Hong Kong Exchanges and Clearing Limited (HKEx) has announced the arrangements for the adjustment to the contract terms of all open futures and options contracts on shares of Li & Fung Limited (Li & Fung) to account for a proposed subdivision of the shares.
Li & Fung proposed on 11 April 2011 that each of the existing issued and unissued shares in the share capital of the company be subdivided into two Subdivided Shares. The proposal is conditional upon the approval of Li & Fung shareholders at the company’s upcoming annual general meeting and the approval of the Stock Exchange’s Listing Committee.
For details of the proposed share subdivision, please refer to the announcement by Li & Fung on 11 April 2011.
Highlights of the adjustment arrangements, which are subject to the Share Subdivision becoming effective, are shown below. Investors should consult their brokers for further details, or if they have any questions regarding the adjustment.
|
Underlying Stock (Stock Code) |
Li & Fung Limited (494) |
|
Corporate Action |
Every share will be subdivided into 2 Subdivided Shares |
|
Effective Date |
19 May 2011 |
Li & Fung Futures
Adjustment Procedures
Adjustments will be made to the open positions which exist after the market close on the business day immediately before the Effective Date. Details of the adjustment procedures are as follows:
|
Adjustment Term |
Formula |
Remark |
|
Adjustment Ratio (AR) |
1 Share / 2 Subdivided Shares = 0.5000 |
Rounded to the nearest 4 decimal places |
|
Adjusted Contracted Price (ACP) |
Contracted price of outstanding stock futures contract x AR |
Rounded to the nearest 2 decimal places |
|
Adjusted Contract Multiplier (ACM) |
Contracted price of outstanding stock futures contract x |
Rounded to the nearest 4 decimal places |
Trading of Adjusted and Standard Contracts
After the market close on the business day immediately before the Effective Date, the open positions will be transferred to the adjusted futures contracts. In addition, new futures contracts based on the standard contract multiplier will be introduced for trading on the Effective Date. Details of the adjusted and standard contracts available for trading on and after the Effective Date are illustrated are shown below:
|
Contract |
Trading Symbol |
Contract Multiplier |
Availability For Trading |
Addition of New Futures Contracts |
|
Adjusted |
LIA |
4,000 |
From Effective Date to |
No |
|
Standard |
LIF |
2,000 |
From Effective Date onwards |
Yes |
Investors should note that the cash settlement amount of adjusted and standard futures contracts on the last trading day will be calculated using their respective contract multipliers. There will not be any changes to the number of open positions and other contract terms after the transfer of positions.
Li & Fung Options
Adjustment Procedures
Adjustments will be made to the open positions which exist after the market close on the business day immediately before the Effective Date. Details of the adjustment procedures are as follows:
|
Adjustment Term |
Formula |
Remark |
|
Adjustment Ratio (AR) |
1 Share / 2 Subdivided Shares = 0.5000 |
Rounded to the nearest |
|
Adjusted Exercise Price (AEP) |
Exercise price of outstanding options series x AR |
Rounded to the nearest |
|
Adjusted Contract Size (ACS) |
Exercise price of outstanding options series x (2,000 shares / AEP) |
Rounded to the nearest |
Trading of Adjusted and Standard Contracts
After the market close on the business day immediately before the Effective Date, the open positions will be transferred to the adjusted option series. In addition, new option series based on the standard contract size will be introduced for trading on the Effective Date. Details of the adjusted and standard contracts available for trading on and after the Effective Date are shown below:
|
Contract |
Trading Symbol |
Contract Size |
Availability For Trading |
Addition of New Options Series |
|
Adjusted |
LIA |
4,000 |
From Effective Date to |
No |
|
Standard |
LIF |
2,000 |
From Effective Date onwards |
Yes |
Investors should note that the adjusted and standard option series have different contract sizes. There will not be any changes to the number of open positions and other contract terms after the transfer of positions.
