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Can
adia
n Ann
ual D
eriv
ativ
es C
onfe
renc
e N
ovem
ber
17-1
9, 2
014
The
Evo
lutio
n of
The
Can
adia
n D
eriv
ativ
es M
arke
t
And
y N
ybo
Hea
d of
Der
ivat
ives
Res
earc
h
2
Focu
s
Intro
duct
ion
Tren
ds in
glo
bal d
eriv
ativ
es m
arke
ts
Cha
ract
eris
tics
of C
anad
a Fu
ture
opp
ortu
nitie
s K
ey ta
keaw
ays
3
Tren
ds in
glo
bal d
eriv
ativ
es m
arke
ts
4
- 2
4
6
8
10
12
Amer
icas
A
sia
Paci
fic
EAM
E
Volu
me
of tr
adin
g (B
illio
ns o
f con
tract
s)
Glo
bal f
utur
es v
olum
es a
re s
low
ly re
cove
ring
afte
r hitt
ing
a re
cord
Sou
rce:
WFE
, TA
BB
Gro
up
Key
Driv
ers
Shift
ing
glob
al m
onet
ary
polic
y In
crea
sed
fixed
inco
me
mar
ket
vola
tility
R
isin
g in
tere
st in
inde
x st
rate
gies
In
tern
atio
nal i
nves
tmen
t flo
ws
and
fligh
t to
qual
ity
C
AG
R -1
2%
5
- 2
4
6
8
10
12
14
Amer
icas
A
sia
Paci
fic
EAM
E
prim
arily
a re
sult
of a
nem
ic v
olat
ility
in u
nder
lyin
g eq
uity
mar
kets
Sou
rce:
WFE
, TA
BB
Gro
up
Key
Driv
ers
Ane
mic
vol
atilit
y La
ck o
f hig
h vo
lum
e st
rate
gies
Es
peci
ally
pro
p, q
uant
& d
ispe
rsio
n G
loba
l ban
k ca
pita
l rul
es
Not
e: K
ospi
200
not
iona
l rev
erse
spl
it in
av
g vs
52M
M a
vg
C
AG
R -1
9%
Volu
me
of tr
adin
g (B
illio
ns o
f con
tract
s)
6
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Inte
rest
Rat
e E
quity
En
ergy
C
omm
oditi
es
FX
Oth
er/M
etal
s
Sou
rce:
FIA
, TA
BB
Gro
up
US
futu
res
mar
kets
are
on
a te
ar, n
o su
rpris
e gi
ven
fixed
inco
me
prod
uct l
iqui
dity
Volu
me
of tr
adin
g on
U
S e
xcha
nges
(B
illio
ns o
f con
tract
s)
7
US
opt
ions
trad
ing
cont
inue
s to
incr
ease
; 201
4 vo
lum
e on
pac
e to
re
ach
the
seco
nd h
ighe
st le
vel o
n re
cord
ETF
35
%
Inde
x10
%
Sin
gle
Sto
ck
56%
Volu
me
by ty
pe o
f opt
ion
2014
:H1
Sou
rce:
O
CC
, TA
BB
Gro
up e
stim
ates
S
ourc
e:
OC
C
0.7
0.8
0.8
0.9
1.2
1.5
2.0
2.9
3.6
3.6
3.9
4.6
4.0
4.1
4.2
2000
to 2
014
CA
GR
: 14%
Bill
ions
of c
ontra
cts
Annu
al U
S O
ptio
ns T
radi
ng V
olum
e 20
00 to
201
4P
Key
Driv
ers
Dem
and
for i
ndex
and
ETF
pro
duct
s St
rong
gro
wth
in w
eekl
ies
Ret
urn
of th
e re
tail
inve
stor
In
satia
ble
dem
and
for v
olat
ility
exp
osur
e
8
Cha
ract
eris
tics
of C
anad
a
9
19.2
6.7
4.6
3.8
3.1
2.4
2.3
1.9
1.6
1.5
1.5
1.5
1.5
1.3
1.3
1.2
1.1
1.0
NY
SE
NA
SD
AQ
OM
X
Japa
n E
xcha
nge
Gro
up
