Business confidence across the derivatives industry reached its highest level for at least three years in the second quarter of 2026, driven by record trading volumes fuelled by heightened geopolitical tensions in the Middle East, according to the latest SGX Global Market Sentiment Index Report produced by Acuiti in association with SGX Group.
The index rose to 79 in Q2 2026, up from 75 in Q1, marking the third consecutive quarterly increase and the strongest reading in five quarters since the report started in Q3 2023. In Q1 2025, the index stood at 78.
The index is a quarterly benchmark of business confidence across the derivatives industry, based on a survey of senior executives in Acuiti’s network, covering proprietary trading, asset management, hedge funds, clearing firms and sell-side execution desks. Acuiti says , however, that the overall reading of 79 masks a sharp divergence across market segments. It finds that sell-side execution desks, sell-side clearing firms and proprietary trading firms all posted record confidence levels – reaching 85, 87 and 87 respectively – as elevated client trading activity and geopolitical volatility drove exceptional revenues for firms whose income is tied to transaction volumes.
In contrast, hedge fund confidence fell to 74 from 76 in Q1, while asset manager sentiment, though recovering to 60, remained the weakest segment in the survey. Firms exposed to directional risk faced a more challenging environment, with the sharp and unpredictable nature of geopolitical-driven market moves proving difficult to exploit. Several major multi-strategy hedge funds were reported to have suffered significant losses during the period, Acuiti notes.
“For firms who are typically exposed to volumes the first half of 2026 has been a period of significant opportunity,” says Ross Lancaster, head of research at Acuiti. “Record volumes across energy, rates and equities have translated directly into record revenues and record confidence. But for firms that take and manage directional positions, the speed and unpredictability of the moves that the market saw in March and April has been exceptionally challenging.”
Confidence rose across all regions for the second consecutive quarter, reflecting that the drivers of market performance – volatility, volumes and geopolitical disruption – were global in nature.
The latest report also examines institutional engagement with prediction markets, finding the sector at an early but “meaningful” inflection point. Acuiti says 9% of institutional derivatives participants are now actively trading prediction markets (it does not quantify “actively”), with a further 35% considering entry. Proprietary trading firms are the most engaged, with 13% already active and 31% considering participation. Interestingly, 29% of respondents “agreed” (26%), or “strongly agreed” (3%) that prediction markets can more efficiently price risks than traditional derivative markets, with just 9% “disagreeing” (6%), or “strongly disagreeing” (3%). Perhaps most pertinently, however, 60% said they did neither!
Unsurprisingly perhaps, regulatory uncertainty remains the primary barrier to broader participation, cited by 57% of respondents. CFTC regulatory approvals and clarity were identified by 56% as the single most important catalyst for mainstream institutional adoption, followed by established derivatives exchanges launching a full prediction market product suite.