Size of the Derivative Market

The derivative market is much bigger than the stock market in terms of underlying assets. It is estimated to have an underlying amount of more than $1.2 quadrillion in terms of outstanding contracts, which is more than 10 times the world’s GDP.

There is however a vast difference between the principal amount of the contract and the value of the contract. For example, an agreement to buy 100mn British Pounds at an exchange rate of 1.3 USD has a principal amount of $130 million, but the value of the contract could be only $1 million.

As of 2022, the National Stock Exchange (NSE) of India is the world’s largest derivatives exchange based on the statistics maintained by the Futures Industry Association (FIA), a derivatives trade body. NSE was the global leader in trading equity index options and currency options in terms of number of contracts.