‘Small but perfectly formed’ was the verdict on the equity derivatives market this time last year. The equity segment of the derivatives market is still comparatively small but in the past year related earnings have soared, making analysts and observers sit up and take notice like never before. The business has become one of the hottest areas to work in.
The Bank for International Settlement (BIS) estimates that the over-the-counter (OTC) segment of the equity derivatives market was worth $5000bn in notional terms at the end of 2005 – a mere fraction of the overall $285,000bn OTC market. The BIS’s exchange-traded figures do not show the listed equity-linked segment as carrying much weight either. Notional turnover in listed equity derivative instruments accounted for just $39,000bn of the $344,000bn total that was traded on exchanges around the world in the final quarter of 2005.
