Confidence in Derivatives Markets Rebounds: Survey

Business confidence in global derivatives markets has rebounded after two quarters of decline owing to receding geopolitical tensions and stabilising markets, according to SGX’s quarterly survey compiled by Acuiti, which notes that most firms see a positive finish to the year.

The results are based on responses from 578 senior executives around the world, including prop firms, hedge funds, asset managers, FCMs and other sell-side market participants. In the fourth quarter the confidence Index ticked to 71, up from 68 in the previous three months, with sentiment improving across all company types aside from hedge funds.

The third quarter saw strong volumes traded both in equity futures and options markets, particularly in the US where uncertainty around trade policy and concerns over high valuations fuelled activity. This backdrop created favourable conditions for firms whose performance is linked to volumes, such as prop firms and the sell-side, and for trend followers.

“As a result, most firms reported a positive outlook for the end of the year as the current trends, driven by contained uncertainty, are predicted by many to continue to prevail for the remainder of 2025,” the survey notes.

The sharpest increase came from the APAC region, while Europe registered the smallest improvement. “This quarter’s survey reported accelerating the shift toward Asian derivatives markets. Nearly three-quarters of firms are active on [sic] the region’s markets or planning to start trading them,” the survey observes.

In terms of participants type, sell-side clearing firms topped the Index with 82% of these businesses optimistic about the next three months. Together with execution desk respondents, executives cited strong interest rate activity in Japan. The continued expansion of the listed universe and innovative initiatives from exchanges to draw liquidity from OTC markets were also mentioned as drivers.

Sell-side execution desk staff said their confidence was boosted by expected volatility in energy markets at the end of the year and prop firms have recovered their poise with low-latency and algorithmic trading firms leading the rise in optimism.

For asset managers, market conditions improved due to lower volatility conditions and rising equity markets, however, high equity market valuations and a potential fallout from disruptions in the US private credit market remain risks in the last quarter of the year.