On June 25, FIA hosted two hours of virtual presentations exploring the global economic impact of the COVID-19 pandemic, and particularly how the pandemic has affected commodity derivatives markets.
The discussions, which took place as part of the third and final day of FIA's IDX-V conference, focused on the resilience of global derivatives markets despite high volumes and the unprecedented challenge of working remotely amid the pandemic.
"Simply to say there was volatility, that's to be expected during crises of any nature," said Guy Wolf, global head of market analytics at Marex Spectron, one of the top brokers in commodity futures and options. "The question is, does it reveal structural flaws?" Generally, panelists agreed that markets functioned well despite small areas of inefficiency that could be improved.
Program highlights included:
· Blu Putnam, managing director and chief economist at CME Group, discussed the impact of the pandemic on the equities, oil, gold, and agriculture markets. He also provided an analysis of how the global economy is transitioning into recovery as well as the policy responses, both "supportive" and "regenerative," to help people get from one side of the crisis to the other.
· In a panel discussion on commodity markets, participants pointed to several lessons that could be learned from the crisis. Among these were education to market participants about the real chance of negative prices in certain contracts, as experienced in crude oil futures earlier this year, and challenges to physical delivery experienced amid a global shutdown and quarantine.
· Looking forward, panelists pointed to sustainability issues and related derivatives products as a potential growth area for the industry.
FIA's IDX-V conference took place from June 23 to 25. The virtual programming replaced FIA's annual International Derivatives Expo conference which was cancelled because of public health concerns. Recordings of all IDX-V panels as well as analysis and commentary from FIA staff will be available early next week at FIA.org/idx. IDX-V registered attendees automatically have access for one month. For non-attendees, order access to the recordings for FIA Members: £35 / Non-Members: £75.