However the size of contracts traded in India is small compared to American standards. And in terms of notional value, they still lag far behind the two leaders, which are the CME Group in first place followed by BM&FBOVESPA in second place. In terms of notional value, the CME Group has retained its leadership with an 82% share of the world market.
In Europe, RTS surged to the top with 36 million contracts traded on its derivatives division (FORTS). FORTS dollar/ruble futures are increasingly traded by retail investors and algorithmic traders, while MICEX, the other Russian derivatives exchange, is mostly an interbank market. RTS also listed euro/dollar and euro/ruble futures in February 2009. The euro/dollar contract was more successful than the euro/ruble contract, and market participants tended to simultaneously use both dollar/ruble and euro/dollar contracts to hedge the euro/ruble exchange rate.
2009/2008 % Currency futures volume
% 50 75 100-25-50 0 25
96
63
22
22
14
74
0.31
-2
-14
-23
-49
2 427
1 877
876
508
161
-87
(1): Excluding OTC business registered on the exchange (2): Including CFDs (3): Began trading in October 2008
Source : Alexandre Balabushkin, «The return of the ruble», Swiss Derivatives Review, issue 42, Spring 2010
Multi Commodity Exchange of India (incl. MCX-SX)(3)
National Stock Exchange of India
Johannesburg Stock Exchange
Korea Exchange
RTS
Australian Securities Exchange (incl. SFE)(2)
Tokyo Financial Exchange Inc.
Warsaw Stock Exchange
Rofex
NYSE Liffe (European markets)
CME Group(1)
Turkish Derivatives Exchange
Budapest Stock Exchange
BM&FBOVESPA
MexDer
MICEX
ALL EXCHANGES
54 IOMA | August 2010
(1): Excluding OTC business registered on the exchange (2): Began trading in October 2008
Currency futures contract volume (millions)
0 50 100 150 200 250
7
1
9
14
132
3
7
8
14
18
1436
742
4251
8867
4371
152153
9224
11226
2008
2009
Currency futures notional value (USD trillions)
Other exchanges
National Stock Exchange of India
Korea Exchange
BM&FBOVESPA
CME Group(1)
0 5 10 15 20 25
2008
2009
0.030.04
0.010.22
0.350.55
4.323.36
20.5419.48
Currency futures volume contract by geographical zone (millions)
2008 2009
700
600
500
400
300
200
100
0
Americas Asia Pacific Europe - Africa - Middle East
71
288
565
273
169
82
Other exchanges
Johannesburg Stock Exchange
Budapest Stock Exchange
Turkish Derivatives Exchange
MICEX
RTS
Korea Exchange
Rofex
BM&FBOVESPA
Tokyo Financial Exchange Inc.
CME Group(1)
Multi Commodity Exchange of India (incl. MCX-SX)(2)
National Stock Exchange of India
IOMA | August 2010 55
D – Commodity derivatives
The growth of the commodity future markets accelerated again in 2009 at an annual rate of 54%. Commodity options, which are much less actively traded than futures decreased for the first time, down 14%.
2003
Commodity products volume growth (billion contracts)
Futures Options
Commodity futures Commodity options
2.7
1.8
0.9
0.0
0.18
0.12
0.06
0.0
2005 2006 2007 200920082004
56 IOMA | August 2010
2009/2008 % Change in commodity options volume
% 50 75-25-50-75 0 25
306
174
52
52
6
0
-9
-18
-26
-36
-63
-14
Commodity options contract volume (millions)
Other exchanges
NYSE Liffe (European markets)
Mercado a Término de Buenos Aires
London Metal Exchange
TAIFEX
ICE Futures U.S.
CME Group (incl. OTC)
0 20 40 60 80 100 120 140
2
2
1
7
0
17
124
2
2
4
6
6
11
102
2008
2009
Commodity options notional value (USD billions)
Other exchanges
TAIFEX
London Metal Exchange
CME Group (Ex. OTC)
0 250 500 750 1 000
2008
2009
66
NA34
705384
NA937
NB: Notional values are not available for BM&FBOVESPA, ICE Future Europe, Mercado a Término de Buenos Aires and ICE Future US.
