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The Traded Options Market will be closed for business from 8 February to 10 February 2016. In order to assure that safeguards are in place against potential market risk that may arise during the aforesaid periods when some of the major markets are open, the Clearing House has decided to adopt the following risk management measures:
- The clearing house and client margin intervals for all options classes will be increased temporarily after the close of business on 4 February 2016 (i.e. the adjusted margin requirement must be settled on or before 9:15 a.m., 5 February 2016). Details of the temporary margin intervals will be announced on 1 February 2016 via a separate circular. The margin intervals will be restored to normal after the close of business on 5 February 2016 (i.e. after settling the day-end requirements as of 5 February 2016, Participants may withdraw surplus margin collateral, if any, in the morning of 11 February 2016 by submitting withdrawal requests via CCMS by 11:00 a.m.).
- A special intra-day margin call in respect of all open positions will be made at around 3:00 p.m. on 5 February 2016. You are required to ensure completion of payments within one hour after receiving notification of details of your special intra-day margin call.
Please note that the temporary increase in the margin intervals will generally increase the margin requirements as at the close of business of 4 February 2016. While the degree of increase may vary from portfolio to portfolio, the impact on the margin requirements could be greater for certain options series, especially those out-the-money series which are most sensitive to an increase in the margin intervals. To assist Participants in assessing the potential margin impacts at both clearing house and client levels, the Clearing House will make available a set of simulated Risk Parameter Files (“RPF”) on 1 February 2016 for Participants’ margin estimation purpose. Detailed arrangement will also be included in the margin circular to be released on 1 February 2016.
Please ensure that your staffs are fully aware of both the special intra-day margin call and the temporary increase in the margin intervals and make necessary arrangement with your designated bank. You are also strongly advised to give advanced notice to your clients regarding these arrangements where appropriate and ensure adequate margin deposits from your clients are maintained during the holiday period.
Despite the special intra-day margin call mentioned above, the Clearing House may make additional intra-day margin calls on 5 February 2016 should market conditions warrant.
