Regulation of equity derivatives

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This Overview is a guide to the Financial Services content within the Regulation of equity derivatives subtopic, with links to appropriate materials.

What are equity derivatives?

An equity derivative is a financial instrument that references and offers economic exposure to the performance of an equity asset or other equity-related variable from which the instrument’s price or value is derived.

Equity derivatives may be traded on an exchange or over-the-counter (OTC) (see further details below). They may also be funded or unfunded. Equity derivatives are used primarily by funds and investors as speculative investments and by end users and banks as commercial hedges. However, they also have a variety of other uses which will be covered in further detail below.

Equity derivative instruments fall into the following five principal categories:

  1. •

    options—the two main types of options are put options and call options. A put option holder has the right to sell an underlying asset (for example shares) to a counterparty for an agreed price on an agreed

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Latest Financial Services News

Financial Services—other developments (25/7/2025)

A round-up of other developments, which have not been covered in full by the LexisNexis Financial Services practical guidance team but may nevertheless be of interest.

ECON Committee proposes major changes to EU corporate sustainability reporting rules

The European Parliament's Committee on Economic and Monetary Affairs (ECON) adopted an opinion on 15 July 2025, proposing significant amendments to EU corporate sustainability reporting requirements. The opinion recommends increasing the reporting threshold to companies with over 5,000 employees and €450m in net worldwide turnover, replacing the current 1,000-employee threshold. For value chain reporting, companies would be prevented from seeking information from business partners below these thresholds, thereby significantly reducing reporting obligations.

IFRS Foundation publishes near-final guidance on reporting uncertainties in financial statements

The International Financial Reporting Standards (IFRS) Foundation has published near-final examples that illustrate how companies can improve disclosure of uncertainties in their financial statements, using climate-related scenarios as illustrations. Developed by the International Accounting Standards Board (IASB) in response to stakeholder feedback regarding insufficient uncertainty reporting, these examples are applicable to all types of uncertainties, not solely those related to climate. The IASB collaborated with the International Sustainability Standards Board (ISSB) to ensure alignment with sustainability disclosure requirements. Final examples are anticipated in October 2025.

European Commission publishes guidelines for green bond disclosure templates

The European Commission has published guidelines establishing voluntary pre-issuance disclosure templates for bonds marketed as either environmentally sustainable or sustainability-linked. These templates support the EU's objective of achieving climate neutrality by 2050 by standardising disclosures for issuers using the EU Taxonomy, thereby complementing the European Green Bond Standard and filling a market gap in demonstrating taxonomy-aligned bond proceeds allocation. The guidelines provide two detailed templates: one for environmentally sustainable bonds, which requires issuers to detail their environmental strategy, the intended allocation of bond proceeds, environmental impacts, and reporting commitments; and another for sustainability-linked bonds, which focuses on the environmental strategy, bond characteristics, performance indicators, and reporting requirements.

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