FIA releases COVID-19 industry sentiment survey
Washington, DC – FIA today released the results of an industry survey to gauge the sentiment of market participants on the impact of the COVID-19 pandemic on the cleared derivatives industry. The results showed that while the industry performed well during recent market volatility, there were several issues that need to be studied and addressed to strengthen the resilience of the system. These include unpredictable changes in margin, clearing operations and trade settlements during stressed market conditions. Survey respondents represented a wide range of industry sectors, including clearing firms, exchanges, CCPs, brokers, principal trading firms, technology vendors, commercial end users and additional service providers.
“Despite the strain of the pandemic, our markets have thrived in discovering prices and allowing businesses to manage risk. Liquidity in the marketplace has remained strong, and the clearing system successfully mitigated counterparty risk,” said FIA President and CEO Walt Lukken. “However, the pandemic exposed areas where improvements can and should be considered. This is an opportune time to discuss the lessons learned from this recent period.”
Highlights of the survey include:
- 76 percent of respondents identified margin volatility and unpredictability as a challenge needing review.
- 80 percent believe market participants should have been more aware that commodity prices can turn negative.
- 77 percent of those surveyed believed Covid-19 will cause our industry to permanently reduce the number of individuals in offices by more than 10 percent.
- 55 percent of respondents believe the closure of trading floors did not harm liquidity.
The survey also addresses the effects of Covid-19 on market liquidity, trade volumes, product growth, sustainability, and short selling bans. The survey was conducted June 4-11, 2020, and respondents came from the US, the UK, Singapore and 20 other countries around the world. 140 individuals responded to the survey and all responses were anonymous.
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FIA is the leading global trade organization for the futures, options and centrally cleared derivatives markets, with offices in Brussels, London, Singapore and Washington, D.C. FIA’s membership includes clearing firms, exchanges, clearinghouses, trading firms and commodities specialists from about 50 countries as well as technology vendors, law firms and other professional service providers. FIA’s mission is to:
- support open, transparent and competitive markets,
- protect and enhance the integrity of the financial system, and
- promote high standards of professional conduct.
As the principal members of derivatives clearinghouses worldwide, FIA's clearing firm members play a critical role in the reduction of systemic risk in global financial markets.
