Osaka Securities Exchange (OSE) has taken steps to suspend trading of Lehman Brothers, Inc. (Lehman Brothers) and debt assumption related to trades in which Lehman Brothers is a counterparty. In response to this, OSE is now announcing the following decision on the handling of margins and outstanding positions for Lehman Brothers' futures and options contracts.
| 1. |
Outstanding Positions |
| |
(1) |
Transactions for offsetting |
| |
|
Customers who seek to conduct transactions for offsetting must submit documentation to Lehman Brothers stating this fact. Transaction participants designated by OSE will execute transactions for such offsetting.
|
| |
(2) |
Position Transfer |
| |
|
Customers may transfer outstanding positions to other transaction participants of OSE. Those customers who seek to do so must apply to the appropriate transaction participant and obtain their consent. Furthermore, the position prices as related to the transfer of outstanding positions will be the settlement price on the previous transaction day (zero as to option contracts).
The deadline for transferring outstanding positions is noon (Japan time) September 24, 2008. Please note that if the applied transaction participant has not submitted documentation to OSE on transferring the outstanding positions, transactions for offsetting position of that customer will be conducted automatically.
|
| |
(3) |
Give-Up |
| |
|
Customers who have concluded a Give-Up Agreement among the customer, Lehman Brothers (or security firm which is the agency of Lehman Brothers) and the other transaction participant (or security firm which is the agency of the other transaction participant) may make a Give-Up instruction to Lehman Brothers. The transaction eligible for Give-Up is the one executed within four business days reckoned from the Give-Up instruction day.
Transaction participants who receive a Give-Up Notification may check the details of the Give-Up Transaction and make a Take-Up Notification to OSE.
|
| 2. |
Margins Required for Agency Transactions |
| |
Margins on Lehman Brothers' customers will be handled in one of the following ways in accordance with the above methods. |
| |
(1) |
In cases where there is a transaction for offsetting |
| |
|
Customers have the right to demand restitution directly from OSE.
|
| |
(2) |
In cases where there is a transfer of outstanding positions to another transaction participant |
| |
|
Margins are also transferred to the applied transaction participant.
|
| |
* |
Points to note for cases Lehman Brothers deposited margins in lieu of customers.
OSE will cash the substitute securities, and margins will then be returned to the customer or transferred to another transaction participant.
Also, the sum of the money that is to be returned to the customer or transferred to another transaction participant will be either A or B below, whichever is smaller. (However, in cases where an outstanding debt is owed to Lehman Brothers for futures and options trading, an amount equivalent to this sum will be subtracted from the amount to be returned or transferred.)
- The sum of the money or the securities at market value that the customer deposits as margins.
- The amount is calculated with the following method.
(Margins that Lehman Brothers deposits with OSE in lieu of its customers) - (Commission charges required when OSE cashes substitute securities that Lehman Brothers deposited in lieu of its customers) = (1)
Then, the amount is calculated by distributing (1) on a pro rata basis in accordance with the sum of the money or the securities at market value that the respective customers deposited with Lehman Brothers as margins.
|
|
