Derivatives 2025

SPAIN Law and Practice Contributed by: Miguel Cases and Claudi Rossell, Cases & Lacambra

the implementation of EU climate-related legisla - tion; • the implementation of Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022, on digital operational resilience for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/2014, (EU) No 909/2014 and (EU) 2016/1011 (DORA), which applies from 17 January 2025; and • digitalisation and artificial intelligence. Spanish Stock Exchanges and Markets ( Bolsas y Mercados Españoles (BME)) operates the only official Spanish market specialised in derivatives: Mercado de Derivados (MEFF). Although an OTC segment exists, the bulk of MEFF’s activities are focused on futures, options and swaps traded on a trading venue. The current products and their underlying assets are as follows: • futures and options (European style) over the IBEX35 index; • futures (settled by differences or physically) and options (American and European style) over Span - ish shares; • futures over dividend benchmarks and single-share dividends; • rollovers of equity futures; • rollovers of foreign exchange (FX) futures; and • swaps and futures over the Iberian Electricity Mar - ket (MIBEL). 2. Types of Derivatives 2.1 Futures and Options MEFF has recently improved the functionalities avail - able to retail investors. In this vein, it is worth men - tioning that such investors can directly hold segre - gated derivatives accounts, and all retail investors’ transactions are now marked with the so-called red flag to fully comply with all regulations applicable to retail investors, especially those related to pricing. In addition to these improvements, MEFF is adding new underlying shares after each relevant IPO in Spain. In respect of OTC options, major banks regularly offer a broad range of FX options to their clients, including

retail clients, actively engaged in cross-border activi - ties. The huge interest in these products is normally a consequence of the high volatility in FX markets, although these hedging structures can be extremely costly in practice. OTC options over underlying assets other than exchange rates are generally negotiated on a case-by-case basis and as part of structured investments. 2.2 Swaps and Security-Based Swaps Before the emergence of specialised trading venues, these instruments were exclusively closed by banks voluntarily acting as market makers vis-à-vis end users. Two Spanish banks (BBVA and Santander) that – on an organised, frequent, systematic and substan - tial basis – dealt on their own account by executing OTC derivative client orders outside a regulated mar - ket (RM), multilateral trade facility (MTF) or organised trade facility (OTF), became systematic internalisers (SIs) after meeting the applicable quantitative crite - ria under MiFID II. Although the current situation may change in the near future since SI status is no longer mandatory in respect of derivatives under MiFID III, at present it is very common that large end users, even non-financial counterparties (NFCs), close OTC derivatives on OTFs, since such trading venues act as online price aggregators and improve transparency. The most relevant regulatory developments in inter- bank derivatives transactions are outlined in this chapter of the guide. These developments aim to enhance market resiliency and pricing transparency. In terms of transparency, the entire regulatory develop - ment has been influenced by the absence of collusive practices; however, no specific transparency stand - ards have been established in this respect. Recent Spanish case law has focused on alleged collusion in the project finance lending market among the four largest Spanish banks, which were investigated and sanctioned by the Spanish National Markets and Competition Commission ( Comisión Nacional de los Mercados y la Competencia (CNMC)). However, this sanction was ultimately dismissed by the National High Court since the CNMC was unable to prove the existence of collusion among banks to mislead their clients on swap pricing.

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