Eurex members were able to cash in on the market swing, which encouraged a strong increase in volumes in some of Eurex’s newest derivatives products, with volatility derivatives being the standout performer.
The Deutsche Börse subsidiary recorded an “all-time peak” of 271,930 contracts traded on 24 April, the day after French voters reduced the field of presidential candidates to two, including controversial right-wing politician Marine Le Pen.
Prior the rally, a 22 percent decrease in equity lending revenue in Europe hit overall Q1 securities lending revenue.
French equities lending was one of the biggest losers in Q1, according to IHS Markit, which recorded a 41 percent drop-off in revenues year over year. Only the UK and Denmark saw greater revenue falls, with decreases of 42 percent and 69 percent, respectively.
Quarterly revenue for the French market was just shy of €40 million.
At the same time, Eurex Repo’s average monthly outstanding volume was down 59 percent in its GC Pooling business sector, but up 19 percent in its repo market.
For GC Pooling, April outstanding volume hit €47.7 billion, down from €115.9 billion in 2016. Repo volume grew from €34.9 billion to €47.7 billion over the same the period.
Thomas Book, Eurex CEO and head of derivatives markets trading at Deutsche Börse, said volatility derivatives give investors a more accurate way of taking a position on the outlook for volatility in European equity markets.
He said: “VSTOXX derivatives are designed to suit the needs of a growing number of sophisticated investors who are seeking, not only volatility exposure, but also to benefit from the efficiencies of exchange trading and central clearing.”
Eurex highlighted in a note to investors that EURO STOXX bank futures and options saw a particularly marked increase in activity and volumes, with average daily volumes doubling those of 2016, reflecting particular nervousness among many investors in the sector.