Derivatives Giant CME Sees Spike in Volumes as Volatility Picks Up

Global FX traders have welcomed the recent outburst in Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term as markets pick up after a sloppy summer. US-based, Chicago Mercantile Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (CME) has reported a record in its FX futures and options contracts volumes. The multi-asset exchange saw activity jump on the back of movements in the currency markets.

The trading venue saw Open Interest for FX futures and options combined reach 2,630,556 contracts yesterday, with notional equal to $309 billion. The current figure surpassed the exchange's previous record which was set on the 19th of March, 2013, with 2,589,468 contracts and $286 billion in notional value traded.

Major currencies have seen sharp moves against the greenback, recent announcements coming from the ECB, coupled with the much awaited Scotland referendum have given traders a new awakening.

Craig LeVeille, CME Group Executive Director, FX Products, commented about the current market climate in a statement: "The recent events, ECB cut, upcoming Brazilian election and Scottish referendum, have created a spark in global volatility which is being reflected in these new records and sudden surge in average daily volumes."

News of yesterday's upbeat volumes follow in from the CME's uptake across its FX offering. The exchange hit an all-time high in its FX Options product range, with volumes reaching a record $32.4 billion in notional value and a sizeable 231,307 contracts exchanging hands, on the fourth of September 2014.

This was accompanied with an all-time record volume of its FX Futures offering at recently launched, CME Europe on Sept. 9, 2014, reaching 4,080 contracts and $527 million in notional.

The rise in activity is promising for the wider FX market as participants have been facing tough operating conditions. CME's growth in volumes highlights traders sentiment to transact on recognised transparent venues in light of the recent fiasco impacting the currency markets with FX rates manipulation.

Mr LeVeille added: "This reflects that participants have continued to value the benefits of holding risk exposure in CME FX futures, and gained an increased understanding of the capital efficiency advantage of futures in the post."