Financial transactions in the US - some new figures

A year ago, I posted a blog about how the US financial system processes at least $15 trillion a day - based on a report from the New York Federal Reserve which used numbers obtained during 2010.

How are those figures holding up today?

Well, it would appear that there was a substantial drop in the total volume of money going through the system between 2011 and 2012 - at least for some of the key players.

For example, the Chicago Mercantile Exchange's financial report for 2012 said that there had been a 15% drop from the $1.086 quadrillion that it handled in 2011 to a mere $806 trillion in 2012. Still at 0.1%, a financial transaction tax could still raise a handy sum if applied to all of that.

One other interesting outfit is the Options Clearing Corporation (OCC). In 2013, they handled well over 4 billion contracts in Equity, Index and ETF Options. I wrote to them to ask them what this corresponded to in terms of dollars, and a very nice man at OCC immediately replied to say that these contacts had a total premium value of $1.3 trillion - and that I could find the details on their website here.

So, of course, I did. And here is what I found.

As you can see, premiums dropped back from $1.36 trillion in 2012 to a mere $1.2 trillion in 2013. Looks like times are rough for OCC too.

But here's the 64 quadrillion dollar question. If the premiums on the trades were $1.2 trillion, what were the actual values that were being traded? This is something that you can't find on OCC's site. But my understanding is that when people buy an option on a share, the premium they pay might be a small percentage of the actual value - maybe 1% or less. Anyone like to suggest what the actual value of transactions handled by OCC could be?

Another clue comes from a comparison with Euroclear PLC. On page 9 of their 2012 Annual Report you can find the following graph showing that their Turnover, or the value of securities transactions settled, was €541.6 trillion in 2012, a 7% decrease compared with 2011.

But that turnover was based on a mere 159 million netted transactions, implying that the average value of each transaction was a very impressive €3.4 billion each (!). If the 4 billion transactions handled by OCC were worth the same sort of amounts, OCC could be clearing as much as $16 quadrillion a year. Now that would be worth taxing with a 0.1% FTT. Hey, even a 0.001% FTT would be well worth it - I make that $160 billion a year.