Underlying Asset: The financial asset that is the subject of a Contract traded in the Futures Market.
Close (a Contract): To carry out a transaction opposite to the one that initiated the Contract, either by purchasing an identical Contract previously sold or selling one previously purchased. For two Contracts to be identical, they must match in Class, Type, and Series.
Class of Contract: Futures and Options Contracts related to the same Underlying Asset.
Client: A natural or legal person conducting buy-sell transactions of Contracts in the Market through a Member.
Clearing: The process of aggregating into a net position the cash payment or securities delivery obligations derived from Contracts recorded in the corresponding Accounts.
General Conditions: Market rules describing the specific characteristics of each of the contracts traded.
Central Counterparty: The act of interposing itself on its own account in clearing and settlement processes related to obligations arising from members’ participation in recognized financial or securities clearing and settlement systems, as well as for operations not conducted in official markets, under the provisions of Spanish Law 41/1999 on payment and securities settlement systems.
Contract: A generic term encompassing all Futures and Options admitted to trading in the Market.
Futures Contract: A standardized forward contract obligating the buyer to purchase the Underlying Asset at an agreed-upon price (Futures Price) on a future date (Settlement Date). Conversely, the seller is obligated to sell the same Underlying Asset at the same agreed-upon price and date. Until the Settlement Date or until a closing transaction occurs, daily settlements of gains and losses are performed.
The obligation to buy or sell the Underlying Asset on the future date may be replaced by the obligation to fulfill Cash Settlement if the asset is non-deliverable or delivery by cash differences is permitted.
Option Contract: A standardized contract granting the buyer the right, but not the obligation, to buy (CALL) or sell (PUT) the Underlying Asset at an agreed-upon price (Strike Price) on a future date (Settlement Date). The contract may be exercised only on the Expiration Date (European-style Option) or at any time before the Expiration Date (American-style Option), depending on the General Conditions of the Contract.
The option seller is obligated to deliver the Underlying Asset on the Expiration Date if the buyer chooses to exercise the option. In return, the seller receives a premium.
Since the contract can be cash-settled, the obligation to buy or sell may be replaced with the obligation to fulfill Cash Settlement.
Clearing Account: Each electronic record within the Operations Registry, where Contracts and Transactions related to the account holder are logged, along with the resulting Positions and Margins. This is also a generic term for all Accounts held by a Member or Client in either the General Registry or the Detail Registry, as applicable.
Margin Deposits: Amount of guarantees required by BME Clearing to cover risks assumed from the Contracts recorded in each Account.
Business Day: A day defined as such in the calendar made public before the beginning of each calendar year.
Central Counterparty Entity: An entity performing Central Counterparty functions under Article 44 ter of Spanish Law 24/1988 on the Securities Market.
Execution of an Order: The act of fulfilling a buy or sell order transmitted by a Market Member.
In the case of Options, an order can be executed only if there is another order in the opposite direction matching:
- Contract Class (same Underlying Asset)
- Option Type (CALL or PUT)
- Strike Price
- Expiration Date
- Premium
For Futures Contracts, the following must match:
- Contract Class (same Underlying Asset)
- Expiration Date
- Futures Price
Exercise: The act by which the buyer of an Option exercises their right to buy or sell the Underlying Asset.
Exercise Day: The day on which an Option can be exercised, as stipulated in the General Conditions of each Contract.
Settlement Date: The day on which a Futures or Options Contract is settled, as outlined in the General Conditions of each Contract.
Expiration Day: The last day a Futures or Options Contract can be registered in the Market. It is defined in the General Conditions of each Contract.
Future: A Futures Contract.
Margins: Assets provided in favor of the Clearing House or Members, as stipulated in the Regulations and applicable ECC norms, to cover the risk of default on obligations contracted by Members and Clients.
Default: The situation where a Member or Client fails to meet the obligations outlined in the Regulations and supplementary norms, incurring circumstances detailed in Chapter 8 of the Regulations.