Euro
next
Hon
g Ko
ng E
xcha
nges
Sha
ngha
i SE
TMX
Gro
up
Deu
tsch
e B
örse
SIX
Sw
iss
Exc
hang
e
She
nzhe
n S
E
BS
E In
dia
Nat
iona
l Sto
ck E
xcha
nge
Indi
a
Aus
tralia
n S
E
Kore
a Ex
chan
ge
NA
SD
AQ
OM
X N
ordi
c E
xcha
nge
BME
Span
ish
Exch
ange
s
BM
&FB
OV
ES
PA
Joha
nnes
burg
SE
equi
ty m
arke
ts ra
nk s
even
th in
term
s of
mar
ket c
ap
Fina
ncia
ls
34%
Ener
gy
26%
Mat
eria
ls
11%
Indu
stria
ls
8%
Con
sum
er
disc
retio
nar
y 6%
Tele
com
4%
Con
sum
er
stap
les
4%
Hea
lth
care
3%
Util
ities
2%
In
form
atio
n te
chno
logy
2%
Con
cent
ratio
n in
fina
nce,
ene
rgy
and
na
tura
l res
ourc
e se
ctor
s pr
ovid
es
bene
fits
and
chal
leng
es
Sou
rce:
WFE
, TM
X, T
AB
B G
roup
10
Pen
sion
fund
s $1
,300
.0
Mut
ual f
unds
$1
,100
.0
Insu
ranc
e co
mpa
nies
$6
45.0
Exc
hang
e Tr
aded
Fun
ds
$70.
0
Hed
ge fu
nds
$55.
0
Tota
l Ass
ets
unde
r M
anag
emen
t $3
.2 T
rillio
n
Can
adia
n ca
pita
l mar
kets
ben
efit
from
a s
ubst
antia
l dom
estic
in
stitu
tiona
l inv
esto
r bas
e
Sou
rce:
CLH
IA, I
FIC
, Sta
tistic
s C
anad
a, E
TFIn
sigh
ts, T
AB
B G
roup
est
imat
es
11
(60,
000)
(40,
000)
(20,
000) -
20,
000
40,
000
60,
000
80,
000
100
,000
120
,000
Deb
t Eq
uity
& In
v Fu
nds
Sou
rce:
Sta
tistic
s C
anad
a
Inte
rnat
iona
l inv
estm
ent f
low
s ha
ve b
een
cons
iste
nt, w
ith
sign
ifica
nt fl
ows
com
ing
from
bot
h th
e U
S a
nd E
urop
e
Aus
tralia
C
anad
a D
enm
ark
Ger
man
y Lu
xem
bour
g N
orw
ay
Sin
gapo
re
Sw
eden
S
witz
erla
nd
Cou
ntrie
s w
ith
AA
A R
atin
g
12
7.3
8.1
10.7
12
.9
18.2
27.6
28
.5
22.1
17.2
24.2
33.1
34
.9
40.9
36.9
Mill
ions
of
cont
ract
s
Futu
res
mar
kets
in C
anad
a ha
ve b
enef
ited
from
man
y of
the
sam
e tre
nds
impa
ctin
g gl
obal
mar
kets
3.5
12.2
20.9
S&
P/T
SX
60 In
dex
Sta
ndar
d Fu
ture
s (S
XF)
Ten-
Year
Gov
ernm
ent o
f C
anad
a B
ond
Futu
res
(CG
B)
Thre
e-M
onth
Can
adia
n B
anke
rs'
Acc
epta
nce
Futu
res
(BA
X)
Mos
t Act
ivel
y Tr
ade
Con
tract
s Ja
n-14
to O
ct-1
4
Sour
ce: M
ontre
al E
xcha
nge
13
5.5
6.6
7.0
8.9
10.4
13.0
14.2
16.0
17
.6 20
.1 28
.8 2
9.4
25.4
20.6
Mill
ions
of
cont
ract
s
Opt
ions
mar
kets
hav
e se
en d
eclin
ing
volu
mes
, lac
k of
vol
atili
ty
and
wea
knes
s in
nat
ural
reso
urce
sec
tor a
re im
pact
ing
dem
and
0 20
40
60
80100
CB
OE
Vola
tility
Inde
x
Sour
ce: M
ontre
al E
xcha
nge,
CBO
E
S&
P
Can
ada
60 In
dex
0.4
Opt
ions
on
ETF
s 3.
