Interest Rate Futures: Innovate and Prosper
Report Summary
Interest Rate Futures: Innovate and Prosper
The exchange landscape for interest rate futures is changing dramatically as exchanges launch new products and a new entrant emerges.
Boston, June 23, 2011 – A new report from Aite Group examines the state of the interest rate futures market. It explores the products available and highlights changes at and new offerings from the three major U.S. exchanges in the space.
The futures industry has traditionally been characterized by its single pool of liquidity for its products and by its clearing of trades via a clearinghouse that is owned and operated by the exchange itself. This model proved very successful during the global credit crisis, when a major clearing member of many exchanges went bankrupt. While the vertical clearing model will remain intact, the exchange landscape is changing in 2011, with a new participant entering the interest rate sector and many new products being launched.
“Since the credit crisis, volume in the interest rate futures market has been on a roller-coaster ride,” says Paul Zubulake, senior analyst with Aite Group and author of this report. “With little progress made in the fight to control debt in the United States and Europe, volume numbers will be supported in the medium- and long-term interest rate market. Volume in short-term interest rate futures will continue to suffer from a lack of volatility as the zero-interest-rate policy of the U.S. Federal Reserve continues, at least through 2012. The end users of derivatives products will continue to focus on cross-margin opportunities and the inevitable switch to central clearing of over-the-counter derivatives.”
This 20-page Impact Note contains 13 figures and six tables. Clients of Aite Group's Institutional Securities & Investments service can download the report.