Valuation Interval: All points between the maximum and minimum price of the Underlying Asset for which MEFF calculates market prices for Options and Futures, later used for calculating Margins.
Daily Settlement of Gains and Losses: Daily cash settlement of differences between the agreed Futures Price of trades conducted on the same day and the Daily Settlement Price, or between the previous day’s Daily Settlement Price and the current day’s price for previously open Futures. After this process, all Futures Contracts are considered settled at the Daily Settlement Price.
Settlement at Expiration: The fulfillment of a contract on the settlement date. If settlement is by delivery, it involves the transfer of the underlying asset in exchange for the agreed price. If settlement is in cash, it involves transferring the monetary difference between the strike price or future price, as applicable, and the settlement price at expiration.
Settlement in Cash: A procedure where the contract's fulfillment on the settlement date occurs exclusively through the transfer of the monetary difference between the agreed price in the contract and the settlement price at expiration. Cash exchanges at expiration take into account, if applicable, the process of daily settlement of gains and losses.
Settlement by Delivery: A procedure where the fulfillment of the contract on the settlement date occurs through the delivery of the underlying asset by the seller to the buyer in exchange for the agreed price. Cash exchanges at expiration consider, if applicable, the daily settlement of gains and losses.
Member: A general term for a participant in the market or clearinghouse with direct access to it.
Clearinghouse Member: A generic designation for any type of clearinghouse member, which can include Non-Clearing Members, Proprietary Non-Clearing Members, Individual Clearing Members, and General Clearing Members, as defined in Chapter 2 of the regulations.
Trading Member: A type of member whose role is to trade in the market.
Option: An options contract.
Call Option: Also known as a CALL option. The holder of this option has the right, but not the obligation, to buy the underlying asset specified in the contract at the strike price. The option seller has the obligation to sell the underlying asset if the buyer exercises their right. Since settlement can be in cash, exercising the option may not involve a physical purchase but only a cash transfer.
Put Option: Also known as a PUT option. The holder has the right to sell the underlying asset specified in the contract at the strike price. The option seller has the obligation to buy the underlying asset if the buyer exercises their right. As with call options, settlement in cash may replace a physical sale with a cash transfer.
Combined Order: A buy or sell order for contracts in more than one series, conditioned upon the full execution of the order.
Market Order: A buy or sell order for contracts within the same series that does not include any conditions other than the minimum description of an order.
Reaction Period: The estimated period needed to close all contracts registered in an account.
Strike Price: The agreed price in an options contract at which the buyer can purchase (in the case of a CALL option) or sell (in the case of a PUT option) the underlying asset. The seller is obligated to sell or buy, respectively, if the buyer exercises the option.
Price of Future: The agreed price in a futures contract, adjusted daily according to the daily settlement process of gains and losses.
Settlement Price at Expiration: The reference price used to calculate the final settlement of a contract.
Daily Settlement Price: The price used to calculate margin deposits and the daily settlement of gains and losses.
Premium: The amount paid by the option buyer to the seller.
First Trading Day: The first day an options or futures contract can be traded on the MEFF exchange. It is always a business day.
Valuation Point: A point within the valuation interval.
Registry: The act by which BME Clearing, in its role as a central counterparty entity, records an operation's data in the corresponding accounts of the General Register. Simultaneously, registrars record the operation's data in their detailed registry accounts.
General Register: A system managed by BME Clearing to register operations, contracts, and transactions in accounts opened by members.
Second-Tier Register: A system managed by each registrar member to register operations, contracts, and transactions in accounts opened by their clients.
Series: Within each class of contracts, a series consists of options with the same strike price and expiration date or futures with the same expiration date.
Types of Options: Includes Call Options (CALL) and Put Options (PUT).
Transaction: The act of matching two buy or sell orders in the electronic trading system or accepting operations negotiated directly between participants within the market or trading system.
Order Transmission: The act by which a member sends an order to the market.
Transfer: A record whereby a contract, transaction, or position (in whole or in part) is transferred from one account to another.