Hong Kong Exchanges and Clearing Limited (HKEx) has announced the trading and clearing arrangements for HKEx Futures and Option contracts open on Monday, 26 June 2006 to account for the change in HKEx’s board lot from 2,000 shares to 500 shares with effect from 26 June 2006.

Highlights of the arrangements are attached below.  Investors should consult their brokers for further details, or if they have any questions regarding the arrangements. 

HKEx Option Contracts

Class Symbols

HKEx Option contracts with the old contract size of 2,000 shares will be denoted by a temporary class symbol “HEA”.  The expiry months will be June, July, August, September and December 2006, and they will be available for trading until expiration.  On and after 26 June 2006, no new option series under “HEA” will be introduced.

HKEx Option contracts with the new contract size of 500 shares will be denoted by the original class symbol “HEX”.  The available expiry months for HEX Option contracts will be June, July, August, September and December 2006, and they will be introduced according to the normal operational procedures. 

The timetable for trading HEX and HEA Option contracts, from 26 June, 2006, is shown below:

Open Positions

Open positions in HEX Option contracts after the market close on 23 June 2006 will be transferred to the respective HEA Option contracts.  There will not be any changes to the open positions, exercise prices, contract size and expiry months whatsoever after the transfer of positions.  All open contracts will be traded and settled under the original contract terms from 26 June 2006 onwards.

Pending Stock Positions

Pendingstock positions resulting from the exercise / assignment of HEX Option contracts on or before 23 Jun 2006 will be settled via the Central Clearing and Settlement System under stock code 0388 according to the old contract terms of 2,000 shares per contract.

Settlement of Exercised Option Trades

Exercise / assignment of both HEX and HEA Option contracts from 26 Jun 2006 onwards will result in stock settlement obligations of 500 and 2,000 shares (stock code 0388) per contract respectively.

Shares Used as Cover Collateral

The covered positions of HEX Option contracts existing after the market close on 23 June 2006 will be transferred to the respective HEA Option contracts.

HKEx Futures Contracts

Trading Symbols

HKEx Futures contracts with the old contract multiplier of 2,000 shares will be denoted by a temporary trading symbol “HEA”.  The expiry months will be June, July, August, September and December 2006, and they will be available for trading until expiration.  On and after 26 June 2006, no new futures contract months under “HEA” will be introduced.

HKEx Futures contracts with the new contract multiplier of 500 shares will be denoted by the original trading symbol “HEX”.  The available contract months for HEX Futures contracts will be June, July, August, September and December 2006 and they will be introduced according to the normal operational procedures. 

The timetable for trading HEX and HEA Futures contracts, from 26 June 2006, is shown below:

Open Positions

Open positions in HEX Futures contracts after the market close on 23 June 2006 will be transferred to the respective HEA Futures contracts.  There will not be any changes to open positions, contract prices, contract multiplier and contract months whatsoever after the transfer of positions.  All open contracts will be traded and settled under the original contract terms from 26 June 2006 onwards.

Cash Settlement of Futures Contracts on Last Trading Day

HEA Futures contracts will be cash settled on the last trading day for the spot month contracts using the contract multiplier of 2,000 shares per contract.

For HEX Futures contracts, the cash settlement amount of spot month contracts on the last trading day will be calculated using the new contract multiplier of 500 shares per contract under normal procedures.