Equity derivatives: Spain’s stock rules give derivatives exposure

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.