PART C – UNDERLYING FINANCIAL INSTRUMENT |
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5.03 | Underlying financial instrument listed on the Exchange |
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(1) | Where the underlying financial instrument of the structured warrants is shares or units in an exchange-traded fund listed on the Exchange, an issuer must ensure that the underlying corporation or exchange-traded fund has an average daily market capitalisation (excluding treasury shares) of at least - |
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| (a) | RM1 billion in the past 3 months ending on the last market day of the calendar month immediately preceding the date of issue; or |
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| (b) | RM3 billion for newly listed corporations or exchange-traded funds that do not meet the 3 month market capitalisation track record. |
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(1A) | Where the underlying financial instrument of the structured warrants is shares or units in an exchange-traded fund that will be listed on the Exchange, an issuer must ensure that the underlying corporation or exchange-traded fund has a market capitalisation (excluding treasury shares) of at least RM3 billion based on the issue price of the shares or units in the exchange-traded fund as set out in the prospectus. FAQ 5.2, FAQ 5.3 |
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(2) | In the case of an issue of structured warrants where the underlying financial instrument is shares, an issuer must ensure that the underlying corporation is in compliance with the Exchange's public shareholding spread requirement. |
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5.04 | Underlying financial instrument listed outside Malaysia |
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(1) | Where the underlying financial instrument of the structured warrants is shares or units in an exchange-traded fund listed on a securities exchange outside Malaysia, an issuer must ensure that the underlying financial instrument satisfies the following criteria: |
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| (a) | the underlying corporation or exchange-traded fund is listed on a securities exchange which is a member of the World Federation of Exchanges or is approved by the Exchange; |
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| (b) | the underlying corporation or exchange-traded fund must have an average daily market capitalisation equivalent to at least - |
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| | (i) | RM3 billion in the past 3 months ending on the last market day of the calendar month immediately preceding the date of issue; or |
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| | (ii) | RM5 billion for newly listed corporations or exchange-traded fund that does not meet the 3 month market capitalisation track record; |
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| (c) | the underlying corporation or exchange-traded fund must be in compliance with the listing rules and requirements of its home exchange at the date of issue; and |
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| (d) | information on the price, volume, financial information and price-sensitive information relating to the underlying corporation or exchange-traded fund must be available to investors in Malaysia. |
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(2) | Where the underlying
financial instrument of the structured warrants is shares or units in an
exchange-traded fund that will be listed on a securities exchange outside
Malaysia, an issuer must ensure that the underlying financial instrument
satisfies the following criteria: FAQ 5.2, FAQ 5.4 |
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| (a) | the underlying corporation or exchange-traded fund must have a market capitalisation equivalent to at least RM5 billion based on the issue price of the shares or units in the exchange-traded fund as set out in the prospectus; and |
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| (b) | upon listing, the
underlying corporation or exchange-traded fund must comply with the
requirements set out in subparagraphs (1)(a), (c) and (d) above. |
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5.05 | Index as underlying financial instrument |
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Where the underlying financial instrument of the structured warrants is an index - |
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(1) | an issuer must ensure that the index is either based on the Exchange or if it is based on a securities exchange outside Malaysia, it is approved by the Exchange; and |
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(2) | where the index is based on a securities exchange outside Malaysia, information on its composition and performance must be made available to investors in Malaysia. |
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5.06 | Underlying shares for put warrants or callable bear certificates FAQ 5.34 |
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Subject to compliance with paragraph 5.03 above, when an issuer issues put warrants or callable bear certificates based on underlying shares which are listed on the Exchange, the issuer must ensure that – |
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(a) | the underlying shares of the put warrants or callable bear certificates are part of the Approved Securities; and FAQ 5.32, FAQ 5.33 |
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(b) | if the underlying shares are not part of the Approved Securities, the issuer must only issue put warrants together with call warrants of the same size and tenure based on the same underlying shares. |
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5.07 | Acceptable securities exchange outside Malaysia |
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Where the underlying financial instrument of the structured warrants is listed on a securities exchange outside Malaysia, in determining whether the securities exchange is acceptable, the Exchange will consider among others, the following: |
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(a) | the market is regulated in a fair and orderly manner by the government or properly constituted body pursuant to a body of laws, regulations or rules which are broadly based; |
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(b) | quality of the reporting and timeliness of the disclosure of information on price, volume, financial information and price-sensitive information; and |
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(c) | the availability of price information to investors in Malaysia. |
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5.08 | Acceptable index |
