| 5.36 | Settlement of CBBCs where the call price is different from the exercise price |
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| | This Question is based on the same facts as Question 5.35 above. For the purpose of this Question, it is assumed that the next trading session after the MCE occurs at 9.30 a.m. contains at least 1 hour of continuous trading for PLC X's shares as defined in paragraph 5.25A(2) of the Main LR. |
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| | (a) | Assuming the traded prices of PLC X's shares during the various trading phases on 2 August 2010 are as follows: |
| | | -table.PNG) |
| | | Are the callable bull certificate holders in this case entitled to receive a cash amount upon the MCE? |
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| | | Yes. Pursuant to paragraphs 5.25A(1)(b)(i) and 5.25A(2)(a) of the Main LR, where the call price of a callable bull certificate is different from the exercise price, the certificate holders will receive a cash amount if the lowest traded price transacted during the Main Trading Phase of an underlying financial instrument from the MCE up to the end of the next trading session, is above the exercise price. |
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| | | In this case, MCE occurs at 9.30 a.m. The lowest traded price transacted during the Main Trading Phase** of PLC X's shares from the MCE (9.30 a.m.) up to the end of the afternoon trading session, is higher than the exercise price of RM1.00. |
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| | | As such, the callable bull certificate holders in this case are entitled to receive a cash amount upon the MCE. |
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| | | **For the purpose of the lowest traded price during the Main Trading Phase, the opening and closing prices are not taken into account. As such, the opening and closing prices of RM0.90 which is lower than the exercise price of RM1.00 is not taken into account. Instead, RM1.20 which is the lowest traded price during the continuous trading phases is regarded as the lowest traded price for settlement purpose. |
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| | | Note: The requirement that only the lowest/highest traded price that occurs during the "Main Trading Phase" can be taken into account in computing the settlement price of a CBBC, is only applicable when the underlying financial instrument is shares or exchange-traded funds listed on the Exchange. |
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| | (b) | This Question is independent from Question (a) above. Assuming the traded prices of PLC X's shares during the various trading phases on 2 August 2010 are as follows: |
| | | -table.PNG) |
| | | Are the callable bull certificate holders in this case entitled to receive a cash amount upon the MCE? |
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| | | No. As explained in (a) above, pursuant to paragraph 5.25A(1)(b)(i) of the Main LR, the callable bull certificate holders will only receive a cash amount if the lowest traded price transacted during the Main Trading Phase of PLC X's shares from the MCE up to the end of the next trading session, is above the exercise price. |
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| | | In this case, the MCE occurs at 9.30 a.m. The lowest traded price transacted during the Main Trading Phase of PLC X's shares from the MCE (9.30 a.m.) up to the end of the afternoon trading session (excluding the opening and closing prices), is RM0.90 which occurs during the continuous trading at 3.00 p.m. RM0.90 is below the exercise price of RM1.00. |
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| | | As such, the callable bull certificate holders in this case are not entitled to receive a cash amount upon the MCE. |