The Nomad Economist: How Big is the Derivatives Market


The Nomad Economist
Premiered Jun 21, 2022

The visible or measurable size of the derivative market, if you include options, futures, swaps, forex spreads etc, is more than $300 trillion. But there is an invisible or not easy to measure component, which is probably 3 times larger than 300 trillion. So those 2 added together, the size of the derivative markets is approaching $1200 trillion or 1.2 quadrillion.

The total size of the world economy itself is less than $73 trillion. In other words, the derivatives market is more than 10 times larger than the size of the world economy. The derivatives market is, in a word, gigantic. So how can that be? Well largely because there are numerous derivatives in existence, available on virtually every possible type of investment asset, including equities, commodities, bonds and foreign currency exchange.

Some market analysts even place the size of the market at more than 10 times that of the total world gross domestic product GDP. However, other researchers challenge these estimates, arguing of the size of the derivatives market is vastly overstated.


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