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CHICAGO (Dow Jones) -- Shifts in key interest rates and the entry of major electronic-trading firms are driving a rebound in interest-rate futures volumes at the Montreal Exchange, according to its chief executive.

Activity in the Montreal Exchange's rate-futures markets through the end of October is 54% higher than 2009 levels, outpacing the growth seen by larger international rivals that run similar markets, said Montreal Exchange Chief Executive Alain Miquelon.

"There's much more happening as far as short-term rates in Canada," said Miquelon.

Interest-rate fluctuations, along with stock-market indexes and commodity prices, provide the basis for some of the most heavily traded futures markets in the world, run by companies like CME Group Inc. (CME), Deutsche Boerse AG (DB1.XE) and NYSE Euronext (NYX).

Trading in many major interest-rate futures markets has been dampened by central banks' efforts to keep credit flowing and hold benchmark rates at low levels. The U.S. Federal Reserve on Wednesday proceeded with a long-anticipated move to buy $600 billion in longer-maturity Treasurys, the latest in a string of unconventional moves to recharge the U.S. economy.

Resource-rich Canada experienced a milder slowdown relative to the U.S. and other major economies, Miquelon said, helping enable the Bank of Canada to hike its funds rate three times this year and spur hedging action.

The exchange also has been working to recruit more foreign high-frequency trading firms to trade on its markets. Miquelon said that Getco LLC and Allston Trading, major electronic market-making firms based in Chicago, have signed up as members of the exchange in recent months and are ramping up activity with an early focus on rate futures.

Exchange operator TMX Group Inc. (X.T), Toronto-based parent of the Montreal Exchange, may open an office in Chicago to liaise with more of these firms, Miquelon said. An office is possible in New York as well, he said. A new office in London already is planned for early 2011.

"We see algorithmic trading as in-bound volume," he said, noting a relative shortage of homegrown trading firms.

The growth in rate futures has driven a rebound relative to equity-index futures traded at the Montreal Exchange, with the two product groups split evenly in terms of activity.

As banks and major hedge funds around the world scaled back trading following the 2008 financial crisis, the traditionally larger fixed-income derivatives markets listed at the Montreal Exchange were outpaced by stock-linked contracts, Miquelon said.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

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