March 10, 2025 — A mix of political upheaval, geopolitical conflict and macroeconomic concerns is poised to fuel increases in derivatives trading activity.
Uncertainty about the impact of newly enacted policies from the Trump administration and the direction of inflation, interest rates and the economy have investors around the world on edge. As institutions and retail investors alike reposition their portfolios to better withstand the resulting volatility, many will turn to derivatives markets.
More than 80% of the 263 derivatives market participants and experts participating in a Q1 2025 study by Crisil Coalition Greenwich conducted in partnership with the FIA believe political instability will drive growth in derivatives trading volume in the next two years. Roughly half of respondents also think fluctuations in interest rates in the U.S. and around the world will contribute to expanding derivatives trading volumes.
“Questions about tariffs, government reorganization, rising geopolitical tensions, and continued conflicts in Ukraine and the Middle East have the potential to keep markets volatile for the foreseeable future, motivating investors and intermediaries to look to the derivatives market to help manage through the consequences,” says Stephen Bruel, Senior Analyst on the Market Structure & Technology team at Crisil Coalition Greenwich and author of Drivers of derivatives markets growth in the year ahead.
Secular Trends Also Driving Growth
In addition to what seem to be mounting macroeconomic and political risks, growth in global derivatives markets is also being driven by several powerful secular trends.
Retail participation in the derivatives markets is increasing around the world due to improved access and new products, and innovation is making derivatives markets more efficient and cost-effective for all investors by lowering trading costs, generating scale and providing new features on listed products, such as more event and digital asset contracts. In addition, policy changes related to cryptocurrencies could unlock new growth for derivatives markets.
“The Trump administration has proven itself more supportive of digital assets, and thus, the ecosystem of cryptocurrencies and derivatives on those currencies could face less opposition and grow more rapidly,” says Stephen Bruel.
Drivers of derivatives markets growth in the year ahead identifies the primary drivers of market growth and examines the impact that tariffs, deregulation, macroeconomic events, interest-rate fluctuations, changes in energy policy, and other factors will have on derivatives markets in the months and years to come.