FIA and Acuiti release report on challenges and opportunities for the European listed derivatives markets

18 June 2024

  • Report based on survey of market participants conducted by Acuiti
  • Report finds optimism regarding growth and innovation in Europe, but many firms see more growth potential in other parts of the world
  • Report finds that regulatory burden is widely viewed as a major challenge
  • Report finds interest rates and energy are the asset classes with the greatest potential for growth in trading volume over the next five years

London and Washington, DC – FIA today released a report on the challenges and opportunities facing the European listed derivatives markets. The report is based on responses to a survey conducted recently by Acuiti, a market intelligence firm, that gauged industry sentiment regarding the key trends, opportunities and challenges facing the industry in Europe.

Acuiti surveyed more than 100 individuals at a variety of firms active in Europe, including clearing brokers, asset managers, hedge funds, principal trading firms, exchanges and software vendors. The survey asked for opinions on current trends as well as the outlook for the next five years.

The survey found that the industry is optimistic about the potential for growth and innovation in Europe, but also aware that other parts of the world may offer better growth prospects. The survey also found a high level of concern about existing and prospective regulations as well as the aftereffects of Brexit.

The key trends identified in this report are:

  • Global ambitions: Many firms see more potential growth in terms of clients and trading volume outside of Europe than inside Europe.
  • Regulatory headwinds: There is a broad consensus across the industry that the combined impact of multiple sets of regulations has created a major burden for the industry.
  • Brexit aftermath: Most listed derivatives market participants see Brexit as having a negative effect on London's stature as a global financial center and predict that Paris will be the European financial center with the greatest growth potential over the next five years.
  • Cyber risk: The threat of disruption from cyber-attack was identified as the single greatest risk that the industry is currently facing.
  • Growth opportunities: Futures and options based on interest rates and energy were viewed as having the greatest growth potential over the next five years. Crypto and carbon also look attractive to many firms, although a sizeable number of survey respondents said their firms have no intention of entering these new asset classes.
  • Efficiency vs Innovation: Views on technology trends vary significantly across the industry. Clearing brokers and other sell-side firms are prioritizing gains in efficiency from their investments in technology. In contrast, principal trading firms and exchanges are more interested in innovative new technologies such as artificial intelligence and blockchain.

"This report provides an important window into how the European listed derivatives industry views the major challenges and opportunities in the years ahead," said Bruce Savage, FIA Head of Europe. "We look forward to working with European policy makers and the industry on ways to leverage the findings of this report and accelerate the growth of European markets."

"To better serve the exchange-traded and cleared derivatives markets, FIA is keenly interested in understanding the dynamics of growth and innovation at both the regional and global level," said Walt Lukken, FIA President and CEO. "Many of our most important members are based in Europe, and we are delighted to partner with Acuiti on this initiative to understand how the industry sees the outlook for this region."

“Market participants within Europe are optimistic about their growth prospects and the future of European derivatives markets, however, many are looking outside Europe for client growth,” said Will Mitting, Founder and Managing Director of Acuiti. “Fragmented markets are increasing the costs of trading in Europe while regulation is hampering many firms’ ability to commit capital to expansion. For Europe to fully realise its potential, it is essential that these issues are addressed.”

The report is being released in conjunction with the International Derivatives Expo (IDX), FIA's annual conference and trade show in London. IDX brings together more than 1,000 executives from clearing firms, trading firms, exchanges and technology providers for three days of discussions on the most critical issues related to the cleared derivatives industry in Europe.

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