Hong Kong Exchanges and Clearing Limited (HKEx) has announced trading and clearing arrangements for HKEx Futures and Option contracts open on Monday, 7 April 2008 to account for the change in HKEx’s board lot from 500 shares to 100 shares with effect from 7 April 2008.

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

Trading Arrangements

Starting from 7 April 2008, all existing HKEx option contracts with the old contract size will be denoted by a temporary class symbol, while HKEx option contracts with new contract size will be listed for trading and denoted by the standard class symbol. 

* Expiry months and option series will be listed according to normal operating procedures. 

Open Positions

The open positions of existing HKEx option contracts (with the old contract size) after the market close on 3 April 2008 will be converted to the temporary option contracts.  There will not be any changes to the number of open positions, exercise prices, contract size and expiry months for the option contracts whatsoever after the conversion of positions.  All open contracts will be traded and settled under the original contract terms from 7 April 2008 onwards.   

Pending Stock Positions

Pending stock positions resulting from exercise / assignment of temporary option contracts on or before 3 April 2008 will be settled via CCASS, the Central Clearing and Settlement System, under the same stock code according to the contract terms of the temporary option contracts.

Settlement of Exercised Option Trades

Exercise / assignment of the temporary and standard option contracts from 7 April 2008 onwards will result in stock settlement obligations of the number of underlying shares (same stock code) according to the contract sizes.

Shares Used as Cover Collateral

The covered short call positions of the existing option contracts after the market close on 3 April 2008 will still be covered under the temporary option contracts after conversion of positions.

HKEx Futures Contracts

Trading Arrangements

Starting from 7 April 2008, all existing HKEx futures contracts with old contract multiplier will be denoted by a temporary trading symbol, while HKEx futures contracts with new contract multiplier will be listed for trading and denoted by the standard trading symbol. 

* Contract months will be listed according to normal operating procedures. 

Open Positions

The open positions in the existing HKEx futures contracts immediately before 7 April 2008 will be transferred to the temporary futures contracts.  There will not be any changes to the number of open positions, contract prices, contract multiplier and contract months for the temporary futures contracts whatsoever after the transfer of positions.  All open contracts will be traded and settled under the original contract terms from 7 April 2008 onwards.

Cash Settlement of Futures Contracts on Last Trading Day

The temporary futures contracts will be cash settled on their respective last trading days according to their original contract terms, with the cash settlement amount calculated with the original contract multiplier.   The cash settlement amount of the standard futures contracts will be calculated using the new contract multiplier on their respective last trading days under normal procedures.