Financial instruments

European Union's derivatives market is worth €453 trillion, ESMA says

ESMA has done its first study of the EU's derivative markets.
ESMA has done its first study of the EU's derivative markets.
Photo: AFP

The European Union's derivatives market is worth a notional €453 trillion and there are around 33 million transactions still open, the Paris-based European Securities and Markets Authority (ESMA) said in its first overview of it.

The study was based on data available as of February 24 from trade repositories. Under EU rules counterparties and clearing houses must report details of any derivative contracts that have been concluded, modified or terminated. 

ESMA's research covered interest rate, credit, equity, commodity and foreign exchange derivatives.

This "is but a starting point," ESMA said. There's "substantial work yet to be carried out on enhancing data quality and on further market and statistical analysis."

The study showed equity derivatives accounted for 48% of all transactions while, measured by value, interest rates made up the largest market at €282 trillion, ESMA said. 

Investopedia defines a derivative as a security with a price that is dependent upon or derived from one or more underlying assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset.

Derivatives can either be traded over-the-counter or on an exchange.    

(Alistair Holloway, alistair.holloway@wort.lu, +352 49 93 739) 

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