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Renée Schultes and Natasha de Terán - Financial News Online US
07 Feb 2008
07 Feb 2008
January was a record month for trading in equity derivatives on European exchanges, thanks to extreme stock market volatility.
Eurex, operated by Deutsche Börse and SWX Swiss Exchange, had record volume in futures and options of 138 million contracts in the first four weeks of 2008, a 90% increase on the same period last year.
Contracts based on indices accounted for 98 million of the total and was 10% higher than the previous record on index contracts set last March.
Volume on Euronext.liffe, Europe’s other derivatives exchange, also reached a record in January, with 37.4 million equity derivatives contracts traded, an increase of 46% on the same period last year.
The equity derivatives divisions of banks also profited from the surge in volume. Société Générale registered a strong month, despite the revelation of €4.9bn ($7.2bn) in losses on European index futures incurred by trader Jérôme Kerviel.
David Escoffier, head of equity derivatives in London and global head of the hedge funds group at bank Société Générale, said: “Our global equity derivatives flow business enjoyed one of its best months in January as clients – including hedge funds and long-only managers – have been extremely supportive since the losses were uncovered last month.”
Rival BNP Paribas said it had a record month in equity derivatives, with a trebling of flow volume in January.
Shaun Wainstein, head of equities and derivatives at BNP Paribas in London, said: “This can be explained not only by market volatility but also a long-term trend of wider use of vanilla and more complex derivatives by institutional and hedge fund portfolio managers.”
The equity derivatives records come as European initial public offerings and mergers and acquisitions declined.
Eurex, operated by Deutsche Börse and SWX Swiss Exchange, had record volume in futures and options of 138 million contracts in the first four weeks of 2008, a 90% increase on the same period last year.
Contracts based on indices accounted for 98 million of the total and was 10% higher than the previous record on index contracts set last March.
Volume on Euronext.liffe, Europe’s other derivatives exchange, also reached a record in January, with 37.4 million equity derivatives contracts traded, an increase of 46% on the same period last year.
The equity derivatives divisions of banks also profited from the surge in volume. Société Générale registered a strong month, despite the revelation of €4.9bn ($7.2bn) in losses on European index futures incurred by trader Jérôme Kerviel.
David Escoffier, head of equity derivatives in London and global head of the hedge funds group at bank Société Générale, said: “Our global equity derivatives flow business enjoyed one of its best months in January as clients – including hedge funds and long-only managers – have been extremely supportive since the losses were uncovered last month.”
Rival BNP Paribas said it had a record month in equity derivatives, with a trebling of flow volume in January.
Shaun Wainstein, head of equities and derivatives at BNP Paribas in London, said: “This can be explained not only by market volatility but also a long-term trend of wider use of vanilla and more complex derivatives by institutional and hedge fund portfolio managers.”
The equity derivatives records come as European initial public offerings and mergers and acquisitions declined.
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