Following up on its 7 November 2017 news release “Arrangements of Wharf Holdings Structured Products, Futures And Options Need to be Adjusted”, Hong Kong Exchanges and Clearing Limited (HKEX) announced today (Tuesday) that with a view towards protecting market integrity and maintaining an orderly market, and after consultation with the Securities and Futures Commission (SFC) pursuant to the applicable Trading Rules, it will apply a minimum value of 0.25 to the Adjustment Ratio (AR) of the Capital Adjustment to The Wharf (Holdings) Ltd (Wharf) Options and Futures.
Imposing a minimum value on the AR will prevent the scenario that the contract sizes of the Wharf Options and Futures become so abnormally high that they could jeopardise the orderliness of the underlying market. Details of the floor applied to the AR as follows:
OPTIONS
For definition of Entitlement, please see Note below following table.
FUTURES
Note: Entitlement is Wharf Real Estate Investment Company Limited’s (Wharf REIC) stock price times the entitlement ratio for each Wharf share. The stock price of Wharf REIC will be determined by the volume weighted average price, or VWAP, of auto-matched trades of Wharf REIC on its listing day on the Stock Exchange.
The aim is to provide an orderly market. The market was given advance notice in circulars (Options and Futures) issued today.
For further details, please refer to the Wharf Options circulars issued on 7 and 10 November 2017 and Wharf Futures circulars issued on 7 and 10 November 2017.
HKEX will closely monitor trading of Wharf and Wharf REIC shares to ensure market orderliness. Any suspected manipulation will be reported to the SFC.
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