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Where the underlying financial instrument of the structured warrants is an index, in determining whether the index is acceptable, the Exchange will consider among others, whether the index – |
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(a) | is broadly based; |
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(b) | has transparent components; and |
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(c) | is a recognised benchmark. |
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PART D – ADMISSION |
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5.09 | Admission |
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(1) | The Exchange will exercise discretion over the admission and continued listing of structured warrants on its Official List and may approve or reject applications for listing, as it deems fit. |
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(2) | The Exchange may also approve applications for listing unconditionally or subject to such conditions, as it deems fit. |
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(3) | An issuer applying to admit a structured warrant issue must comply with the relevant listing procedures and requirements as may be prescribed by the Exchange. FAQ 5.5, FAQ 5.6, FAQ 5.7, FAQ 5.8, FAQ 5.9, FAQ 5.10, FAQ 5.11, FAQ 5.12, FAQ 5.31 |
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| [ Cross reference: Practice Note 27 ] |
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(4) | An issuer must submit its listing application to the Exchange for the issue of structured warrants through an eligible broker. However, where the issuers themselves are eligible brokers or eligible licensed persons approved by Bank Negara Malaysia, they may submit the proposals on their own behalf. |
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5.10 | Approval from other authorities FAQ 5.1 |
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(1) | An issuer seeking a listing of its structured warrants on the Official List must fulfill the eligibility criteria prescribed by the SC. |
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(2) | In addition, an issuer must obtain approval(s) from the other relevant authorities (where applicable) before listing and quotation of any structured warrants will be considered by the Exchange. |
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5.11 | Holders of structured warrants |
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(1) | An issuer must ensure that, upon initial listing, the structured warrants for which listing is sought are in the hands of a minimum - FAQ 5.13 |
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| (a) | 100 warrant holders holding not less than 1 board lot of warrants each; or |
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| (b) | 50 warrant holders holding not less than 1 board lot each provided that each of these warrant holders subscribe for a minimum of RM100,000 of warrants each. |
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(2) | The requirements in subparagraph (1) above do not apply to – |
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| (a) | an issuer of bull equity-linked structures; or |
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| (b) | an issuer who provides liquidity for the structured warrant issue via market making in accordance with paragraph 5.12 below. FAQ 5.14 |
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5.12 | Market making FAQ 5.13, FAQ 5.14, FAQ 5.15, FAQ 5.16 |
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An issuer intending to provide liquidity via market making must appoint only 1 Market Maker or be the Market Maker if it wishes to undertake the market making activities itself. |
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PART E – TERMS AND CONDITIONS |
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5.13 | Maximum issue size |
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(1) | For structured warrants where settlement is – |
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| (a) | by way of physical delivery; and |
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| (b) | the underlying financial instrument is shares or an exchange-traded fund listed on the Exchange, |
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| the aggregate outstanding collateralised and non-collateralised structured warrants issued at any one time must not exceed 20% of the share capital of the underlying corporation or the fund size of the exchange-traded fund. |
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(2) | For the purpose of this paragraph, the aggregate outstanding collateralised and non-collateralised structured warrants issued include those already issued by third-party issuers on the same underlying shares that are still outstanding (unexercised and unexpired). |
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(3) | When computing the size of a structured warrant issue, an issuer must not include the company warrants issued by the underlying corporation. |
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5.14 | Minimum issue size |
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Each issue of structured warrants must be for a total face amount of not less than RM5 million. |
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5.15 | Tenure of issue |
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The expiry date of the structured warrants – |
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(a) | in relation to call and put warrants, must not be
earlier than 6 months and not later than 5 years from the date of issue; |
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(b) | in relation to bull equity-linked structures, must
not be earlier than 28 days and not later than 2 years from the date of issue; and |
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(c) | in relation to callable bull/bear certificates, must
not be earlier than 3 months and not later than 5 years from the date of issue,
unless a MCE occurs in which case the callable bull/bear certificate will be
terminated before its expiry date. |
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5.16 | Take-over, liquidation, dissolution and winding-up |
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The terms and conditions of each issue of structured warrant must specify the rights of the warrant holders in the event of – |
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(a) | a take-over, merger, liquidation, dissolution or winding-up of the underlying corporation or issuer; |
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(b) | a scheme of arrangement involving the shareholders of the underlying corporation or issuer; |
