BME Launches European-Style Stock Options with Cash Settlement

BME, through its derivatives market MEFF, has recently introduced European-style stock options contracts that will be settled by difference. This new offering, in its initial phase, includes shares from major companies such as Banco Santander, Banco Sabadell, and BBVA, as well as significant players in the energy and consumer sectors, including Endesa, Iberdrola, Inditex, Repsol, and Telefónica.

Settlement by difference means that, upon the contract’s expiration date, the fulfillment is carried out through a cash transfer. This transfer reflects the difference between the previously agreed price and the spot settlement price, thus eliminating the need for physical stock transactions in the process.

Starting in March 2025, investors will have access to these new options, which offer various advantages. Among them, the standardization of the product facilitates the trading process and enhances market liquidity. Additionally, their accessibility through the order book and application registry increases both transparency and efficiency of the system.

One of the most notable features of these options is the flexibility they provide to investors, allowing them to develop more sophisticated strategies without the obligation to exercise the contracts early. This means that sellers of call options and buyers of put options do not need to own the shares at the expiration, thereby lowering the barriers to entry into the market.

Clotilde Salmerón, General Director of MEFF, has emphasized the importance of this innovation, stating that her team is constantly looking for ways to respond to investors’ needs. According to Salmerón, the launch of these options represents a valuable opportunity for the Spanish derivatives market, driving its expansion.

The involvement of Susquehanna, an active member of MEFF, has been crucial in the development of this new product. This leading liquidity provider is committed to offering competitive prices both in screen trades and block transactions, thus ensuring robust market coverage that will benefit all participants adopting this new financial tool.