• Would like $X$ to remain general, but if needed, let's say GBPUSD Exchange Rate.
  • By liquidity I mean overal market volume across exchanges / ease of opening and closing positions / total notional outstanding.

Completely depends on the asset class.

For currencies (including GBP/USD) the spot market is an order of magnitude more liquid than forwards, futures or options. However, some currencies with trading restrictions have a non-deliverable forward contract which can be much more liquid than the spot market for offshore investors (e.g. INR, KRW, TWD). Additionally BRL has an unusually liquid futures market.

For single name equities, the cash market is very liquid although many participants (particularly hedge funds) trade equities on swap, which are also liquid. In India, single name equity futures are pretty liquid compared to the cash.

For equity indices, futures are normally the most liquid - compare \$200 billion average daily volume in S&P 500 e-minis, compared with \$120 billion for the entire US cash equity market (but then you have to trade ~500 individual stocks) and \$20 billion for the SPY ETF. Korean (KOSPI) index options are unusually liquid.

For commodities, futures are much more liquid than spot (and most people can't trade spot anyway) but some smaller futures are traded on swap instead (e.g. freight, distillates).

In fixed income it is highly variable and depends on how you can access the market. The only liquid exchange-traded products are bond futures and short-term interest rate futures, but the cash bond and interest rate swap markets are also very liquid, depending on the currency.

  • $\begingroup$ What is the advantage of trading single name equities on a swap? $\endgroup$ Oct 18 '19 at 12:20
  • $\begingroup$ Leverage, simplicity. $\endgroup$ Oct 18 '19 at 13:52
  • $\begingroup$ To add to what you have above, for base metals nearly all of the liquidity is on the lme contracts, which are forwards rather than futures. And for gold, you have extremely liquid spot and futures markets as well as numerous liquid physically backed etfs. $\endgroup$
    – will
    Oct 20 '19 at 8:15

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