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(c) | winding-up of the underlying exchange-traded fund; or |
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(d) | any other circumstances having a similar effect on the rights of warrant holders to any of the above events. |
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5.17 | Adjustment FAQ 5.17 |
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Where an adjustment is necessary pursuant to a Corporate Proposal or otherwise, an issuer may only adjust the exercise price, conversion ratio or call price of its structured warrants. |
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5.17A | Suspension and cancellation of callable bull/bear certificate |
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(1) | If a MCE occurs, an issuer
of callable bull/bear certificate must immediately notify the Exchange of the MCE and suspension in
accordance with paragraph 5.41A. The Exchange will then suspend the trading of
the callable bull/bear certificate on the Exchange, and the callable bull/bear certificate will terminate with effect from such suspension. FAQ 5.35, FAQ 5.39 |
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(2) | The
Exchange may cancel the callable bull/bear certificate trades that are executed
after the MCE – |
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| (a) | if the trading of a callable bull/bear certificate is not suspended immediately after a MCE; or |
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| (b) | for
any other reason which the Exchange deems fit. |
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PART F - TRUST DEED/DEED POLL |
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5.18 | Contents of trust deed or deed poll |
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(1) | An issuer must ensure that the trust deed or deed poll governing an issue of structured warrants includes the various provisions set out in Appendix 5A. |
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(2) | An issuer
must furnish to the Exchange a letter of compliance pursuant to paragraph 2.12
together with the trust deed or deed poll and a checklist showing compliance
with Appendix 5A. |
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(3) | Notwithstanding
anything provided in this Chapter, a trust deed or deed poll must not include any provision for the
extension or shortening of tenure of the structured warrants. |
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PART G – TRADING |
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5.19 | Minimum issue price |
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The minimum issue price for a structured warrants issue must be RM0.15 per warrant. |
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5.20 | Board lot |
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(1) | Trading of structured warrants must be in a board lot comprising 100 units or any other number of securities permitted by the Rules of the Exchange. |
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(2) | Structured warrants based on an index must be issued in board lots of 100 warrants. |
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5.21 | Conversion Ratio |
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For the purpose of exercising structured warrants where settlement is by delivery of the underlying shares or exchange-traded fund units, the conversion ratio must be as follows: |
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(a) | 1 structured warrant for 1
share or exchange-traded fund unit; |
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(b) | 10 structured warrants for 1 share or exchange-traded fund unit; or |
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(c) | such other ratio as the
Exchange may approve, provided it will convert to a whole number of a board lot
of the underlying shares or exchange-traded fund units. |
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5.22 | Exercise Style |
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(1) | Subject to subparagraph (2)
below, the right of the structured warrant holders must be exercisable in
American style, European style or such other style as the Exchange may approve.
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(2) | The following structured
warrants may only be exercised in European style: |
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| (a) | bull equity-linked
structures; and |
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| (b) | callable bull/bear
certificates. |
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PART H – SETTLEMENT OF STRUCTURED WARRANTS |
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5.23 | Mode of settlement |
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(1) | A structured warrants issue
must be settled either - |
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| (a) | by delivery of the
underlying shares or units of the exchange-traded fund; or |
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| (b) | in cash. |
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(2) | The issuer must clearly specify
the mode of settlement in the terms and
conditions of the structured warrants issue. |
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(3) | Subject to subparagraph (4)
below, upon exercise by warrant holders or at the expiry date of a structured
warrant issue, an issuer does not have the option to elect for an alternative
mode of settlement. |
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(4) | Notwithstanding subparagraph (3) above, where – |
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| (a) | the mode of settlement is
by delivery of underlying shares or units of the exchange-traded fund; and |
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| (b) | the warrant holders receive
odd lots of shares upon exercise of the structured warrants or at expiry date, |
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| the issuer must settle the said odd lots in cash. |
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5.24 | Settlement in cash only |
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(1) | An issue of structured warrants must be settled in cash if - |
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| (a) | the underlying financial
instrument is – |
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| | (i) | shares or an
exchange-traded fund listed on a securities exchange outside Malaysia; or |
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| | (ii) | an index; or |
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| (b) | it is a callable bull/bear
certificate. |
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(2) | An issuer must clearly specify
the settlement in cash in the terms and conditions of the structured warrants issue. |
