CME Group has reported record growth in its equity index sector futures, fueled by rising market volatility triggered by uncertainty surrounding tariffs introduced by the Trump administration. This economic unpredictability has pushed investors to reassess their market exposures, driving a sharp increase in demand for risk management tools. As a result, CME saw a notable surge in average daily volumes (ADV) across its futures offerings. In the first quarter of 2025 alone, the exchange recorded an ADV of 29.8 million contracts—up 13% from the same period in 2024. Equity index futures played a key role in this growth, with sector-based products gaining popularity amid shifting market sentiment. CME has also expanded its product lineup to accommodate evolving investor needs, introducing innovations such as derived blocks and new index contracts. As global uncertainty continues, CME’s diverse futures ecosystem remains a crucial destination for managing portfolio risk and positioning in volatile conditions.
Surge in Trading Activity
In the first quarter of 2025, CME Group reported a record quarterly ADV of 29.8 million contracts, marking a 13% increase from the same period in 2024. This surge was not limited to equity index contracts but also included historic highs across interest rate, agricultural, foreign exchange, and cryptocurrency products.
Paul Woolman, CME Group’s Global Head of Equity Products, emphasized the pivotal role of uncertainty in driving these trends. “The key word really is uncertainty,” he said in an interview with Markets Media. “Clients are not sure what they should be doing to their exposures and how best to position themselves.”
This uncertainty translated into extraordinary spikes in trading volumes. On April 3, 2025, equities futures and options volume surged 43% above the year-to-date ADV. Remarkably, the following day saw another dramatic increase, with volume nearly doubling the average, hitting a 95% rise.
A Fragile Market Ecosystem
Nicholas Colas, co-founder of DataTrek Research, highlighted the broader implications of the current market dynamics. He pointed to a longstanding virtuous cycle connecting stock valuations, capital allocation, and economic policy—one that underpins American market resilience. However, Colas warned that prolonged volatility could erode investor confidence.
“A few months of volatility and ever-lower stock prices risk permanently damaging investors’ confidence in its foundations,” said Colas.
He cited the CBOE Volatility Index (VIX), which closed the week at 45.3—three standard deviations above its historical norm—as evidence of the intense pressure markets are facing. Colas also noted that while futures markets now price in a 68% probability of at least 100 basis points in rate cuts this year (up from 32% the previous week), such monetary policy shifts may not be enough to stave off a recession.
Crisis-Level Market Movements
Nicholas Colas, co-founder of DataTrek Research, pointed out the severity of the market’s instability, citing a rare +6 standard deviation 2-day move in the Nasdaq Composite on April 4, 2025. This significant market fluctuation, which has only occurred ten times since the index’s creation in 1971, signals heightened market turbulence, comparable to major financial events such as the 1987 crash, the dot-com bubble, and the 2008 financial crisis. While such anomalies have historically been followed by recovery, Colas stressed that sustained positive performance depends on substantial changes in government policy. He warned that without a decisive shift in economic policy, investor confidence could remain shaken. “There needs to be a sufficient change in current government policy and very soon,” Colas stated, underscoring the urgent need for action to stabilize the market and restore investor optimism amid the ongoing uncertainty.
Innovation in Futures Products
Woolman attributed much of the growth in equity index sector futures to innovations such as derived blocks. A derived block is a block trade where pricing and quantity are determined based on hedging activity in related markets like stock baskets and ETFs. This approach enhances liquidity and levels the playing field when compared to sector swaps or ETFs.
“Derived blocks have been very popular and helped level the playing field from a liquidity standpoint,” said Woolman. “They offer all the benefits of the futures wrapper.”
Another innovative offering launched in 2024 was the S&P 500 Equal Weight Index futures. Unlike traditional market cap-weighted indices, this product allocates equal weight to all S&P 500 constituents. Woolman noted that recent underperformance by the so-called “Magnificent Seven” tech stocks had made this product particularly attractive to investors.
Rise of Total Return and Dividend Futures
Equity index total return futures have also emerged as a significant growth area within CME’s over-the-counter (OTC) alternatives. ADV for these products grew by 90–100% in the first quarter of 2025. Woolman said clients increasingly favor these contracts over total return swaps due to greater transparency and capital efficiency.
“As liquidity has increased, we see more clients using equity index total return futures in lieu of total return swaps,” he said. “So far in 2025, ADV is roughly 100% up over what we saw in the whole of 2024.”
CME’s equity index dividend futures, launched in 2024, have also gained strong traction. Woolman reported that volumes are up approximately 50% this year, signaling rising investor interest in dividend exposure.
Growing Participation and Overnight Trading
The unpredictability of news from the Trump administration has also accelerated overnight trading activity. Woolman noted that both institutional and retail clients are increasingly active outside of regular market hours, taking advantage of CME’s overnight liquidity pool.
“As more clients become aware that the overnight liquidity pool is available, they are able to manage their risk in real time,” he said.
Options Market Expansion
Options continue to be another area of strong growth for CME. Option blocks—allowing clients to trade entire positions at a single price—have gained popularity since their post-COVID introduction. Woolman noted that retail trading of equity index options has also surged, supported by broader access through retail distribution platforms.
In 2024, CME launched options on six E-mini Select Sector futures and Bloomberg Commodity Index (BCOM) futures. Woolman confirmed that CME will continue to expand its suite of options and futures products in response to client demand.
“We will continue to add more options on newer products and additional futures products,” he said.
Frequently Asked Questions
What is driving the increase in CME Group’s equity index futures volumes?
The increase in volumes is primarily driven by heightened market volatility and uncertainty caused by tariffs introduced by the Trump administration. This volatility has led investors to seek ways to manage risk, particularly through equity index futures.
How much did CME Group’s average daily volumes (ADV) grow in 2025?
In the first quarter of 2025, CME reported a record quarterly ADV of 29.8 million contracts, marking a 13% increase compared to the same period in 2024.
What is a derived block trade in CME Group’s futures market?
A derived block is a block trade where the price and quantity are determined based on hedging transactions in related markets like stock baskets and ETFs. This approach helps enhance liquidity and provides flexibility in managing exposure.
How have sector futures products performed during this period of uncertainty?
Sector futures, particularly equity index futures, have seen significant growth as investors look for efficient and transparent ways to hedge their risks amid volatile market conditions.
What is the significance of the +6 standard deviation move in the Nasdaq Composite?
A +6 standard deviation move in the Nasdaq Composite on April 4, 2025, represents an extremely rare market fluctuation, indicating heightened volatility. Such events have historically been linked to major financial crises but have also been followed by recoveries if accompanied by decisive government policy changes.
What types of futures products are seeing growth in 2025?
Key areas of growth at CME include equity index total return futures, equity index dividend futures, and innovative products like derived blocks and S&P 500 Equal Weight Index futures.
How is CME addressing the growing demand for options?
CME has seen strong growth in options, particularly equity index options, which have become increasingly popular with both institutional and retail investors. CME continues to expand its options product lineup to meet evolving market needs.
What impact has the Trump administration’s tariff policy had on market activity?
Tariff uncertainty has created significant market volatility, influencing both institutional and retail investors to adjust their portfolios and risk management strategies, leading to increased demand for CME’s futures products.
Conclusion
CME Group’s record growth in equity index futures reflects a broader trend of investors seeking precision, flexibility, and capital efficiency in volatile markets. Driven by geopolitical uncertainty and facilitated by product innovation, the futures landscape is evolving to meet the complex needs of both institutional and retail investors.