Commodity options contract volume by geographical zone (millions)
2008 2009
180
160
140
120
100
80
60
40
20
0
Americas Asia Pacific Europe - Africa - Middle East
0
144
6
118
10 8
ICE Futures CanadaMercado a Término de Buenos Aires
ICE Futures EuropeBudapest Stock Exchange
NYSE Liffe (European markets)Australian Securities Exchange (incl. SFE)
BM&FBOVESPACME Group (incl. OTC)
London Metal ExchangeICE Futures U.S.
Johannesburg Stock ExchangeALL EXCHANGES
IOMA | August 2010 57
b) Commodity futures
CME Group lost its first position for the trading of commodity futures, as it was overtaken by the Dalian Commodity Exchange and matched by the Shanghai Futures Exchange. However the CME Group still holds the leader position in terms of notional value traded because the size of contracts on the new emerging markets tends to be lower than in traditional exchanges in America or Europe. But it should be noted that the Zhengzhou Commodity Exchange is progressing very rapidly in terms of notional value traded. It already represented about a quarter of the notional value recorded on the CME Group.
The Asia Pacific region became the most active of the three regions for trading commodity futures in 2008 for the first time. In 2009 it increased its lead over other markets: Overall volumes in Asia represented about twice the volumes recorded on all other exchanges in the two other regions.
2009/2008 % Change in commodity futures volume
% 50 75 100-25-50-75-100 0 25
316
216
210
166
120
71
33
8
6
2
0.64
0.73
0.57
-9
-10
-12
-14
-38
-39
-43
-46
-48
54
-89
(1): Excluding OTC business registered on the exchange
Turkish Derivatives Exchange
Budapest Stock Exchange
Shanghai Futures Exchange
Dalian Commodity Exchange
Hong Kong Exchanges(1)
Multi Commodity Exchange of India (incl. MCX-SX)
Bursa Malaysia
ICE Futures Europe
ICE Futures Canada
Zhengzhou Commodity Exchange
CME Group (incl. OTC)
Mercado a Término de Buenos Aires
London Metal Exchange
ICE Futures U.S.
NYSE Liffe (European markets)
Korea Exchange
Johannesburg Stock Exchange
TAIFEX
BM&FBOVESPA
Tokyo Grain Exchange
Central Japan Commodity Exchanges
Australian Securities Exchange (incl. SFE)
Eurex
ALL EXCHANGES
58 IOMA | August 2010
(1): Excluding OTC business registered on the exchange
NB: Notional values are not available for Central Japan Commodity Exchange, ICE Future Canada, Tokyo Grain Exchange, Mercado a Término de Buenos Aires,
ICE Future US, London Metal Exchange, ICE Future Europe, Shanghai Futures Exchange and Multi Commodity Exchange of India (includes MCX-SX).
Commodity futures contract volume (millions)
0 100 200 300 400 500 600 700 800
29
12
14
43
106
152
223
140
86
22
11
14
39
107
165
227
435
513516
313834
146
2008
2009
Commodity options notional value (USD billions)
0 1 000 2 000 3 000 4 000 5 000
13
44
43
60
64
214
1 026
NA
24
23
28
38
64
203
1 399
4 669
2008
2009
9 5387 023
Commodity futures contract volume by geographical zone (millions)
2008 2009
2 000
1 600
1 200
800
400
0
Americas Asia - Pacific Europe - Africa - Middle East
782
1 656
577 575
272 284
Other exchanges
NYSE Liffe (European markets)
Mercado a Término de Buenos Aires
ICE Futures U.S.
London Metal Exchange
Multi Commodity Exchange of India (incl. MCX-SX)
ICE Futures Europe
Zhengzhou Commodity Exchange
Shanghai Futures Exchange
CME Group (incl. OTC)
Dalian Commodity Exchange
Other exchanges
BM&FBOVESPA
Johannesburg Stock Exchange
TAIFEX
Bursa Malaysia
NYSE Liffe (European markets)
Zhengzhou Commodity Exchange
CME Group(1)
London Metal Exchange
IOMA | August 2010 59
Energy futures
As in previous years, most energy derivatives trading is concentrated on two exchanges, CME Group and ICE Futures Europe. In Asia, Multi Commodity Exchange of India and the Shanghai Futures Exchange both recorded fast growing figures.
