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Derivatives market size graph

The OTC interest rate derivatives market in April 2013

As interest rates deeply influence the performance of both financial and non-financial firms, the enormous size of markets for derivatives that facilitate their hedging and reallocation should come as no surprise. With an average of $7.4 trillion per trading day in April 2013, total turnover in interest rate derivatives, including both exchanges and OTC markets, was well above the $5.5 trillion traded in the FX segment.

OTC contracts account for only one third of turnover in the interest rate segment but make up the bulk of the open positions. Notional amounts outstanding of OTC interest rate derivatives stood at $561 trillion in mid-2013, far above the $62 trillion of open interest on the international derivatives exchanges. This discrepancy reflects differences in the structure of the two markets and in the maturity of the contracts. Exchange-traded futures and options tend to have much shorter maturities than OTC derivatives. Shorter maturity increases turnover relative to outstanding amounts. Furthermore, on an exchange, offsetting positions are routinely netted out. In contrast, OTC market contracts tend to "pile up". As a result, OTC market participants end up with a large number of offsetting or partially offsetting contracts, resulting in a high total notional amount relative to both turnover and net exposure. That said, this difference between exchange-traded and OTC markets has diminished as market participants make increased use of multilateral termination services to trim the size of their derivatives book (Ledrut and Upper (2007)).

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And fresh geopolitical angst is again pushing yields lower on benchmark government debt. All this creates incentives for financial engineering.

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Popular Q&A

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What is the size of the Knowledge Management market ? does someone have relevant facts and/or graphs ? - Quora

Well, I don't really know, and I am very curious as well because I need this data. I found this report from 2008 saying that by 2012 the market revenues would be around $157M

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What is the lot size of contract in the equity derivatives market?

Lot size refers to number of underlying securities in one contract. The lot size is determined keeping in mind the minimum contract size requirement at the time of introduction of derivative contracts on a particular underlying.

For example, if shares of XYZ Ltd are quoted at Rs.1000 each and the minimum contract size is Rs.2 lacs, then the lot size for that particular scrips stands to be 200000/1000 = 200 shares i.e. one contract in XYZ Ltd. covers 200 shares.

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