The Spanish stock exchange, Bolsas y Mercados Españoles (BME), has launched European-style cash-settled options through MEFF, the Spanish derivatives market. These options contracts are settled by differences – fulfilled on the settlement date through cash transfers equivalent to the difference between the price agreed in the contract and the settlement price at maturity.
This option type provides no possibility of early exercise. According to a press release from BME, the benefits of these contracts include standardisation, accessibility, and flexibility. With the options available in the order book and register applications, market transparency and efficiency is improved. They also allow for “more varied and sophisticated investment strategies without the possibility of the strategy holder having to deal with early exercises”.
In the initial phase sees options with Banco Santander, Banco Sabadell, BBVA, Endesa, Iberdrola, Inditex, and Repsol y Telefónica as underlyings.
