Lynn Strongin Dodds assesses the latest Acuiti SGX sentiment report which found a positive outlook for the next three months particularly among sell-side and prop trading firms
Despite April’s tumultuous time triggered by US tariff announcements, confidence in the derivatives market remains strong, according to the latest Acuiti SGX Global Market Sentiment Index
The Index, compiled quarterly, acts as a barometer for business outlook across asset managers, hedge funds, proprietary trading firms, sell-side execution desks, and clearing providers.
Data for Q2 2025 was collected from 588 senior executives, between January 6 and February 21 across North America, Europe, Asia Pacific (APAC), and the rest of the world. It revealed a modest dip in optimism, with the headline index falling from a record 78 in Q1 to 74 which is still at historically high levels.
The report found sell-side clearing and proprietary trading firms remain the most bullish, citing surging volumes in early April when President Trump announced the Liberation Day tariffs. Overall, 81% of the former were upbeat for the next three months, compared with 84% last quarter. Brokers and interdealer brokers led the way with 95%.
This is not surprising since as the report points out firms involved in derivatives trading tend to profit from volatility because it leads to buoyant activity and more opportunities to trade around market movements.
The report notes that the five trading days between the 4th and 10th April were the top five largest intra-day point swings in the S&P 500 since it was formed in 1957. This boosted volumes in equity futures with record trading in options across multiple exchanges.
The report cites the Futures Industry Association’s (FIA) exchange traded derivative (ETD) tracker data which revealed that April turmoil came off the back of a strong first quarter. Volumes on European and North American markets jumped 25% while exchange volumes to date by asset class rose 32% year-on-year from Q1 2024.
Prop firms, which also thrive on a roller coaster ride, were hopeful for Q3 due to investments they made in technology and expertise which they expect will help them street through uncertain waters. Ultra-low latency firms were the most cheerful with 91% confident about business performance over the next three months.
However, not every firm reaped gains which explains why sentiment dropped sharply in Q2 among asset managers, and in particular hedge funds, and after three quarters of positive growth. This was mainly driven by firms with managed futures strategies, many of whom experienced losses during the turmoil in April.
Asset managers remain the most pessimistic cohort, with a sentiment score of 69. Regulatory and political pushback on environment, social and governance (ESG) strategies, coupled with fee compression and operational costs, continue to weigh on this group, particularly in Europe.
Overall, the report notes regional differences with US firms reaching a new high – 89 – on the index driven by deregulation expectations and elevated volatility. By contrast, European confidence dropped sharply from 81 to 73 amid concerns about trade imbalances caused by the “America First” policy stance of the Trump administration. Meanwhile, APAC firms remained stable at 72.
In addition to gauging market sentiment, the Acuiti Q2 report also looks at trends and in this case highlighted the growing institutional interest in crypto derivatives. This is particularly the case with perpetual futures which are now being introduced on traditional regulated exchanges.
The main attraction of these instruments is that unlike standard contracts, they enable investors to speculate on the future price of cryptocurrencies like Bitcoin or Ethreuem without an expiration date. They use a funding rate mechanism to keep the contract price aligned with the underlying asset.
However, overall institutional engagement with crypto remains low with only 12% of firms actively trading digital assets. This indicates that near-term institutional adoption may be slow, with a larger wave expected further down the line. To date, proprietary trading firms are leading adoption, followed by hedge funds and sell-side brokers.
The main stumbling blocks noted by respondents include regulatory uncertainty, fragmented liquidity, limited trusted venues, and operational friction. In addition, for firms that just want exposure to directional movements, regulated onshore, traditional exchanges can suffice.
For many though the appeal of trading the asset class lies in trading against retail flow and arbitraging across different venues. In a highly fragmented and capital inefficient market, this can pose challenges, it added.
