Derivatives of increasing importance to ASX

The Australian Stock Exchange (ASX) has seen a 5% drop in net profit for the year to June 30, but revenues from derivatives trading, clearing and settlement rose 15% to $32.5 million, with 46,226 options contracts traded – 20% higher than the 38,519 recorded for the same period last year.

ASX managing director Richard Humphry said: “The recent growth in the derivatives market, which has been largely driven by retail investors, as well as the growth in our interest rate market, provides an indicator that investors are seeking to diversify their portfolios.”

Humphry said the growth in derivatives activity was a "positive sign" for some of ASX's longer-term initiatives like the development of an equity futures market.

ASX held a licence to clear and settle futures for the now-defunct Australian Derivatives Exchange. But it has now lodged an application to establish a market to trade, clear and settle futures in its own right.

The licence is currently in front of a parliamentary committee, which has 28 days to raise any objections.

Subject to regulatory approval, ASX expects to introduce its first futures products during the current financial year. The first products are likely to be based on State Street Global Advisors’ (SSgA) ASX/S&P50 and ASX/S&P200 exchange-traded funds (ETFs), which were launched on August 28.