Equity derivatives—Spain—Q&A guide
Equity derivatives—Spain—Q&A guide

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Equity derivatives—Spain—Q&A guide
  • 1. Other than transactions between dealers, what are the most typical types of over-the-counter (OTC) equity derivatives transactions and what are the common uses of these transactions?
  • 2. May market participants borrow shares and sell them short in the local market? If so, what rules govern short selling?
  • 3. Describe the primary laws and regulations surrounding OTC equity derivatives transactions between dealers. What regulatory authorities are primarily responsible for administering those rules?
  • 4. In addition to dealers, what types of entities may enter into OTC equity derivatives transactions?
  • 5. Describe the primary laws and regulations surrounding OTC equity derivatives transactions between a dealer and an eligible counterparty that is not the issuer of the underlying shares or an affiliate of the issuer? What regulatory authorities are primarily responsible for administering those rules?
  • 6. Do securities registration issues arise if the issuer of the underlying shares or an affiliate of the issuer sells the issuer’s shares via an OTC equity derivative?
  • 7. May issuers repurchase their shares directly or via a derivative?
  • 8. What types of risks do dealers face in the event of a bankruptcy or insolvency of the counterparty? Do any special bankruptcy or insolvency rules apply if the counterparty is the issuer or an affiliate of the issuer?
  • 9. What types of reporting obligations does an issuer or a shareholder face when entering into an OTC equity derivatives transaction on the issuer’s shares?
  • More...

Equity derivatives—Spain—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to equity derivatives in Spain published as part of the Lexology Getting the Deal Through series by Law Business Research (published: May 2020).

Authors: Garrigues—Gonzalo García-Fuertes

1. Other than transactions between dealers, what are the most typical types of over-the-counter (OTC) equity derivatives transactions and what are the common uses of these transactions?

There are no public statistics about the use of OTC equity derivatives in Spain, but dealers and market participants are quite sophisticated, and it can be expected that all the most common OTC equity derivatives are used. The most important of these include:

  1.  margin loans, used to finance or leverage large shareholdings of listed shares;

  2. collars and collar loans;

  3. put and call transactions or swaps used to acquire an economic interest in a company, including listed companies in takeover situations;

  4. call spreads;

  5. share loans, share sale and repurchase transactions and zero strike call options on convertible debts;

  6. other credit default swaps; and

  7. other agreements to be settled in cash (by differences).

In addition to the above, we have recently received a number of legal enquiries regarding the use of prepaid forward contracts and regulatory capital optimisation transactions.

At the time of writing, we are under the covid-19 quarantine, and the extraordinary market measures have been implemented. Because of this, the National Securities Market Commission (CNMV) banned for two months any

Popular documents