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5.25 | Settlement of bull equity-linked structures |
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Subject to paragraph 5.24, in relation to a settlement of bull equity-linked structures, the terms and conditions of the issue must clearly specify that the holders will receive on settlement date – |
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(a) | a predetermined cash amount
if the closing price of the underlying shares on expiry date is at or above the
exercise price; or |
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(b) | delivery of underlying shares or a cash amount if the closing price of the underlying shares is below the exercise price on expiry date. In this event, the cash will be calculated by reference to the value of those underlying shares. |
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5.25A | Settlement of callable bull/bear certificate FAQ 5.36, FAQ 5.37 |
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(1) | An issuer must
clearly specify in the terms and conditions of the callable bull/bear
certificate issue that if a MCE occurs, the callable bull/bear certificate will
be settled in the following manner: |
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| (a) | where the call price
is equal to the exercise price, the certificate holders will not receive any
cash amount; or |
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| (b) | where the call price
is different from the exercise price, the certificate holders will receive a
cash amount calculated in accordance with a predetermined formula, if - |
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| | (i) | in relation to a
callable bull certificate, the lowest traded price/level of the underlying
financial instrument from the MCE up to the end of the next trading session, is
above the exercise price; or |
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| | (ii) | in relation to a callable bear certificate, the highest traded price/level of the underlying financial instrument from the MCE up to the end of the next trading session, is below the exercise price. |
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(2) | For the purpose of
sub-paragraph (1)(b) above – |
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| (a) | where the underlying financial instrument is shares or exchange-traded funds listed on the Exchange, the "lowest/highest traded price" refers to the "lowest/highest traded price" during the Main Trading Phase only; and |
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| (b) | the "next trading session" refers to the 1st trading session after the occurrence of the MCE, which contains at least 1 hour of continuous trading for the underlying financial instrument. |
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5.26 | Calculation of settlement price when settled in cash |
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(1) | Subject to paragraph 5.25A, where settlement of a structured warrant issue is in cash, an issuer must specify in the terms and condition of the structured warrants, the method of calculation in determining the settlement price, as follows: |
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| (a) | where the underlying
financial instrument is shares or an exchange-traded fund, the settlement price
will be calculated using one of the following methods: |
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| | (i) | the volume weighted average price; or |
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| | (ii) | the average closing price; or |
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| | (iii) | the closing price of the underlying share or exchange-traded fund on the market day immediately before the exercise or expiry date; and |
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| (b) | where the underlying financial instrument is an index, the settlement price must be calculated using one of the following methods: |
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| | (i) | the closing level of the underlying index on the market day immediately before the exercise or expiry date; or |
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| | (ii) | the final settlement price
settling the corresponding index futures contract on the expiry date; or |
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| | (iii) | the average of the closing levels of the underlying index for the 5 market days prior to and including the market day immediately before the exercise or expiry date. |
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(2) | For the purpose of
subparagraph (1)(a) above, the volume
weighted average price or the average closing price of the underlying shares or
exchange-traded fund will be computed based on 5 market days immediately before
the exercise or expiry date of the structured warrants, subject to any
adjustment as may be necessary to reflect any capitalisation, rights issue,
distribution or others. |
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5.27 | Calculation of settlement price for American style structured warrants |
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(1) | Subject to subparagraph
(2), for American style structured warrants, in addition to the methods of
calculating the settlement price set out in paragraph 5.26, the following
calculation method may be used: |
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| (a) | where the structured
warrant is exercised before 12.30 p.m., the settlement price must be calculated
using - |
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| | (i) | the closing price of the underlying share or exchange-traded fund; or |
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| | (ii) | the closing level of the underlying index, |
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| | where applicable, on the day that the structured warrant is exercised; and |
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| (b) | where the structured warrant is exercised on or after 12.30 p.m., the settlement price must be calculated using - |
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| | (i) | the closing price of the underlying share or exchange-traded fund; or |
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| | (ii) | the closing level of the underlying index, |
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| | where applicable, on the next day after the day when the structured warrant is exercised. |
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(2) | An issuer may only use the additional calculation method set out in subparagraph (1) if - |
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| (a) | it has specified the same in the terms and condition of the structured warrants issue; and |