2009/2008 % Change in energy futures volume
% 50 75 100-25-50-75-100 0 25
145
49
24
13
8
-100
-100
21
Energy futures contract volume (millions)
0 100 200 300
2008
2009
0.20.0
0.010.0
0.10.1
3146
2152
152165
201227
Multi Commodity Exchange of India (incl. MCX-SX)
Shanghai Futures Exchange
Australian Securities Exchange (incl. SFE)
CME Group (excl. OTC)
ICE Futures Europe
Turkish Derivatives Exchange
Eurex
ALL EXCHANGES
Eurex
Turkish Derivatives Exchange
Australian Securities Exchange (incl. SFE)
Shanghai Futures Exchange
Multi Commodity Exchange of India (incl. MCX-SX)
ICE Futures Europe
CME Group (excl. OTC)
60 IOMA | August 2010
Metal futures
Trading on metal derivatives tends to concentrate on one exchange in each region: the London metal Exchange, CME Group and the Shanghai Futures Exchange.
The landscape is changing rapidly: the most actively traded contract is the Steel Rebar Future, which was launched by the Shanghai Futures Exchange in March 2009. Several other contracts listed in Shanghai showed an exponential growth. Copper futures tripled and ranked second in the world.
2009/2008 % Change in metal futures volume
% 50 75 100-25-50 0 25
574
400
120
47
37
91
1
-5
-38
-50
Metal futures contract volume (millions)
0 100 200 300
2008
2009
53
5351
6494
106107
59296
0.020.4
Turkish Derivatives Exchange
Shanghai Futures Exchange
Hong Kong Exchanges
Multi Commodity Exchange of India (incl. MCX-SX)
Korea Exchange
London Metal Exchange
CME Group (excl. OTC)
TAIFEX
BM&FBOVESPA
ALL EXCHANGES
Other exchanges
TAIFEX
CME Group (excl. OTC)
Multi Commodity Exchange of India (incl. MCX-SX)
London Metal Exchange
Shanghai Futures Exchange
IOMA | August 2010 61
Agricultural futures
Agricultural derivatives are the most actively traded commodity derivatives.
As already mentioned in previous IOMA derivatives surveys, agricultural derivatives markets remain less developed in Europe than in the Americas and Asia. The revision of the European Common Agricultural Policy scheduled for 2013 will probably increase the risk exposure of farmers and agro industries, a trend that should stimulate hedging on derivatives markets.
2009/2008 % Change in agricultural futures volume
% 50 75 100-25-50 0 25
216
166
92
33
6
2
1
65
-9
-9
-10
-14
-16
-39
-43
-54
Agricultural futures contract volume (millions)
0 100 200 300 400 500 600 700 800 900
0.1
2
3
3
3
8
12
14
43
47
168
223
0.1
2
4
2
4
5
11
14
39
89
154
227
834313
2008
2009
Budapest Stock ExchangeDalian Commodity Exchange
Shanghai Futures ExchangeBursa Malaysia
ICE Futures CanadaZhengzhou Commodity Exchange
Mercado a Término de Buenos AiresCME Group (excl. OTC)
ICE Futures U.S.NYSE Liffe (European markets)Johannesburg Stock Exchange
Korea ExchangeBM&FBOVESPA
Tokyo Grain ExchangeAustralian Securities Exchange (incl. SFE)
ALL EXCHANGES
Other exchanges
Johannesburg Stock Exchange
Bursa Malaysia
BM&FBOVESPA
ICE Futures Canada
Tokyo Grain Exchange
NYSE Liffe (European markets)
Mercado a Término de Buenos Aires
ICE Futures U.S.
Shanghai Futures Exchange
CME Group (excl. OTC)
Zhengzhou Commodity Exchange
Dalian Commodity Exchange
62 IOMA | August 2010
Gathering statistics on retail trading
Like last year, exchanges were asked about the share of retail investors in trading activity. The table below summarizes answers received. Very few changes were observed compared to 2008. Equity and index options are usually more traded by private investors than futures. However, several exchanges (MEFF, Singapore Exchange and Osaka Stock Exchange) succeeded in attracting significant interest from retail investors in futures contracts.
