Confidence among major derivatives firms increased in the final quarter of 2025, breaking a six-month trend of declining optimism, according to an industry survey.
The SGX Global Market Sentiment Index, compiled by Singapore Exchange Group and the analytics firm Acuiti, climbed to 71 in the fourth quarter, up from 68 in the third. The rise suggests firms are anticipating heightened activity across equity, bond and energy markets as the year closes.
Despite the improvement, the overall mood remains more subdued than the high point recorded at the start of the year. The index surveys senior executives from a range of institutions, including hedge funds, asset managers, proprietary trading firms and banks.
Sell-Side Firms Lead Optimism
The report found that clearing houses and brokerage execution desks, often described as the “sell-side,” are the most buoyant. Strong demand for interest rate derivatives, notably in Japan, and sustained higher global rates are boosting clearing firms. Meanwhile, execution desks are expecting a surge in business from anticipated volatility in energy markets.
After a difficult previous quarter, proprietary trading firms, particularly those specializing in high-speed algorithmic strategies, registered a strong recovery in confidence. By contrast, optimism among hedge funds and asset managers remained largely unchanged.
Volatility Driving Activity
Will Mitting, managing director of Acuiti, said the market was entering a bullish phase. “Expected levels of volatility will drive volumes and the need to hedge and reposition,” he said. However, he added a note of caution, stating that some asset managers are concerned about the growing risk of a correction in global stock prices.
The survey also pointed to a growing focus on Asian markets. Two-thirds of firms trading Asian derivatives have increased their investments in the region during 2025. While China and India lead the list of markets seen as offering the most opportunity, the firms also highlighted Japan, Singapore, Vietnam, Taiwan and South Korea, underscoring the diverse appeal of the region.
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