0
Indi
vidu
al
Equ
ities
16
.9
Mos
t Act
ivel
y Tr
aded
Con
tract
s Ja
n-14
to O
ct-1
4
14
Old
Slid
es
Futu
re o
ppor
tuni
ties
15
Low
er,
8%
Hig
her,
23%
S
ame,
69
%
How
will
you
der
ivat
ives
act
ivity
ch
ange
in th
e ne
xt 1
2 m
onth
s?
The
buy
side
will
con
tinue
to g
row
thei
r use
of e
quity
inde
x de
rivat
ives
with
stra
tegy
exp
ansi
on a
nat
ural
evo
lutio
n of
act
iviti
es
Grow
/ Pr
otec
t As
sets
Low
er
Trad
ing
Cost
s
Upd
ate
Trad
ing
Plat
form
s
Inno
vativ
e Al
pha
Tech
nolo
gy
New
Ca
pabi
litie
s
Com
ply
with
New
Ru
les
Stre
amlin
e O
pera
tions
Fact
ors
driv
ing
incr
ease
d ad
optio
n
Sou
rce:
16
6% 12%
9%
1%
18%
19%
90%
82%
62%
54%
8%
25%
4%
6%
29%
41%
19%
19%
4%
55%
37%
CTA
201
2
CTA
201
4
Hed
ge F
und
2012
Hed
ge F
und
2014
Long
-onl
y 20
12
Long
-onl
y 20
14
How
do
you
use
futu
res
in y
our t
radi
ng s
trate
gies
?
Exp
osur
e to
Ass
et C
lass
A
lpha
R
isk
Mgm
t/Hed
ging
C
ash
Flow
s
Stra
tegi
es a
re e
volv
ing
as n
eed
to g
ener
ate
alph
a, re
gula
tion
and
capi
tal s
carc
ity im
pact
inve
stm
ent g
oals
Sou
rce:
17
Glo
bal r
egul
ator
y in
itiat
ives
will
eve
ntua
lly im
pact
the
type
s of
de
rivat
ives
use
d by
the
buy
side
Will
you
chan
ge th
e de
rivat
ives
pro
duct
s yo
u us
e as
a re
sult
of re
gula
tory
cha
nge?
Eva
luat
ing
33%
Yes
6%
No
61%
Mos
t reg
ulat
ory
initi
ativ
es h
ave
focu
sed
on in
tere
st ra
te p
rodu
cts
Cre
dit d
efau
lt sw
aps
Inte
rest
rate
sw
aps
Trad
ing
is s
low
ly m
ovin
g to
exc
hang
es
and
orga
nize
d tra
ding
faci
litie
s Tr
ansp
aren
cy is
a p
rimar
y go
al
Surv
eilla
nce
and
over
sigh
t St
ricte
r cap
ital r
ules
will
shi
ft eq
uity
OTC
m
arke
ts to
list
ed p
rodu
cts
over
tim
e Ba
sel I
II w
ill fo
rce
brok
ers
to ra
tion
capi
tal
Miti
gatin
g sy
stem
ic ri
sk is
a k
ey g
oal
Buy
side
nee
ds to
man
age
and
hedg
e ex
posu
res
Brok
ers
will
pro
activ
ely
mon
itor c
lient
ex
posu
res
Por
tfolio
mar
gini
ng ru
les
will
attr
act
grea
ter a
ttent
ion
Sou
rce:
18
Will
you
trad
e sw
ap fu
ture
s in
stea
d of
sw
aps?
