RiskTech Forum

Equity derivatives trading moving to electronic platforms, according to Greenwich Associates

Posted: 22 October 2012  |  Source: FINCAD


The trading of equity derivatives is being done more and more on electronic platforms, according to data provided by investment management firm Greenwich Associates.

The fraction of North American futures contracts transacted on electronic platforms rose to 48 percent during the 2011-2012 period from 38 percent the year before, according to Futures Magazine. Insurance firms and hedge funds in the nation are currently trading two-thirds of these contracts on electronic platforms.

U.K. market participants experienced a larger jump, transacting 42 percent of futures contracts electronically in 2011-2012, up sharply from 24 percent the prior year, the media outlet reports. European hedge funds also increased their percentage of futures traded via electronic bourses to 42 from 24 previously.

"We believe futures, ETFs and – albeit to a lesser degree because of capital commitment issues – options  trading business will continue to move rapidly to electronic platforms due to a confluence of two trends," Greenwich Associates consultant Jay Bennett stated, according to the news source.

The use of electronic platforms for making derivatives trades has largely been encouraged by financial regulators such as the Financial Stability Board pushing for all standardized products being transacted through electronic platforms or exchanges.