Overview and Scope
Derivatives and commodities brokerage refer to the activity of buying and selling commodity derivatives. Commodity derivatives brokerage entails trading standardized derivative (futures and options) contracts on recognized stock exchanges electronic trading platforms, subject to SEBI approval and existing regulations and laws governing by the commodity derivatives market.
Sizing and Forecast
The derivatives & commodities brokerage market size has grown strongly in recent years. It will grow from $511.73 billion in 2023 to $555.33 billion in 2024 at a compound annual growth rate (CAGR) of 8.5%. The growth in the historic period can be attributed to market globalization and integration, financial market innovations, risk management needs, economic growth and industrial demand, regulatory changes and compliance.
The derivatives & commodities brokerage market size is expected to see strong growth in the next few years. It will grow to $779.85 billion in 2028 at a compound annual growth rate (CAGR) of 8.9%. The growth in the forecast period can be attributed to emergence of cryptocurrencies, environmental, social, and governance (esg) investing, expansion of renewable energy markets, geopolitical factors, increasing retail participation. Major trends in the forecast period include technological advancements, rise of algorithmic trading and automation, regulatory compliance and reporting requirements, increased focus on risk management solutions, expansion of cryptocurrency trading services.
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Segmentation & Regional Insights
The derivatives & commodities brokerage market covered in this report is segmented –
1) By Type: Commodity Brokerage, Derivative Brokerage
2) By Brokers: Futures Commission Merchants, Introducing Brokers, National Futures Association, Commodity Pool Operator, Floor Trader, Other Brokers
3) By Derivative Contract: Options, Futures, Forwards, Swaps
4) By Application: Futures Company, Securities Company, Bank Institutions
North America was the largest region in the derivatives and commodities brokerage market in 2023. The regions covered in the derivatives & commodities brokerage market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa
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Major Driver Impacting Market Growth
The digitization of trading is expected to propel the growth of the derivatives and commodities brokerage markets going forward. Digital trading is the nearly fully online buying and selling of securities like stocks, bonds, mutual funds, ETFs, and currencies. Online trading helps monitor investments anytime, helps with faster transactions, and it is cheaper. Brokerage firms that deal in derivatives and commodities also offer specialized investment advice and solutions. For instance, in November 2021, according to UK Board Of Trade, a UK-based government department, a British government body concerned with commerce and industry, the digital sector alone contributed £151 billion ($197 billion) to the British economy, employing almost 5% of the national workforce representing as much as $11 trillion ($14 trillion) or 15.5% of global GDP. Therefore, digitization of trading is driving the growth of the derivatives and commodities brokerage market going forward.
Key Industry Players
Major companies operating in the derivatives and commodities brokerage market are developing new execution algorithms to gain a competitive edge in the market. An execution algorithm, also known as an execution strategy or trading algorithm, is a set of predefined rules and instructions programmed to automate the process of buying or selling financial instruments in the financial markets. For instance, in January 2021, Citigroup Inc., a US-based investment banking company, launched a new suite of intelligent execution algorithms designed specifically for global listed derivatives trading. The flagship algorithm, named ‘Arrival,’ is an implementation shortfall strategy crafted from scratch. It aims to minimize slippage by balancing the cost trade-off between market impact and price volatility in real-time across diverse market conditions. Arrival consolidates various strategies into a simplified access point, eliminating the need for clients to enter numerous parameters. Citi’s algorithm development focuses on capturing detailed instrument and contract-specific information for dynamic modeling of the order book and adaptive behavior to optimize execution performance. The suite includes other intelligent benchmark algorithms, such as TWAP, VWAP, and Close, along with various tactical strategies and smart order types to cater to diverse client requirements in the evolving landscape of multi-asset trading.
The derivatives & commodities brokerage market report table of contents includes:
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List Of Tables:
Table 1: Global Historic Market Growth, 2018-2023, $ Billion
Table 2: Global Forecast Market Growth, 2023-2028F, 2033F, $ Billion
Table 3: Global Derivatives & Commodities Brokerage Market, Segmentation By Type, Historic and Forecast, 2018-2023, 2023-2028F, 2033F, $ Billion
Table 4: Global Derivatives & Commodities Brokerage Market, Segmentation By Brokers, Historic and Forecast, 2018-2023, 2023-2028F, 2033F, $ Billion
Table 5: Global Derivatives & Commodities Brokerage Market, Segmentation By Derivative Contract, Historic and Forecast, 2018-2023, 2023-2028F, 2033F, $ Billion
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Table 75: Nomure Holdings Inc. Financial Performance
Table 76: Goldman Sachs Group Inc. Financial Performance
Table 77: Morgan Stanley Financial Performance
Table 78: Citigroup Inc. Financial Performance
Table 79: Motilal Oswal Financial Services Ltd Financial Performance
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