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Market Capitalization of Equities and Derivatives

The current global market capitalization of equities stands at roughly $80 trillion, with the USA constituting roughly 40% of this market. On the other hand, derivatives, as quoted before, are a $500 trillion market, approximately six-times the size of the spot market. The primary reason for this significant gap is the cost-efficiency that derivatives provide. Derivatives reduce the cost of entry and carry for traders, who can use these products to create an array of trading strategies using proper risk management frameworks.