0 20,0
00
40,0
00
60,0
00
80,0
00
100,
000
120,
000
140,
000
160,
000
0
20,0
00
40,0
00
60,0
00
80,0
00
100,
000 D
ec-1
2 A
pr-1
3 A
ug-1
3 D
ec-1
3 A
pr-1
4 A
ug-1
4
Ope
n In
tere
st
Volu
me
2-ye
ar5-
year
10-y
ear
30-y
ear
CM
E G
roup
Del
iver
able
Sw
ap F
utur
es
0 2000
0 40
000
6000
0 80
000
1000
00
1200
00
1400
00
0
5,00
0
10,0
00
15,0
00
20,0
00
25,0
00
30,0
00 Jan-
13
May
-13
Sep-
13
Jan-
14
May
-14
Sep-
14
Ope
n In
tere
st
Volu
me
Stan
dard
s Fl
exes
Eris
Exc
hang
e IR
Sw
ap F
utur
es
29%
17%
8%
71%
83%
92%
2014
2013
2012
Yes
No
Con
trib
utin
g Fa
ctor
s
As
exis
ting
OTC
sw
ap p
ortfo
lios
turn
over
, the
dec
isio
n to
use
sw
aps
or fu
ture
s w
ill in
clud
e al
tern
ativ
e pr
oduc
ts
that
allo
w u
sers
to re
duce
cle
arin
g co
sts,
esp
ecia
lly a
s m
anda
ted
clea
ring
for s
wap
s is
impl
emen
ted.
Liqu
idity
in s
wap
futu
res
as e
vide
nced
by
open
inte
rest
an
d tra
ding
vol
umes
has
incr
ease
d st
eadi
ly; v
olum
e gr
owth
aro
und
quar
terly
rolls
is e
vide
nce
of c
ontin
ued
adop
tion.
One
are
a of
pro
mis
e is
sw
ap fu
ture
s as
a re
plac
emen
t for
OTC
Sou
rce:
TA
BB
Gro
up, C
ME
Gro
up, E
ris E
xcha
nge
19
-
100
200
300
400
500
600
700
800
Fore
ign
Exc
hang
e In
tere
st R
ates
E
quity
-Lin
ked
Com
mod
ity
CD
S
Oth
er
glob
al O
TC d
eriv
ativ
es m
arke
ts c
ontin
ue to
exp
and;
es
peci
ally
in fo
reig
n ex
chan
ge a
nd in
tere
st ra
te in
stru
men
ts
Sou
rce:
BIS
, TA
BB
Gro
up
Not
iona
l am
ount
out
stan
ding
by
und
erly
ing
prod
uct t
ype
($ tr
illio
ns)
20
Inte
rest
rate
s6,
971
Ove
rnig
ht in
tere
st
rate
1,32
3
Zero
cou
pon
244
Bas
is
202
Tota
l O
utst
andi
ng
$8.9
trill
ion
The
Can
adia
n do
llar s
wap
mar
ket r
epre
sent
s a
futu
re s
ourc
e of
de
man
d fo
r lis
ted
deriv
ativ
e pr
oduc
ts
All
amou
nts
in
billio
ns o
f dol
lars
Not
iona
l am
ount
out
stan
ding
of C
anad
ian
dolla
r sw
aps
Sour
ce: S
wap
Cle
ar
21
Attr
actin
g tra
ding
inte
rest
in n
ew p
rodu
cts
is a
n in
trica
te p
roce
ss,
with
bui
ldin
g liq
uidi
ty a
key
det
erm
inan
t of s
ucce
ss
54%
46%
24%
19%
14%
5%
3%
Liqu
idity
Pro
duct
-driv
en
Cos
t
Fung
ibilit
y
Tech
nolo
gy
Ope
ratio
nal E
ffici
ency
Bra
nd
Liqu
idity
is a
lway
s th
e bi
gges
t fac
tor
dict
atin
g su
cces
s; g
ettin
g ou
t of a
trad
e is
eve
n m
ore
criti
cal
The
deci
sion
to tr
ade
at a
spe
cific
ve
nue
is d
riven
by
a ra
nge
of fa
ctor
s In
nova
tive
prod
uct d
esig
n Lo
w tr
adin
g co
sts
Com
preh
ensi
ve te
chno
logy
ca
pabi
litie
s E
ase
of a
cces
s Ex
chan
ge s
uppo
rt C
apita
l req
uire
men
ts a
re b
ecom
ing
mor
e im
porta
nt
Mar
gin
requ
irem
ents
C
ompr
ehen
sive
cle
arin
g in
frast
ruct
ure
Low
fees
Wha
t wou
ld b
e th
e m
ost i
mpo
rtant
ince
ntiv
e to
tra
de a
new
pro
duct
on
an e
xcha
nge?
