By John Ferry
Spanish regulations on the proportion of a mutual fund’s stock holdings that can be in a single company are inadvertently boosting exchange-traded equity derivatives volumes.
Mutual funds are limited to holding a maximum of 10% of a portfolio in a single company but are getting around this by taking exposures using single-stock futures (SSF) and other equity derivatives, say market participants. This is helping boost trading volumes on Meff, the Spanish derivatives exchange, and also on other European derivatives exchanges, such as Eurex.
“Spanish mutual funds have some constraints when it comes to cash market investments, and for this reason SSF are very popular in the Spanish market,” says a Eurex insider, who adds that the exchange’s own nascent SSF market – launched in October – is also receiving a boost from the activities of Spanish mutual funds.
Record volumes
Meff’s accumulated first-quarter trading volumes were up 45% to 16.3
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