exceptionally, such Corporate Event also becomes effective during that same
trading session. In such circumstances, the Exchange will suspend trading
in the Individual Equity Option Contract, potentially for the remainder of
that trading session, for the necessary contract adjustments to be made. In
contrast, Universal Stock Futures Contracts (cash settlement) and
Universal Stock Futures Contracts (physical delivery) will remain open for
trading on a ‘cum entitlement’ basis for the remainder of the trading ses-
sion, and the necessary contract adjustments will be made after the close of
business.
Member firms should draw to the attention of changes created by the provi-
sions in the Policy to their clients given that for instance a Universal Stock
Futures Contract (cash settlement) and Universal Stock Futures Contract
(physical delivery) would be trading ‘cum entitlement’ when the underlying
share would be trading ‘ex entitlement’.
Takeovers
The Board reserves the right to determine how contracts should best be
adjusted in the event that a company is the subject of a takeover offer.
However, as a general rule the Board will make such a determination on the
basis described below. In the case of Individual Equity Option Contracts,
Delivery Contracts shall be performed as follows:
(a) before the offer has been declared ‘wholly unconditional’, by requiring
Delivery Sellers to deliver the number of shares in ‘non-assented’ form
that they have contracted to sell; and
(b) once the offer is declared wholly unconditional, in respect of Delivery
Contracts to be settled through CREST, by requiring the matching and
settlement of the components of the headline offer for the takeover in
appropriate proportions.
The Settlement Day may be postponed until the acquiring company distrib-
utes the consideration for the takeover, in which case The London Clearing
House may continue to call delivery margin until settlement is completed.
In the case of Universal Stock Futures Contracts (cash settlement), the
EDSP shall be calculated as follows:
(a) before the offer has been declared ‘wholly unconditional’, by using the
Relevant Reference Price for the contract, as defined in the List of
Contract Details, (i.e. the price by reference to which the EDSP shall be
calculated) based on the valuation of ‘non-assented’ shares; and
(b) once the offer is declared wholly unconditional, by using a valuation
representative of the components of the headline offer for the takeover
in appropriate proportions. The Board will seek to ensure that the tim-
ing of the calculation of the EDSP is unaffected by the outcome of the
takeover offer.
254 Euronext.liffe corporate action policy