FIA releases COVID-19 industry survey on the global cleared derivatives industry

The Futures Industry Association (FIA) released last week the results of an industry sentiment survey focused on the impact of COVID-19 on the global cleared derivatives industry. The survey was conducted among FIA members representing a wide range of industry sectors, including clearing firms, exchanges, CCPs, brokers, principal trading firms, technology vendors, commercial end-users and additional service providers.

The unexpected spread of the coronavirus disease resulted in unprecedented volumes of trading in the derivatives markets during the first half of 2020. The heightened volatility has provoked an impact on industry participants’ operations, collateral requirements and working environment. However, the cleared derivatives markets have proved resilient in absorbing this turbulence and the associated risk.

The results of the survey showed strong support on the way exchange-traded and cleared derivatives markets have performed during the COVID crisis, with 62 per cent of the respondents believing the post-crisis reforms helped the derivatives markets cope with the pandemic. Additionally, 59 per cent of the respondents support that there was adequate liquidity in the market during times of extreme volatility, and 55 per cent maintain the decision to close trading floor did not harm market liquidity.

The survey also highlighted several issues that need to be addressed to strengthen the resilience of the system. Among those, 76 per cent pointed at margin volatility and unpredictability as the main challenge to review, with issues with clearing operations and systems coming at a second place.

Despite the strain of the pandemic, our markets have thrived in discovering prices and allowing businesses to manage risk. Liquidity in the marketplace has remained strong, and the clearing system successfully mitigated counterparty risk. However, the pandemic exposed areas where improvements can and should be considered. This is an opportune time to discuss the lessons learned from this recent period,” said FIA President and CEO Walt Lukken.

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