By Simon Miller

Trading in stock price indices denominated in Japanese Yen surged after the devastating earthquake and tsunami according to the BIS quarterly report.

Measured in terms of the number of contracts traded, turnover globally rose modestly by 4% but in Japan, trading surged by 39% in the number of contracts and 41% in terms of notional amounts over the quarter as a whole.

The report noted: “Much of this rise took place after the severe earthquake and tsunami that hit the east coast of Japan on 11 March.”

Trading in contracts denominated in euros also picked up significantly (number of contracts: 15%, notional amounts: 23%). Sizeable growth in turnover also took place in a number of emerging markets, such as Israel (15% and 17%), India (25% and 15%), Thailand (9% and 22%), Chinese Taipei (32% and 88%) and South Africa (10% and 15%).

BIS quarterly report found that international futures and options exchanges activities rose in Q1 2011 with turnover measured by notional amounts increasing to $581trn (£353.6trn), 21% higher than in the previous quarter, while open interest, also measured in notional amounts, expanded by 24% between end-December 2010 and end-March 2011. Activity grew in all market segments except foreign exchange.

Turnover in the interest rate segment went up by 23% to $498trn, which “mainly reflected heavy trading in futures and options on short-term interest rates, whose turnover increased by 23% and 30%, respectively”, according to BIS. Trading in contracts on bonds also rose (15%).

The growth in activity affected all major currencies except the Japanese yen with particularly large increases recorded in the short-term sterling segment, where futures turnover surged by 57% and options turnover by 113% as traders took positions on the changing odds of a Bank of England policy rate increase.

The report added: “In Japan, the odds of a rate change remained low throughout the period, which could explain the 20% drop in turnover at both the long and the short end of the interest rate market.”

Activity in the foreign exchange segment of the international derivatives markets remained stable at $10trn in the first quarter of 2011, but according to BIS, this masks sizeable differences across currencies.

Turnover in contracts on the Japanese yen went up by 29% which was mostly due to short-term trading; open interest rose by merely 9%. Turnover in futures and options on sterling and the Swiss franc rose by 20% each. By contrast, turnover in the Brazilian real (which is traded predominantly on exchanges) fell by 17% and that in the euro by 6%.

Lower trading on Chinese exchanges weakened overall activity on the international commodity exchanges during the first quarter of 2011.

Worldwide turnover, in terms of the number of contracts, of commodity derivatives contracted by 20% as trading on Chinese exchanges halved, partly because contract sizes increased. Excluding China, turnover in commodity derivatives increased by 14%, with limited variation across commodity types.

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