Relatively stable interest rates and corporate wariness of exotic derivatives contributed to a 7.2% dip in trading volume last year at two of Chicago's biggest exchanges.

The number of financial futures and options contracts traded at the Chicago Board of Trade and the Chicago Mercantile Exchange last year declined to about 414 million contracts from a record high 446 million contracts in 1994.

William Crawford, a spokesman for the Mercantile Exchange, noted relative inactivity by the Federal Reserve Board in 1995, compared with 1994.

"In 1995 the Fed tinkered with interest rates only two times," he said. "Without that volatility our markets don't trade that actively."

The Board of Trade recorded a total of 160.3 million financial futures and options contracts trades in 1995, compared with the 1994 record of 177 million trades, a 9.4% decline.

Similarly, the Mercantile Exchange reported a 10.5% decline in combined financial futures and options volume, to 195.9 million this past year versus 219 million the year before.

Patrick Arbor, chairman of the Board of Trade, agreed that lower volatility in the financial markets was partly responsible for the decline. But he said events in other markets added to the decline.

"The bad publicity surrounding the use of both exchange-traded and off- exchange derivatives has led to a careful analysis by corporate treasurers of the use of these products," said Mr. Arbor. Though more scrutiny has caused some companies to reduce their activity, he thinks the decline is "only temporary."

At both markets, though, the declines were spread across a variety of both futures and options contracts.

In fact, the only major financial product group that showed any increase was the equity and index futures and options contracts at the Mercantile Exchange. Futures contracts in this group showed a 1.5% rise in trading volume, to just over 20.7 million, while the number of index options contracts traded rose 20.7%. However, the volume in this product group amounted to about 20% of the volume in the market's interest rate products.

But the increases in trading of options on interest rate products at the Board of Trade have made Mr. Arbor optimistic about the future of the market.

And big banks are encouraged about their prospects, thanks to the number of product innovations at both exchanges that cater to their needs.

"Ten years ago, we were strictly in interest rates and maybe some currencies," said W. Robert Felker, president of First Chicago Futures, the futures commission merchant of First Chicago NBD Corp. "Now we're into all kinds of markets. So that's going to help us diversify our sources of revenue and maintain more consistency of earnings."

Much of the expansion at both exchanges is focused on product offerings based on emerging markets.

This past year, the Mercantile Exchange opened a growth and emerging markets division and quickly lured 50 new members, including Latin American institutions like Bancomer, Banca Serfin, and Sociedad de Bolsa from Argentina. The division will host contracts on the currencies, interest rates, and stock indexes of nations like Mexico, Brazil, and others.

The Board of Trade countered by requesting approval from the Commodity Futures Trading Commission to offer futures and options contracts on three Brady bond indexes - the Latin America, Mexico, and Brazil indexes. The exchange's wholly owned subsidiary, the MidAmerica Commodity Exchange, also requested approval to trade a Mexican peso futures contract.

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