Hong Kong Exchanges and Clearing Limited (HKEx) has announced trading and clearing arrangements for Tencent Holdings Limited (Tencent) option contracts open on Monday, 17 August 2009 to account for the change in Tencent’s board lot from 200 shares to 100 shares with effect from 17 August 2009.

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

Trading Arrangements

Starting from 17 August 2009, all existing Tencent option contracts with the old contract size will be denoted by a temporary class symbol, while Tencent 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 Tencent option contracts (with the old contract size) after the market close on 14 August 2009 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 17 August 2009 onwards. 

Pending Stock Positions

Pending stock positions resulting from exercise/assignment of existing option contracts on or before 14 August 2009 will be settled via CCASS, the Central Clearing and Settlement System, under the same stock code according to existing contract size.

Settlement of Exercised Option Trades

Exercise/assignment of the temporary and standard option contracts from 17 August 2009 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 14 August 2009 will still be covered but under the temporary option contracts after conversion of positions.