Asia-Pacific OTC Derivatives Study

Derivatives markets have grown markedly in Asia-Pacific in the past decade, with Hong Kong and Singapore now pre-eminent in regional trading of FX and interest rate derivatives (IRD). Total IRD daily average turnover in Asia-Pacific markets increased to $298.3 billion (US dollars unless otherwise specified) in April 2016 from $187.4 billion in April 2007, while the equivalent figure in FX increased to $1.7 trillion from $1 trillion.

This rate of growth has outstripped that of global derivatives markets. Between 2007 and 2016, IRD turnover in Asia-Pacific markets grew at 5% compound annual growth rate (CAGR), while FX turnover grew at 6%. Global IRD and FX turnover grew at 4% and 5% CAGR, respectively, over the same period.

Despite the increasing trading activity in Asia-Pacific markets, the trading volumes in those markets still remain low as a percentage of global trading volumes. For example, Hong Kong, the largest Asia-Pacific market by IRD trading activity on a net-gross basis, had only a 3.6% global market share, while the US and the European Union (EU) accounted for 40.8% and 47.5%, respectively, of global daily average IRD turnover in April 2016. Singapore, the largest Asia-Pacific market by FX trading activity on a net-gross basis, accounted for only 7.9% of the global daily average turnover, while the US and EU represented 36.9% and 47.6%, respectively, in April 2016.

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