Requirement (MIFID)
Article 37 Derivatives
Requirements MIFID - REGULATION (EC) No 1287/2006
Description
Description
1. When admitting to trading a financial instrument of a kind
listed in points of Sections C(4) to (10) of Annex I to Directive
2004/39/EC, regulated markets shall verify that the following
conditions are satisfied:
(a) the terms of the contract establishing the financial
instrument must be clear and unambiguous, and enable a
correlation between the price of the financial instrument
and the price or other value measure of the underlying;
(b) the price or other value measure of the underlying must be
reliable and publicly available;
(c) sufficient information of a kind needed to value the
derivative must be publicly available;
(d) the arrangements for determining the settlement price of
the contract must be such that the price properly reflects
the price or other value measure of the underlying;
(e) where the settlement of the derivative requires or provides
for the possibility of the delivery of an underlying security
or asset rather than cash settlement, there must be adequate
arrangements to enable market participants to obtain
relevant information about that underlying as well as
adequate settlement and delivery procedures for the
underlying.
2. Where the financial instruments concerned are of a kind
listed in Sections C (5), (6), (7) or (10) of Annex I to Directive
2004/39/EC, point (b) of paragraph 1 shall not apply if the
following conditions are satisfied:
(a) the contract establishing that instrument must be likely to
provide a means of disclosing to the market, or enabling the
market to assess, the price or other value measure of the
underlying, where the price or value measure is not
otherwise publicly available;
(b) the regulated market must ensure that appropriate supervisory
arrangements are in place to monitor trading and
settlement in such financial instruments;
(c) the regulated market must ensure that settlement and
delivery, whether physical delivery or by cash settlement,
can be effected in accordance with the contract terms and
conditions of those financial instruments.
Comment
Applies to Article 40(1) and (2) of Directive 2004/39/EC