Effects of the Covid-19 pandemic on derivatives markets: Evidence from global futures and options exchanges

We examine key developments in trade-related activity on global derivatives markets during the Covid-19 pandemic. We first document significant increases in volumes and open interest. Drawing upon techniques from network theory, we next find greater market interconnectedness and notable changes in market centrality. For US exchanges, we examine their response to the increased market uncertainty and find large and more frequent changes to margin requirements. We also find a considerable drop in trader participation driven mainly by noncommercial traders along with an increase in the percent of open interest held by commercial shorts and noncommercial longs.