Jurisdiction(s):
European Union

Equity derivatives: instruments, markets, and EU regulatory obligations under EMIR, MiFID II/MiFIR, and the Short Selling Regulation

Published by a LexisNexis EU Law expert

Practice notes

What is an equity derivative?

An equity derivative is a financial instrument whose price or value is linked to the performance of an equity asset or another equity‑related variable. Such instruments may trade on an exchange or over the counter (see more below). They can be structured as funded or unfunded. Equity derivatives are used chiefly by funds and investors for speculative exposure, and by end users and banks as commercial hedges. They also serve a range of additional purposes that will be explored further below. Further applications are noted below, with additional context to be provided in subsequent sections for readers there.

Types of equity derivative instruments

Equity derivative instruments fall into the following seven principal categories:

Options — the two primary forms are put options and call options. A put option holder is entitled to sell an underlying asset (for example, shares) to a counterparty for an agreed price on a specified future date. A call option holder is entitled to buy an underlying asset (for example, shares) from a counterparty for an agreed price on a specified future date.
Forward contracts — ‘forwards’ are private, bilateral agreements for the sale and purchase of specified equity securities in

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Web page updated on 21/05/2026

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