Exchange Share of retail trading (2009) Share of retail trading (2008)
Athens Derivatives Ex. 30%
BM&F 7.97% 8%
Montréal Exchange Equity and ETF options: significant Futures: insignificant Equity and ETF options: significant Futures: insignificant
BOVESPA 68.56% (options) 63% (options)
Bursa Malaysia 0.65
CBOE25% to 35% : Higher in ETF & Equity options & lower in Cash Index, Volatility & futures contracts
25% to 35%
Eurex less than 10% Less than 5%
Hong Kong Exchange 23% 17%
ISE 50% (Estimated value) 50% (approximately)
MEFFMini-Futures: 70 to 80% Other products: 5 to 15%
Mini-Futures: 70 to 80% Other products: 5 to 15%
NYSE Arca 0.3
Osaka Stock ExchangeAll Security Options Put: 25.3%;All Security Options Call: 5.7%;
Equity Options Put: 17%;Equity Options Call: 13%
Singapore Exchange Negligible Negligible
TAIFEX 44.39% 39%
Thailand Futures Exchange 60% 57%
Tokyo Stock Exchange Very small Very small
Warsaw Stock ExchangeFutures: 52% Options: 65%
Futures: 54% Options: 59%
IOMA | August 2010 63
Clearing of derivatives transactions
For the second year running data was gathered from clearing organizations.
In the Americas, the Options Clearing Corporation is the world’s largest equity derivatives clearing organization. The OCC’s participant exchanges include: the Boston Options Exchange, Chicago Board Options Exchange, International Securities Exchange, NASDAQ OMX PHLX, NYSE Amex and NYSE Arca.
Regulators increased pressure to impose the clearing of OTC trades on credit derivatives. In March 2009, ICE Trust, a subsidiary of the InterContinental Exchange (ICE), began to clear CDSs, starting with the North American Markit CDX indexes, single-name CDSs being expected in the following months. ICE Trust’s offer is based on the expertise of Creditex, an interdealer broker it acquired recently. Its membership is open to buy-side and sell-side institutions. In March 2009, ICE Trust cleared index 600 index CDS trades for a notional amount of 70 billion dollars.
ICE also intends to develop a specialized CDS clearing house for European-based products, such as Markit iTraxx indexes. For its part, CME (through its recently acquired ClearPort platform) and the hedge fund Citadel got authorization from the SEC to create a clearing house for CDSs, named CMDX.
The Options Clearing Corporation Other exchanges (100% cleared home)
1 393 (28%)
3 546 (72%)
Equity derivatives clearing in America
in 2008(contracts single
counted - millions)
The Options Clearing Corporation Other exchanges (100% cleared home)
1 407 (29%)
3 512 (71%)
Equity derivatives clearing in America
in 2009(contracts single
counted - millions)
In the Europe, Africa and Middle East region, the two largest clearing organizations are Eurex and LCH.Clearnet. Eurex clearing house clears the Eurex on-exchange trades as well as an important part of OTC trades. LCH.Clearnet’s main activity is the clearing NYSE Liffe trades on-exchange and OTC trades via Bclear. The other stock exchanges have their own clearing houses that clear 100% of the trades on-exchange.
Following pressure from the European Commission, nine international banks committed to set up a euro area based clearing facility for their OTC trades. In December 2008, NYSE Liffe added CDSs to the range of products that can be registered on its OTC service (Bclear) and cleared by LCH.Clearnet.Ltd. NYSE Liffe CDS contracts are based on Markit iTraxx Europe indexes. LCH.Clearnet SA, based in Paris also announced plans to launch the clearing of euro area CDSs and Eurex announced an initiative to include CDS in its clearing offer. In March 2009, the ISDA announced a standardization of CDS contracts that should facilitate the clearing process.
64 IOMA | August 2010
EUREX Liffe Other exchanges
505 (22.4%)
526 (23.4%)
1 219 (54.2%)Equity and index cleared in Europe, Africa, Middle
East in 2009(contracts single
counted - millions)
Eurex (OTC)
640 (52%)
Liffe (Non-OTC)
265 (50.4%)
Liffe (OTC)
261 (49.6%)Eurex (Non-OTC)
579 (48%)
In the Asia Pacific region, all Stock Exchanges have their own clearing houses that clear 100% of the on-exchange trades.
