By Alexander Osipovich and Gunjan Banerji
A key turning point for futures traders in the early hours of Nov. 9 was Donald Trump's 3 a.m. acceptance speech. The often bombastic candidate struck a conciliatory tone and focused on the American economy, spurring traders to rethink what a Trump presidency would mean for growth.
"I know people who started buying S&P futures a minute or two into his acceptance speech," said Michael Cosgrove, a managing partner at Vectra Capital LLC, a New York-based commodity trading firm.
That kind of response helped send futures volumes to historic records in the wake of Mr. Trump's unforeseen win.
CME Group Inc., the world's biggest operator of derivatives exchanges, said Thursday that 44.5 million contracts traded hands on Nov. 9, smashing the previous record of 39.6 million from Oct. 15, 2014. Individual records were broken in futures on crude oil, gold, stocks, interest rates, the Japanese yen and Mexican peso, as well as some related options.
In contrast, while volumes in cash equities across exchanges rose to 12.1 billion shares on Nov. 9, that figure doesn't make it into the top 20 days historically, data from exchange operator Nasdaq Inc. show.
The intense trading set off by the election snapped a lull that had lasted several months. Volatility and trading activity in futures had been muted for much of the year's third quarter.
The futures-volume numbers captured turbulent after-hours trading during the night after polls closed, when early expectations of a Hillary Clinton victory gave way to the increasing realization that Mr. Trump had won. Market sentiment shifted radically as Mr. Trump built a lead in key swing states and pledged in his acceptance speech to invest in infrastructure.
"The interpretations of the meaning of a Trump victory seemed to morph throughout the night. And that morphing added to the level of volume," said Martin McGuire, a Chicago-based managing director at brokerage TJM Investments LLC.
In a separate unexpected move, CME announced late Thursday that Chief Executive Phupinder S. Gill, who has been at the company's helm since 2012, intends to retire at the end of the year. His contract had been set to run to 2019. Chairman Terrence A. Duffy will add the CEO job.
Futures exchanges like CME will likely see a bump to profits this quarter, after being well-positioned to benefit from the late-night trading frenzy because trading in stocks is concentrated between 9:30 a.m. and 4 p.m. Eastern time when stock exchanges are open.
"The futures markets, because they're nearly 24-hour markets, benefited immensely from an event that happened in the middle of the night when you couldn't trade single names," said Vectra Capital's Cosgrove.
Stocks have rallied since the election, defying predictions that a Trump win would create a nightmare scenario for markets. The Dow Jones Industrial Average soared 475 points over two days to close at a record on Thursday.
CME's shares surged 11% over two days -- their biggest two-day jump since February 2012.
On election night, investors seemed to be monitoring county-by-county voting data and projections on television, according to Paul Jiganti, Chicago-based managing director of business development at IMC, a market-making firm.
"These microbursts of information are absorbed so quickly and a new fair price is established," said Mr. Jiganti, who was following futures markets on his iPad while watching election results on television.
The jump in trading on Wednesday contrasts with the third quarter, in which CME logged a nearly flat quarter for revenue amid sagging volumes in equities and agricultural commodities.
"In recent months, there had been an eerie level of calm that was shattered by the dramatic turn of events in the last 48 hours," said TJM's McGuire.
Other futures exchanges also reported record volumes. CBOE Holdings Inc. said overnight trading in its VIX volatility futures after the election broke the previous record set on June 24, the day after Britain's surprise vote to leave the European Union.
Investors flocked during the night hours into avenues of protection such as VIX, S&P 500 and fixed-income futures, said JJ Kinahan, chief market strategist at TD Ameritrade. "Many people had sort of discounted Trump's chances."
--Inyoung Hwang contributed to this article.
Write to Alexander Osipovich at firstname.lastname@example.org and Gunjan Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
November 11, 2016 10:29 ET (15:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.