When it comes to derivatives trading, it is generally accepted that the over-the-counter (OTC) market volumes dwarf those of their exchange-traded counterparts, but equity derivatives may be the exception to the rule. Last year, a staggering &euro6.6 trillion ($5.7 trillion) of equity derivatives business was traded on Eurex, the Frankfurt-based derivatives exchange. Bank traders estimate this is at least three times more than the amount traded in OTC, and many predict that exchange-traded volumes can only get larger.

Equity derivatives are the fastest growing product area for many European exchanges. Equity futures business on Eurex in January 2002 was up 80% on the previous January, and equity options business increased by 33%. And exchanges continue to introduce new equity products. The London derivatives exchange Liffe launched single stock futures last year while Eurex introduced around 25 more stock and stock index options, and there are now around 70 exchange-traded funds (ETFs) available in Europe compared with just three in mid-2000.