Regulatory reforms have already reshaped derivatives trading in Europe.
The upcoming potential shift towards central clearing for some derivatives classes
and the availability of CCPs globally will likely result in some fragmentation in
derivatives trading. FX derivatives markets are providing first insights into this:
Asia already makes up 26% of global FX derivative trading volumes in 2016. As
the Asian exposures of European firms and Asian financial sector grow, hedging
currency risks in local Asian markets seem to be becoming common practice.
This may fuel the ongoing decentralisation of global derivatives trading and give
rise to higher costs for market participants.