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Arrangements for Adjustment of China Merchants Bank Futures and Options
Hong Kong Exchanges and Clearing Limited (HKEx) announced the arrangements for the adjustment to the contract terms of all open China Merchants Bank’s (CMB) futures and option contracts in existence after the market close on 5 March 2010, the business day immediately before the ex-rights day, which is 8 March 2010, to account for CMB’s 1.3 H rights shares for every 10 existing H shares.
Highlights of the adjustment arrangements are set forth below. Investors should consult their brokers for further details, or if they have any questions regarding the adjustment.
|
Underlying Stock |
China Merchants Bank Co., Ltd. |
|
Corporate Action |
1.3 H rights shares for every 10 existing H shares |
|
Rights Issue Price |
$10.06 |
|
Ex-rights day |
8 March 2010 |
CMB Futures
Adjustment Procedures
Adjustment will be made to the open positions of CMB futures contracts which exist after the market close on 5 March 2010, the business day immediately before the ex-rights day. The details of the adjustment procedures are as follows:
|
Adjustment Term |
Formula |
Remarks |
|
Adjustment Ratio (AR) |
10 old shares + (1.3 new shares x $10.06 / $S*) |
Rounded to the nearest 4 decimal places. |
|
Adjusted contracted price (ACP) |
Contract price of outstanding futures contract x AR |
Rounded to the nearest 2 decimal places |
|
Adjusted Contract Multiplier (ACM) |
Contract price of outstanding futures contract x (500 shares / ACP) |
Rounded to the nearest 4 decimal places |
| * |
Where $10.06 is the issue price for the new shares and $S is the underlying stock closing price on the business day (5 March 2010) prior to the ex-rights day. |
Trading of Adjusted and Standard Contracts
After the market close on 5 March 2010, the business day immediately before the ex-rights day, the open positions will be transferred to the adjusted futures contracts. In addition, new contracts based on the standard contract multiplier will be introduced for trading on the ex-rights day, 8 March 2010. Details of the adjusted and standard contracts available for trading on and after the ex-rights day are shown below:
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|
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Addition of |
|
Adjusted |
CMA |
ACM |
From ex-rights day to |
No |
|
Standard |
CMB |
500 |
From ex-rights day onwards |
Yes |
Investors should note that the cash settlement amount of adjusted and standard futures contracts on the last trading day will be calculated using their respective contract multipliers. There will not be any changes to the number of open positions and other contract terms after the transfer of positions.
CMB Options
Adjustment Procedures
Adjustment will be made to the open positions of CMB option contracts which exist after the market close on 5 March 2010, the business day immediately before the ex-rights day. The details of the adjustment procedures are as follows:
|
Adjustment Term |
Formula |
Remarks |
|
Adjustment Ratio (AR) |
10 old shares + (1.3 new shares x $10.06 / $S*) |
Rounded to the nearest 4 decimal places. |
|
Adjusted Exercise price (AEP) |
Exercise price of outstanding option series x AR |
Rounded to the nearest 2 decimal places |
|
Adjusted Contract Size (ACS) |
Exercise price of outstanding option series x (500 shares / AEP) |
Rounded to the nearest 4 decimal places |
| * |
Where $10.06 is the issue price for the new shares and $S is the underlying stock closing price on the business day (5 March 2010) prior to ex-rights day. |
Trading of Adjusted and Standard Contracts
After the market close on 5 March 2010, the business day immediately before the ex-rights day, the open positions will be transferred to the adjusted option series. In addition, new option series based on the standard contract size will be introduced for trading on the ex-rights day, 8 March 2010. Details of the adjusted and standard contracts available for trading on and after the ex-rights day are shown below:
|
|
|
|
|
Addition of |
|
Adjusted |
CMA |
ACS |
From ex-rights day to |
No |
|
Standard |
CMB |
500 |
From ex-rights day onwards |
Yes |
Investors should note that the adjusted and standard option series have different contract sizes. There will not be any changes to the number of open positions and other contract terms after the transfer of positions.