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| (b) | the structured warrants are exercised before the expiry date. |
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5.28 | Automatic settlement in cash |
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Where the settlement of the structured warrants is in cash, an issuer must ensure that the terms and conditions of the structured warrants issue provide for automatic settlement (i.e. where warrant holders are not required to serve a notice of exercise to the issuer) if – |
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(a) | the structured warrants expire in-the-money; or |
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(b) | in relation to callable bull/bear certificates which are called for and terminated following a MCE, there is a cash amount payable to the certificate holders. |
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PART I – FURTHER ISSUE |
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5.29 | Further Issue FAQ 5.18, FAQ 5.19 |
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(1) | An issuer may apply to list a further issue of its structured warrants ("Further Issue") which forms part of the existing listed series of the structured warrants ("Existing Issue"), subject to the following conditions: |
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| (a) | the Further Issue is for the purpose of facilitating market making; |
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| (b) | the terms and conditions of
the Existing Issue either permit the Further Issue or have been properly
amended to give the issuer the right to issue and list one or more Further
Issues; |
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| (c) | the terms and conditions of
the Further Issue and the Existing Issue must be identical except for the size and
tenure of the issue; and |
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| (d) | the issuer holds not more
than 50% of the Existing Issue at the time of application for the Further Issue.
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(2) | An issuer may retain up to 100% of the Further Issue at the date of listing of the Further Issue. |
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(3) | For the avoidance of doubt, the requirements under paragraphs 5.14, 5.15 and 5.19 are not applicable to a Further issue. |
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5.30 | Listing application for Further Issue |
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An issuer must comply with the relevant listing procedures and requirements for the listing of Further Issue as may be prescribed by the Exchange. |
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[ Cross reference: Practice Note 27 ] |
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PART J – ISSUE OF BASKET WARRANTS |
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5.31 | Basket warrants |
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Basket warrants are call or put warrants that are issued on a basket of 2 or more underlying shares. |
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5.32 | Issuance of basket warrants |
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An issuer may issue basket warrants subject to the relevant terms and conditions applicable to the issue of structured warrants set out in this Chapter, with the following additional requirements: |
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(a) | fully-collateralised issue
of basket call warrants must be settled either by delivery of the underlying
shares or in cash; and |
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(b) | non-collateralised issue of
basket call or put warrants must be settled in cash only. |
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PART K - CONTINUING LISTING OBLIGATIONS |
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5.33 | Obligation to retain a Market Maker |
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(1) | An issuer who provides
liquidity for structured warrants via market making must ensure that the market making obligations, whether performed by
itself or by another party, are performed- |
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| (a) | in accordance with the Rules of the Exchange; and |
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| (b) | as disclosed in the prospectus in relation to the minimum presence, spread and quantity requirements of the structured warrants. |
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(2) | For the avoidance of doubt,
an issuer which has fulfilled the requirements in paragraph 5.11(1) above may
also provide liquidity for its structured warrants via market making. In such
instance, the issuer must also ensure that the Market Maker and market making activities comply with subparagraph (1) above. FAQ 5.14, FAQ 5.15 |
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5.34 | Submission of financial statements |
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(1) | Subject to subparagraph (2) below, an issuer must announce its unaudited/audited financial statements covering the profit and loss position and the balance sheet position on a consolidated basis within 3 months after the close of the half year of the issuer's financial year ("Due Date"), or such period as may be approved by the Exchange. The issuer must ensure that the financial statement states whether there is any abnormal circumstance that has affected or will affect the business and financial position of the issuer. |
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(2) | This obligation does not
apply to an issuer of bull equity-linked structures with an expiry date which
takes place before the Due Date. FAQ 5.20 |
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(3) | An issuer must immediately
announce to the Exchange full details of any financial information which the
issuer discloses to the public. |
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5.35 | Submission of periodic information |
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(1) | Subject to subparagraph (2) below, an issuer must announce the following information to the Exchange, within the timeframes stipulated in subparagraph (2) below: |
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| (a) | the number of structured warrants exercised during the relevant timeframe; |
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| (b) | the cumulative number of structured warrants exercised to date; and |
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| (c) | the number of structured warrants outstanding. |
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(2) | The timeframes referred to in subparagraph (1) above are - FAQ 5.21 |
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