Quarterly Trading Report – Q4 2023: Rally Time

Executive summary:

  • A renewed sense of optimism emerged during the fourth quarter, sparking an increase in U.S. equity trading volumes and a rally in in risk-on fixed income assets
  • S&P 500 Index options set a new single day volume record during the quarter, while U.S. Treasury futures and options and quarterly equity index options set a quarterly average daily trading volume record.
  • As expected, trading volumes slipped and liquidity declined in December due to the year-end holidays—but have since rebounded in 2024.

The final quarter of 2023 may have started off on shaky ground, but there’s no question it ultimately found its footing.

Uncertainty over the end of monetary tightening and a potential U.S. government shutdown at the beginning of the fourth quarter waned as the quarter progressed, sparking a market rally and a renewed sense of optimism among the four major asset classes we trade: equity, fixed income, foreign exchange (FX) and derivatives.

As the quarter hit its stride, we saw a notable increase in U.S. equity trading volumes, a decrease in European intraday equity volatility and a rally in risk-on fixed income assets. Meanwhile, liquidity conditions improved in currency and derivatives saw record volumes. Predictably, trading volumes and liquidity declined with the approach of the year-end holidays in December—but have since rebounded to start the new year.