HNP Futures and Options to be Adjusted
Market Operations
02 Apr 2004
Hong Kong Futures Exchange, a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited, and the SEHK Options Clearing House Limited, a wholly-owned member of Hong Kong Exchanges and Clearing Limited Group, have jointly announced the arrangements for adjustments to the contract terms of all open futures and options contracts on shares of Huaneng Power International Inc. (HNP) to account for a proposed bonus issue and a proposed capital conversion plan by HNP.
Highlights of the adjustment arrangements are attached. Investors should consult their brokers for further details.
Adjusted Margins for Futures Contracts
With effect from 7 April 2004, the minimum margins to be collected by an Exchange Participant from its clients in respect of their dealings in HNP Futures 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.
|
Futures Contract |
Margin Rate |
Initial Margin
(HK$) |
Maintenance Margin
(HK$) |
|
|
|
|
|
|
Huaneng Power International, Inc. (with multiplier 2,000) |
Full Rate |
1,760 per lot |
1,408 per lot |
|
Spread Rate |
264 /lot/side |
211.2 /lot/side
|
|
Huaneng Power International, Inc. (temporary) (with multiplier 4,000) |
Full Rate |
3,520 per lot |
2,816 per lot |
|
Spread Rate |
528 /lot/side |
422.4 /lot/side |
HKFE emphasised that the above are minimum rates and Exchange Participants should set their margin requirements according to their clients' individual circumstances.
Highlights of the adjustment arrangements
HNP Futures Contracts
Immediately before the market open on 7 April 2004 (the ex-date):
| i. |
Adjusted contracted prices will be obtained by multiplying the contracted prices of all outstanding HNP futures contracts by 0.5 and rounding to nearest two decimal places (after the market close on 6 April 2004 trading in HNP contracts with no outstanding positions will be immediately suspended); and
|
| ii. |
The adjusted contract multiplier will be 4,000 shares. |
On 7 April 2004:
| i. |
Adjusted HNP futures contracts will be traded under a temporary trading symbol HNA until the expiration of the existing April, May, June, September and December 2004 contracts or until all outstanding positions are closed, whichever occurs first; and
|
| ii. |
The available contract months for standard HNP futures contracts with the original contract multiplier of 2,000 shares, under the original trading symbol HNP, will be April, May, June, September and December 2004. |
After the adjustments of all outstanding positions in HNP futures contracts which are expected to take effect on the ex-date, there will be two sets of HNP futures contracts. The adjusted contracts with trading symbol HNA and the standard contracts with the trading symbol HNP will be available for trading in parallel. The adjusted contracts with the adjusted contract multiplier of 4,000 shares and the standard contracts with the standard contract multiplier of 2,000 shares are distinct contracts.
HNP Options Contracts
After the close of business on 6 April 2004:
| i. |
The adjusted exercise price will be 0.5 times the old exercise price.
|
| ii. |
The adjusted contract size will be the old contract value divided by the adjusted exercise price. As a result of the adjustment, the adjusted contract size will become 4,000 shares.
|
| iii. |
Open positions |
|
The number of open positions in the pre-adjusted series will be transferred to the respective adjusted series. Only the exercise price and contract size are being adjusted, there will not be any changes to the number of open positions after the adjustment. All such open contracts will be traded and settled under the adjusted contract terms (adjusted exercise price and adjusted contract size per contract) from 7 April 2004 onwards.
|
| iv |
Generation of standard series |
|
New series with a standard contract size of 2,000 shares per contract will be generated in accordance with Operational Trading Procedures so that there will be five series (one at-the-money, two in-the-money and two out-of-the-money) in each of the expiration months of April, May, June, September and December 2004 available for trading on or after 7 April 2004 . |