Brexit is having a positive impact on use of derivatives

Brexit is having a positive impact on the use of derivatives, says derivatives exchange Eurex in its latest monthly report. Market participants are focussing on the finance industry because of uncertainty around Brexit, it comments.

The departure of the UK from the EU entails significant changes to many banks’
business and operational models, it adds. This was reflected in strong volumes at Eurex, driven by a series of corporate news and related events.

Eurex says that market participants turned to its products to express their views on banks’ business strategies ahead of the reporting season. Europe’s largest derivatives exchange, is part of Deutsche Börse Group.

May saw strong demand for interest rate and equity derivatives

• Turnover rose 26 percent to €163m
• Participants strongly relied on equity derivatives (+36 percent) to hedge
  exposures on European markets
• Turnover in Eurex‘s fixed income products rose 31 percent to €47m

Average daily volume up

The average daily volume (ADV) in Deutsche Bank equity options rose by 104
percent to 74,347. ADV in UBS equity options climbed 60 percent to 36,536. Crédit Suisse equity options were up 29 percent to an ADV of 26,616.

To take a position on the overall industry, market participants relied on options and futures on the EURO STOXX Banks. These saw an ADV of 442,485 and an increase of 173 percent, says Eurex.