Futures volumes keep breaking records as Treasury market growsTrading volumes in futures pegged to the US$28trn Treasury market continue to hit new records amid a mushrooming in US government debt, as a growing number of institutions adopt the derivatives contracts to manage their interest rate exposure. CME Group’s Treasury futures broke trading records for a fourth consecutive year in 2024, with average daily volumes rising 20% to US$774bn, about 10% more than changed hands in underlying Treasury bond cash markets, according to CME. That upward trend has continued in 2025, with futures volumes hitting fresh highs, the exchange group said. Agha Mirza, global head of rates and OTC products at CME, said large open interest holders in Treasury futures grew to 1,871 firms in 2024 – up 4% from 2023. These are institutions that hold significant futures positions, helping to deepen the pool of liquidity in the market. “There has been a very broad and diversified growth across different market participants,” said Mirza. “Having such a large level of open interest ensures that, in any given volatility environment, we can continue to offer very deep liquidity, which is exactly what participants need as the US Treasury rolls its debt over and refinances nearly US$2tn of fiscal deficit.” There has been a notable increase in trading activity over the past year across products linked to US interest rates. Treasury volumes increased by 20% on the back of rising “macroeconomic uncertainty” and increased electronic trading, according to analytics firm Coalition Greenwich, while over-the-counter US dollar interest rate derivatives volumes rose 7% to a record US$142trn, according to ISDA. That has coincided with a period of greater uncertainty over the path of interest rates after the Federal Reserve tightened policy rapidly in response to sky-high inflation. It has also come when the size of the Treasury market has ballooned to fund the US government’s yawning fiscal deficit. The amount of Treasury securities outstanding has more than doubled over the past decade, according to trade body SIFMA, including a roughly US$7trn increase over the last four years as spending has risen following the pandemic. Mirza said that changes to the structure of fixed-income markets resulting from regulations like the Dodd-Frank Act and Basel III have encouraged greater use of futures to manage interest rate exposures, particularly among large asset managers. "All of these changes have one thing in common, which is a greater desire for efficiency and a reduced total cost of trading," he said. Bigger than bonds Futures volumes have now outstripped those in underlying Treasury bond markets for three straight years, according to CME, underlining how derivatives contracts have become mainstream. Compare that to 2012, when average daily volumes in futures were less than half that of Treasury securities. Some of this growth has caught the attention of regulators. In 2023, several global supervisors voiced concerns about the size of the Treasury basis trade, a popular hedge fund strategy arbitraging differences between futures and Treasury bond markets. Finance executives, including the hedge fund billionaire Ken Griffin, pushed back against those criticisms and regulators have since gone quiet on the subject. Traders have said the basis trade plays an important role in helping dealers move risk through the market. “The basis trade provides a very important function,” Mirza said. “When the Treasury marketable debt increases, you actually want to see these strategies that help find a home for that debt [grow] in a commensurate manner. As Treasury debt grows, you want other aspects of the market – trading, repo and so on – to grow in a commensurate manner.” Mirza said that trading from clients outside the US was one of the biggest contributors to last year's growth in futures, with activity from international markets now representing a third
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