D
river
s of
Pro
duct
Dem
and
Sou
rce:
22
0 5 10
15
20
25
30
VIX
up
120%
fro
m A
ug-2
2 to
O
ct-1
5 pe
ak
Ren
ewed
vol
atili
ty w
ill a
lso
have
a m
easu
rabl
e im
pact
; rec
ent V
IX
spik
es a
re p
rovi
ding
rene
wed
impe
tus
to tr
ade
Sou
rce:
Chi
cago
Boa
rd O
ptio
ns E
xcha
nge
23
Fede
ral F
unds
Rat
e 20
01-2
014
Sou
rce:
Fed
eral
Res
erve
ZIR
P: L
ates
t gui
danc
e su
gges
ts
rate
incr
ease
s to
beg
in in
201
5
Mon
etar
y po
licy
inte
nded
to k
eep
inte
rest
rate
s lo
w (Z
IRP
) are
su
ppre
ssin
g vo
latil
ity, w
hat h
appe
ns w
hen
QE
3 st
ops?
24
Can
ada
repr
esen
ts a
n at
tract
ive
inve
stm
ent t
arge
t for
glo
bal i
nves
tors
Im
porta
nce
of n
atur
al re
sour
ce s
ecto
r bot
h a
bene
fit a
nd a
cha
lleng
e D
epen
dent
on
glob
al e
cono
mic
reco
very
; lon
g te
rm p
rosp
ects
pos
itive
Fisc
al c
onse
rvat
ism
and
stre
ngth
of f
inan
cial
sec
tor a
re p
rime
attra
ctio
ns
Can
ada
is 1
of 9
cou
ntrie
s w
ith a
AA
A ra
ting
from
3 m
ajor
cre
dit a
genc
ies
Pru
dent
fisc
al p
olic
y al
low
ed it
to e
mer
ge fr
om 2
008
cris
is w
ith li
ttle
finan
cial
fa
llout
Glo
bal e
cono
mic
reco
very
will
resu
lt in
rene
wed
inve
stor
dem
and
Rec
over
y in
com
mod
ity a
nd e
nerg
y se
ctor
s w
ill a
ttrac
t inv
esto
r inf
low
s Sh
ifts
in g
loba
l mon
etar
y po
licy
will
driv
e de
man
d fo
r int
eres
t rat
e pr
oduc
ts
D
eriv
ativ
es m
arke
ts h
ave
sign
ifica
nt ro
om fo
r gro
wth
R
egul
ator
y pr
essu
res
to s
hift
tradi
ng to
cen
tral c
lear
ing
and
exch
ange
trad
ed p
rodu
cts
Hig
her v
olat
ility
will
ince
nt a
ggre
ssiv
e tra
ding
stra
tegi
es, e
spec
ially
in li
sted
opt
ions
O
rgan
ic g
row
th fr
om d
omes
tic in
vest
or b
ase
expl
orin
g th
e us
e of
der
ivat
ives
39
Key
take
away
s
25
For m
ore
deta
iled
info
rmat
ion
and
a co
py o
f the
repo
rt, p
leas
e lo
ok o
ut fo
r a p
ost-
Can
adia
n Ann
ual D
eriv
ativ
es C
onfe
renc
e N
ovem
ber
17-1
9, 2
014
The
Evo
lutio
n of
The
Can
adia
n D
eriv
ativ
es M
arke
t
And
y N
ybo
Hea
d of
Der
ivat
ives
Res
earc
h
