Key facts
- US buy-side firms increased their use of FX derivatives in Q1.
- Mutual funds and ETFs increased FX forwards notional by 15.6%.
- Mutual funds and ETFs increased FX options notional by 16.6%.
- Insurers' FX forwards positions grew by nearly 10%.
- The increase occurred during the first quarter.
US buy-side firms significantly boosted their engagement with foreign exchange derivatives during the first quarter of the year. This trend was particularly evident among mutual funds and exchange-traded funds (ETFs), which experienced a substantial rise in their positions. Specifically, these entities saw a 15.6% increase in the notional value of their foreign exchange forwards. Furthermore, their holdings in FX options also grew considerably, with a 16.6% climb in notional value. Insurers also contributed to this upward trend, with their forwards positions expanding by nearly 10% over the first quarter. This indicates a growing reliance on FX derivatives by various segments of the buy-side to manage currency risks and exposures.