​Callable Bull/Bear Certificate ("CBBC")

 

​5.35

​On 1 June 2010, Issuer A issues 100 million of callable bull certificates based on PLC X's shares listed on Bursa Securities. The certificates have the following features:

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​Call Price         : RM1.50

Exercise Price  : RM1.00

Expiry Date      : 30 Dec 2010

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​​On 2 August 2010, the transacted prices of PLC X's shares as at 10.30 a.m. are as follows:
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Time (a.m.)Transacted Price (RM)
9.001.60
9.201.70
9.301.40
10.001.70
10.301.50
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​​(a)​When does the MCE5 for the callable bull certificates occur?
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​The MCE for the callable bull certificates occurs at 9.30 a.m. on 2 August 2010, when the transacted price is RM1.40, which is below the call price.

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​​(b)​What happens to the callable bull certificate when a MCE occurs?
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​​​When a MCE occurs, the certificates will be called and terminated by Issuer A immediately.
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​5   "MCE" or "mandatory call event" is defined in paragraph 5.02 as the first occurrence at any time before the certificate's expiry date where the transacted price of the underlying financial instrument is –

 

(a)     at or below (in respect of a callable bull certificate); or

(b)     at or above (in respect of a callable bear certificate),

the call price and upon which the callable bull/bear certificate will be called by the issuer.

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