US Derivatives Markets: Staying the Course

by Anshuman Jaswal, PhD, September 11, 2012
North America


The current economic environment and related regulatory developments are fundamentally altering the nature of the derivatives markets. Industry experts have predicted a transition from a bilaterally cleared OTC business to centrally cleared OTC derivatives, along with an increase in the volume of exchange-traded derivatives.

The derivatives markets are facing a regulatory onslaught and are expected to undergo a number of changes to meet regulators’ requirements. In a new report, US Derivatives Markets: Staying the Course, Celent looks at the evolution of the derivatives market in the US and discusses the main trends that are emerging.

In the US, the rule-making related to the Dodd-Frank Act, and the Volcker Rule, are examples of regulatory requirements having an impact. The leading investment banks have been making modifications to their trading organizations in anticipation of the various rules being implemented. Some have moved proprietary trading out of the investment bank into hedge funds within the same group. Another important development has been the recent demand for banks to separate their investment and retail banking divisions. The demand for regulatory provisions similar to the Glass-Steagall Act and a return to “back to basics” banking is gathering momentum.

“The derivatives markets are facing a challenging period in their evolution as the economic environment continues to be volatile,” says Dr. Anshuman Jaswal, Senior Analyst with Celent’s Securities & Investments Group and author of the report. “However, derivatives trading is still going strong and has been able to maintain the volumes seen over the last few years.”

This report looks at the evolution of exchange-traded and OTC derivatives’ volumes over the last few years. The derivatives trading volumes of the leading investment banks are also studied, followed by a section that discusses the composition of derivatives trading (breakdown by different asset classes), levels of credit exposure, and trading revenues by asset class.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary




Exchange-Traded and OTC Derivatives


Performance of the Leading Banks


Trading Composition, Credit
Exposure, and Revenues




Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


Related Celent Research


Sign in to download reports and access personalized information