Investing in their operations helped clearing members manage the market during extreme volatility in the first half of 2025.
Speaking on a panel at FIA’s International Derivatives Expo on 18 June, Helen Gordon, global head of derivatives clearing at JP Morgan called the latest volatility a “good test” given all the investment firms have made across the ecosystem since the Covid volatility spikes.
At the same time, the 94% increase in the volatility index – the VIX – from 2 April to 8 April translated into significant margin breaches, particularly across equity index futures.
“If we're looking at the broader context, we saw breaches as high as 200%. And by breach, I mean the initial margin compared to the two-day price move in the contract,” Gordon said. “And it wasn't just limited to equity futures, it also spread across energy, base metals, precious metals. While the magnitude of those breaches was smaller, again, there were breaches as high as 100%.”
Operations investments made a difference
Despite those challenges, Gordon credited the earlier investments for keeping operations relatively smooth.
“Clients have been really clear on their expectations. They expect reliable, timely and accurate data, regardless of what's going on in the markets,” she said. “That's really driven investment into operational platforms, maybe in a way that we wouldn't have done 10 years ago.” She added that while the bank may have wanted to grow revenue by adding more products, clients wanted investment in the operations side of the business.
But Gordon did not declare victory. “There is a constant requirement to invest. And the drivers for volumes continue to increase – the retail contracts with smaller notional sizes, high frequency trading participation, algos, as well as the world feeling like a lot more of a volatile place to operate in. The combination of these things means [investment] needs to continue.”
Citing data from FIA Tech – the same that Walt Lukken, FIA’s president and CEO, pointed to in his opening remarks, Gordon said that in April, only 11% of transactions were claimed late by clearing brokers, compared to 21% during the Russia invasion of Ukraine. Additionally, amid market volatility on US President Donald Trump’s Liberation Day, 99% of trades, on average, were resolved by the end of T+2. During the Covid pandemic, resolving many trades took T+3 or T+4.
Hester Serafini, president of ICE Clear Europe echoed those thoughts. “Everything actually worked really well. I was quite impressed with how prepared the industry was and how prepared clients and clearing members were.”
Offering perspective, she added that immediately following the Liberation Day announcement, “ICE Clear Europe had three consecutive record days. We beat our prior record day from several years before on one day, then the next day, and then two days later, we beat it again. And we've now beat it again when Israel attacked Iran. Trades are flowing and things are working fine. Clearing members are fine. Clients are fine.”
Matthias Graulich, chief commercial officer at Eurex, largely agreed with Gordon and Serafini.
“If I compare [Liberation Day] with Covid – as the first big volatility event in the last five years – things have massively improved. The industry as a whole has worked really well to improve the operational processes,” he said. “We had situations back in 2020 where operating hours were pushed out, prolonged. Things were not sitting in the right account for days. We have not observed that this time, and this demonstrates that the industry has really evolved and done their homework.”
Margin making a difference
Offering an alternative view on margin, Serafini noted ICE Clear Europe takes a conservative position on margin, which she said served it and its members well during the volatility.
“During the days following Trump's Liberation Day, if you look at the two main contracts that had big moves for Ice Clear Europe, it was oil and the FTSE contract. The largest move observed [on our oil contract] was something like 4.7, and our margin was 4.8, so we were nicely covered there. On the FTSE [contract], we had about 5% margin. And there was a day where the move was about 6.5%, which is a bit more than the margin, but not outrageously more. Given how extreme the event was, I don't think that's a bad result.”
Graulich shared a similar sentiment related to initial margin.
“If I look now and compare the situation [to Covid], we have not seen massive spikes. The floors have proven to be valuable and reduced the impact on margin calls from an initial margin perspective. We feel very comfortable with the progress and development we have seen.”
