“Intense” trading sends trading volumes to record

“Intense” trading sends trading volumes to record

Trading volumes on the stock and futures markets surged in February after fears about the impact of the spread of the coronavirus caused major asset classes to falter.

Stock market data showed that trade flows increased sharply last week, when the U.S. S&P 500 stock index fell more than 10% from a recent high to record its fastest correction since the 1930s.

Intercontinental Exchange, which owns NYSE Euronext and other platforms, said it processed a daily average of 7.6 million futures and options in February – a new monthly record. Deutsche Börse, the German exchange group, said Friday was the heaviest day for stock trading since 2008. Its monthly trading volume increased 60% from 2019 to 183 billion euros. .

CME Group, the world’s largest futures exchange, said it had its second busiest day. “We have seen a flight to quality,” said Derek Sammann, global manager of commodities and options at CME. “People were out of the equities and turned to fixed income.”

During the market shake last week, the S&P 500 Index recorded its largest one-day decline since 2011. Government bonds rushed higher, driving the 10-year US Treasury yield benchmark at a record low below 1.3% as investors sought security in paradise.

“It was intense. . . our busiest week to date, “said a European trader who declined to be named. “It was a record day after a record day, and everyone seemed to get bigger than the last one.”

Friday was the second busiest trading day ever recorded in the United States, according to data from CBOE Global Markets. Turnover reached 19.35 billion contracts, just behind the level of 19.76 billion set in the depths of the financial crisis in October 2008. Almost $ 1 billion in shares have changed hands.

Traders who had bet on US stocks to continue rising “were caught by very long futures positions on US stocks in the correction and were forced to unwind those positions abruptly,” said Nikolaos Panigirtzoglou, analyst at JPMorgan, in a note to customers.

These rapid changes have resulted in record volumes of exchange traded funds. State Street SPY, the world’s largest ETF following the S&P 500, reached a record high for the day’s traded value, which reached $ 113 billion.

Bond ETFs, which trade on the stock markets but are made up of fixed income securities, have also experienced a rush for activity. Vanguard’s BND bond ETF, the second largest of its kind, hit a record high on negotiated value on Friday while iShares AGG of BlackRock, the world’s largest bond ETF, celebrated its second day.

The exchanges could benefit from a new activity in March. Panigirtzoglou noted that the sharp rise in bond prices and the decline in equities had changed the composition of the portfolios of investors who trade in several asset categories, such as pension funds, sovereign wealth funds and funds. balanced mutual funds.

“It is likely that these investors will buy stocks and sell fixed income securities to rebalance at some point in the weeks and months to come,” he said. However, he added that the timing of these rebalancing efforts was not clear, as many funds are prevented by regulations from carrying out rapid shifts.

Additional report by Robin Wigglesworth in Oslo



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