Nasdaq Clearing

Flexible Equity Derivatives

Clearing of Flexible Equity Derivatives

  • Anonymity - Flexible derivatives are cleared-only. They are not executed on our trading venue. Individual trades or total volumes per underlying are not published.
  • Cross-Margining - Cross margining with listed positions in the same underlying instrument leads to efficient use of capital. The same risk parameter applies for flexible contracts on underlying instruments with listed standardized options as for the standardized contracts.
  • Efficiency - Central counterparty clearing and automated process mean operational efficiency in clearing, settlement and corporate action handling.
  • Flexibility - Flexible derivatives can be tailored to a certain exercise price, expiration day, exercise style (American or European) or settlement type (physical or cash).

Nasdaq makes it possible to clear trades as Flexible Derivatives (formerly known as Tailor Made Contracts). In addition to the flexible contracts members can clear lookalikes to the listed contracts (known as Trade Reporting).

Flexible contracts combine the flexibility and anonymity of the OTC market with the security and efficiency of the standardized market. Thus, the investor can design contracts that fit their investment strategies and goals. 

Fact Sheet

  • Underlying security
    - Forwards, Futures and Options on single stocks where Nasdaq operates a market for listed derivatives: Swedish, Finnish, Danish and Norwegian stocks.
    - Forwards, Futures and Options on other single stock names occasionally approved by Nasdaq.
    - Futures and Options on a wide range of Nasdaq indexes, such as OMXS30, OMXO20, OMXC20CAP and VINX30
    - Forwards and options on custom-made indexes and stock baskets as agreed on a case-by-case basis.
    - Options on fixed income forwards.
    - Other types of instruments and contract bases may also be considered as Flexible Derivatives Contracts upon request. However, only customized financial instruments with an underlying security that has been subject to risk analysis (and formally confirmed and approved by Nasdaq) are eligible for clearing.
  • Maturity
    - Time to expiry (the expiry date must to be a bank day for that particular market). 
  • Strike price 
  • Contract type
    - European or American options, futures and forwards. For other contract types the member is asked to contact Nasdaq. 
  • Settlement
    - Cash or delivery
    - For Index Options it is possible to select either the Volume Weighted Average Price or the Daily Closing Price as the settlement price.

The European Market Infrastructure Regulation (EMIR) will require clearing part of the OTC Derivatives at a CCP. The supervisory authorities will determine which derivatives fall under the mandatory clearing.

Based on customer demand, the spectrum of eligible instruments for clearing at Nasdaq may be widened based on the EU regulation and decisions taken by the supervisory authorities.

Flexible contracts provide opportunities to trade derivatives even when the portfolio requires features that the listed market cannot offer. Investors will still have the advantages of clearing, such as corporate action surveillance, recalculation handling, cross margins between OTC and standardized contracts, as well as post-trade information in the Nasdaq clearing system.

The contracts are governed by the same clearing rulebook as standardized contracts. The same Fee List including the Fee Caps applies for the Listed and Flexible Contracts. There are no trading rules or order book for trading.

Flexible Contracts combine the flexibility and anonymity of the OTC market with the security and efficiency of the standardized market. Thus, the investor can design contracts that fit their investment strategies and goals.

OTC-non cleared Exchange-listed Flexible/Cleared OTC

OTC-non cleared    Exchange-listedFlexible/Cleared OTC
Automated processNoYESYES
Governed by Nasdaq trading rulesNo    YESNo
Order book liquidityNoYESNo
Central counterpartyNo
Flexible termsYESNoYES
Governed by Nasdaq Clearing rules
Scroll up