Euronext.liffe launches physically delivered universal stock futures

Euronext.liffe yesterday began to offer four physically delivered universal stock futures in an effort to boost the trading volumes of these contracts. The remaining 111 universal stock futures offered by Euronext.liffe are cash settled. Universal stock futures allow cross-border investment in a range of blue-chip stocks through a single trading platform, a single clearing and settlement system under a single regulatory regime, and without the need to buy or sell the underlying shares.

Four Scandinavian single-stock futures – Nokia, Danske Bank, Novo Nordisk and Norsk Hydro – are now settled with physically delivered underlying shares. Euronext.liffe said the change should reduce the risk of trading these four particular stocks since, unlike the majority of the exchange's contracts, the settlement in the four Scandinavian futures was based on the closing share price at the time of settlement, rather than on the auction price of the shares. And because it’s possible to short or long shares, this created the risk of manipulation with the share price.

“New physically delivered universal stock futures complement our range of 115 cash-settled contracts. Physical delivery adds flexibility to an already successful contract and meets our customers' needs in developing particular areas of their business,” said Simon Raybould, managing director of sales and marketing at Euronext.liffe. “These new contracts will help strengthen our position in this sector.”

More that 5.5 million contracts have traded, with a notional underlying value of €26 billion, since Euronext.liffe launched its first 25 universal stock futures in January 2001.