Hong Kong Exchanges and Clearing Limited (HKEx) will adjust its Hong Kong and China Gas Company Limited (HKG) Futures contract and its HKG Options contract as a result of the company's decision to issue one bonus share for every 10 existing shares. The minimum margins to be collected by an Exchange Participants from its clients in respect of their dealings in HKG Futures contracts will also be adjusted with effect from 22 April 2002.
Futures Contract
The following adjustments will be effective from the market open on Monday, 22 April 2002.
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The contract multiplier for the HKG Futures contract will be increased by 10 per cent, from 1,000 to 1,100;
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The contracted prices of all outstanding HKG Futures contracts will be reduced by 9.09 per cent;
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Outstanding HKG Futures contracts will be traded under a temporary trading symbol, HGA, until the expiration of the existing April, May, June, September and December HGA contract respectively, or until all open positions in any HGA contract month are closed, whichever occurs first; and
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HKG Futures contracts with the original contract multiplier 1,000 also will be listed, under the original trading symbol, HKG.
Options Contract
After the close of business on 19 April 2002:
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All existing HKG options contracts will be adjusted by the adjustment ratio of 0.9091, i.e. the adjusted exercise price for each contract will be 0.9091 (the adjustment ratio) times the old exercise price. The adjusted contract size will be the old contract value (1000 shares times the old exercise price) divided by the adjusted exercise price. As a result of rounding, the adjusted contract size will carry odd lots and fractions of a share. Investors should consult their brokers for the adjustment results on or after 20 April 2002.
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The number of open positions in the old series will be transferred to the respective adjusted series. It should be noted that only the exercise price and contract size are being adjusted and there will not be any changes to the number of open positions after the adjustment. All such positions will be traded and settled under the adjusted contract terms of adjusted exercise price and adjusted contract size per contract from 22 April 2002 onward.
From the open of the market on 22 April 2002:
HKG Standard Series (1000 shares per contract; HKATS code HKG) will be available for trading and HKG Adjusted Series (see contract details above; HKATS code HGA) will be available for trading until the close of business on 30 December 2002. Price information on the HKG and HGA series will be displayed in Teletext pages 3053/3054 and 3075/3076 respectively. The HKG and HGA are distinct series and positions under each version cannot be offset against each other. Investors should pay attention to the series specifications whenever dealing with HKG options contracts, particularly when placing orders or exercising instructions.
Investors should consult their brokers for further details on the HKG Futures and Options contracts.
Adjusted Margins for Futures Contracts
Following the capital adjustment with effect from 22 April 2002, the minimum margins to be collected by an Exchange Participant from its clients in respect of their dealings will be adjusted as outlined in the table below. The margin adjustments are based on the clearing company's normal procedures and standard margining methodology.