FIA-SIFMA Flash Poll Measures Derivatives Markets Sentiment

Responses point to optimism about business outlook, pessimism on regulatory environment

The following was first published by FIA on February 8, 2023

FIA and SIFMA’s Asset Management Group conducted a joint poll of their members during January to capture buyside and sellside views on liquidity, regulation, margin, blockchain and other topics relevant to derivatives markets. The poll garnered more than 100 responses from a curated list of asset managers and brokers actively engaged in the trading and clearing of futures, options and swaps.

Key findings include:

• Industry optimism: When asked whether the business environment for their firm was better or worse than the beginning of 2022, 54% of respondents said conditions are better than a year ago.
• Regulatory pessimism: When asked whether the regulatory environment for their firm was better or worse than the beginning of 2022, 32% of respondents answered it was worse, compared with 23% who said it was better.
• Impact of SEC rules: When asked about the large number of regulatory proposals set forth by the US Securities and Exchange Commission across 2021 and 2022, more than half of respondents said the regulations would result in decreased derivatives product offerings. In a separate question, more than half of respondents also said they believe the rules will increase consolidation within the industry.
• Liquidity factors: When asked about ways to boost liquidity in the exchange-traded derivatives markets, the most common responses were “reduction in capital requirements” and “reduction in regulatory cost and uncertainty”.  A smaller but still significant number pointed to improvements in the processing of trades, a top priority for operational staff on both the buyside and the sellside.
• Volatility: More than half of the respondents said they see increasing use of margin optimization tools in response to the increase in margin requirements set by clearinghouses. Margin requirements typically rise when prices become more volatile, making it more critical for market participants to factor margin costs into their trading decisions.

A PDF of the full findings can be downloaded here. 

FIA and SIFMA prepared the survey in advance of its annual Asset Managers Derivatives Forum 2023, which took place 8-10 February in Dana Point, California.