Interest rate derivatives (IRD) trading activity increased in the first quarter of 2025, driven by elevated interest rate volatility, shifting central bank policy expectations and evolving inflation and growth outlooks. Trading in index credit derivatives also rose, as market participants responded to a changing macroeconomic environment and sought to manage credit exposure. The year-over-year increase in reported notional for both IRD and credit derivatives was influenced by revised block and cap thresholds by the Commodity Futures Trading Commission, which took effect on October 7, 2024, and led to higher disclosed traded notional from the fourth quarter of 2024.

Key highlights for the first quarter of 2025, include:

• IRD traded notional rose by 46.1% to $127.4 trillion in the first quarter of 2025 from $87.2 trillion in the first quarter of 2024. Trade count increased by 23.3% to 809.2 thousand from 656.4 thousand over the same period.
• 69.2% of IRD traded notional had a tenor up to and including one year, 21.0% had a tenor between one and five years and 9.8% had a tenor over five years.
• Cleared IRD transactions made up 86.5% of total IRD traded notional and 86.2% of trade count. 94.9% of fixed-for-floating interest rate swaps (IRS), 93.5% of forward rate agreements (FRA), 95.6% of overnight index swaps (OIS) and 12.4% of other IRD traded notional was cleared.
• IRD transactions executed on swap execution facilities (SEFs) represented 54.6% of total IRD traded notional and 76.1% of trade count. 48.8% of fixed-for-floating IRS, 88.2% of FRA, 56.9% of OIS and 33.3% of other IRD traded notional was executed on SEFs.
• Index credit derivatives traded notional climbed by 95.8% to $5.3 trillion in the first quarter of 2025 from $2.7 trillion in the first quarter of 2024. Trade count rose by 28.9% to 98.4 thousand from 76.3 thousand over the same period.
• Security-based credit derivatives traded notional increased by 0.8% to $196.9 billion from $195.3 billion in the first quarter of 2024. Trade count fell by 11.3% to 54.6 thousand from 61.6 thousand over the same interval.

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