Euro-inspired Cash-Settled Options Introduced by BME

BME, the Spanish stock exchange, has taken a significant step forward in its continuous improvement efforts by launching European-style cash-settled equity options on its derivatives market, MEFF. This move is a testament to BME's responsiveness to client needs and its commitment to providing varied investment alternatives.

The new contracts, which will be available to investors from March 2025, are settled by differences (cash settlement) and do not have the possibility of early exercise. This cash-settled structure simplifies the trading and investment process, benefiting contract liquidity.

The underlying stocks for these new contracts include Banco Santander, Banco Sabadell, BBVA, Endesa, Iberdrola, Inditex, Repsol, and Telefónica. The flexibility of these new contracts allows for more varied and sophisticated investment strategies, making them appealing to various types of investors.

Susquehanna, a MEFF member, played a significant role in the launch of the European-style cash-settled equity options. The institutional trading desk of Susquehanna offers prices for both on-screen and block trades for this product, ensuring market coverage. Susquehanna's involvement demonstrates its commitment to the derivatives market and its role as a key liquidity provider for the growth of the European-style cash-settled equity options market.

Clotilde Salmerón, Head of MEFF, stated that BME is continually offering new investment alternatives for clients. The new contracts will also be available in the order book and register applications, improving market transparency and efficiency. Standardization of these new contracts further simplifies the trading and investment process.

The launch of these European-style cash-settled equity options is expected to continue BME's growth. As they are cash-settled options, the call seller and put buyer are not required to own the shares on the day of expiration. This feature, combined with the flexibility and standardization of the contracts, makes them an attractive addition to the MEFF market.