New Policy For Share Options Where Shares Cease To Be Listed On Amsterdam Exchanges

After publishing a consultation 1999, Amsterdam Exchanges discussed with market participants the policy for share options where shares cease to be listed. On the basis of this discussion, Amsterdam Exchanges formulated a new policy which essentially means that: In principle, Amsterdam Exchanges will maintain the option listing even though the "successor" is not officially listed on its stock market; If it is undesirable or impossible to maintain the option listing, the option position is settled at a defined price which is as close as possible to the market price: the fair value.

If the security underlying a share option ceases to be officially listed on Amsterdam Exchanges, the financial position of the option investor is safeguarded as far as possible. The number of ways in which option listing may continue has been extended, e.g. by the new "trading" segment. But even if option listing cannot continue, the financial position is in principle safeguarded by use of a fair value method specified in the rules. This method determines a price which aims to be as close as possible to the market price before the announcement of the corporate event which ultimately caused the option to cease being listed.

This policy also eliminates a major uncertainty from the pricing of share options, because it is no longer necessary to estimate the probability of successfully maintaining an option listing on Amsterdam Exchanges in the case of a takeover, for example. The rule takes effect today and also applies to all outstanding option positions.

Finally: consequences for warrants to be listed: Amsterdam Exchanges will advise issuers of listed warrants that they are expected to use the same fair value method for newly listed warrants or, if they prefer to deviate from this and use a different system, include an extensive section on this matter in their prospectus.

The complete text of the AEX announcement is available at www.aex.nl