EUREX Liffe Other exchanges
885 (30.8%)
482 (16.8%)
1 506 (52.4%)Equity and index cleared in Europe, Africa, Middle
East in 2008(contracts single
counted - millions)
Eurex (OTC)
750 (49.8%)
Liffe (Non-OTC)
291 (60.4%)
Liffe (OTC)
191 (39.6%)
Eurex (Non-OTC)
757 (50.2%)
IOMA | August 2010 65
Conclusion
The financial crisis had triggered a marked slowdown of derivatives markets in 2008. The crisis continued and deepened for certain types of contracts in 2009. Index futures had only started to slow down at the fall of 2008, the year 2009 ended with a negative performance of 16%. LTIR derivatives have plunged in an even more acute crisis with trading volumes declining by one third and open positions being dramatically reduced. On the contrary, commodity futures continued to grow rapidly in 2009 as in 2008.
2008 volume and 2008/2007 growth rate
Single stock Stock index ETF STIR LTIR Currency Commodity
Contracts traded (millions)
Options 3 313 3 685 857 439 116 59 154
Futures 819 2 287 1 266 1 264 528 1 631
Growth rate ofcontracts traded
Options -9% 4% -6% -9% 39% 16%
Futures 40% 38% -17% -14% 65% 45%
2009 volume and 2009/2008 growth rate
Single stock Stock index ETF STIR LTIR Currency Commodity
Contracts traded (millions)
Options 3 374 3 869 955 397 78 37 132
Futures 501 1 928 - 1 006 896 923 2 515
Growth rate ofcontracts traded
Options 2% 5% 11% -9% -33% -37% -14%
Futures -39% -16% - -21% -29% 75% 54%
66 IOMA | August 2010
The overall financial and economic situation resulted in a slowdown in all segments of market activity, including exchanges. However, one should take into account several positive trends:
• The liquidity of organized derivatives markets may have diminished. But, unlike other segments of the market, such as the interbank monetary market, it never disappeared.
• The turnaround observed in 2009 will probably not end in 2010. The monthly volumes for the first three months of 2010 do not show any significant change in trading volumes on equity and bond derivatives markets (see graph below). However this turnaround came after several years of continuous and vivid growth. Derivatives markets are more and more utilized by economic players, and this fundamental trend is not definitively interrupted. Although some categories of market participants suffered from a reduced leverage (especially hedge funds) the number of exchange members did not diminish significantly.
• Some time is necessary before projects launched by clearing organizations to extend the scope of their services are implemented. A significant portion of OTC trading in vanilla products, like index options, has already been transferred to exchanges. The OTC equity options business has also declined in a number of countries. A higher proportion of trades are executed on-exchange where possible. Even among the services offered by exchanges, the crisis translated in a switch from facilities for registering and clearing of OTC trades to fully exchange executed trades.
• The financial crisis may have triggered increased concentration among financial intermediaries but the weight of the largest market members did not diminish on most exchanges (see graph below).
Monthly trading volumes
Single stock derivatives Stock index derivatives Bond derivatives
800
700
600
500
400
300
200
100
0
Jan. 08 Jan. 09 Jan. 10Mar. 08 Mar. 09 Mar. 10May. 08 May. 09Jul. 08 Jul. 09Sep. 08 Sep. 09Nov. 08 Nov. 09
IOMA | August 2010 67
Percentage of total trading volume of the 5 most active members
% 0 15 30 45 60 75 90 100
16
19
47
16
19
25
3633
4234
3435
36
57
37
38
42
49
48
46
50
53
52
98
75
68
65
54
59
57
43
73
42
43
47
47
53
54
57
96
75
73
65
62
61
59
50
45
2008
2009
National Stock Exchange of India
Eurex
Montréal Exchange
Hong Kong Exchanges
TAIFEX
Korea Exchange
BOVESPA
Johannesburg Stock Exchange
MEFF
Thailand Futures Exchange (TFEX)
MexDer
Bursa Malaysia
Chicago Board Options Exchange (CBOE)
Osaka Stock Exchange
BM&F
Singapore Exchange
NASDAQ OMX Nordic Exchanges
Boston Options Exchange
Warsaw Stock Exchange
Budapest Stock Exchange
Athens Derivatives Exchange
Tel-Aviv Stock Exchange
Australian Securities Exchange (incl. SFE)
Wiener Börse
68 IOMA | August 2010
Statistics of total trading volume of the 5 most active members (%)
2008 2009
55
50
45
40
35
30
25
20
15
10
5
0
Average Median
5148
5047
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