However, this is not always possible and it may be necessary to carry out the
valuation when the underlying stock market opens on the first day of trading
of such share ex entitlement. In the case of Individual Equity Option
Contracts, this will entail a suspension of trading, potentially for the entire
trading session, for the necessary contract adjustments to be made. In con-
trast, in the case of Universal Stock Futures Contracts (cash settlement) and
Universal Stock Futures Contracts (physical delivery), trading will continue
in the relevant futures contract on a ‘cum entitlement’ basis, with the nec-
essary contract adjustments being made after the close of business on the
first day the share is trading ex entitlement.
As stated above, the Board retains the right to determine how contracts
should best be adjusted. However, as a general rule in the case of rights
issues, cash and non-cash special dividends and demergers:
(a) if it is possible to carry out a reliable valuation of the relevant compo-
nents on the underlying stock market at or around the time of determi-
nation of daily settlement prices on the last day of trading of the relevant
share cum entitlement, adjustments will be determined after the close of
business on that day; and
(b) if it is not possible to carry out a reliable valuation on the underlying stock
market at or around the time of determination of daily settlement prices
on the last day of trading of the relevant share cum entitlement, adjust-
ments will be determined on the basis of opening prices of the relevant
components on the first day of trading of such shares ex entitlement. As
stated above, this will necessitate suspending trading in the relevant
Individual Equity Option Contract, potentially for the entire session.
It should be noted that in limited circumstances it may be appropriate or
necessary to use ‘when issued’ prices as the basis for adjustments. Such
prices will only be used if the Board, in its judgement, considers them to
reflect reliably the value of the relevant components.
It should also be noted that the timing of an announcement by a company of
a Corporate Event may result in the Exchange not being able to effect the
appropriate contract adjustments before the start of trading on the first day
the shares trade ex entitlement. In such circumstances, the Exchange will
suspend trading of the relevant Individual Equity Option Contract, poten-
tially for the entire trading session, until the necessary contract adjustments
have been made. In contrast, in order to provide market access for the great-
est period of time, Universal Stock Futures Contracts (cash settlement) and
Universal Stock Futures Contracts (physical delivery) will open for trading on
a ‘cum entitlement’ basis for that trading session, and necessary contract
adjustments will be made after the close of business of the first day on which
the share trades ex entitlement.
Furthermore, it should be noted that the timing of an announcement by a
company of a Corporate Event may occur during the trading session where,
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