1,000 Morrisons Ordinary 10 pence shares and £600 in cash
per lot, in the following line:
Security ISIN Code
Morrisons Ordinary 10 pence shares GB0006043169
(c) It is anticipated that Delivery Bargains held within CREST
which have not settled by Monday 8 March 2004 will be
automatically transferred into bargains for 1,000 Morrisons
Ordinary 10 pence shares and £600 in cash per lot. The con-
sideration for such bargains will remain unchanged.
(d) Members are requested by LCH.Clearnet to enter their deliv-
ery instructions as per LCH.Clearnet’s alleged transactions
within CREST. The consideration of the alleged delivery
instructions entered by LCH.Clearnet will reflect the £600
cash adjustment within the offer.
No additional series will be introduced in respect of Safeway plc
Equity Options and no further expiry months will be listed.
Source: Euronext.liffe.
As can be seen in the above example there is no change to the
contract strike price but there is a change to the underlying that will
be delivered, in this case a combination of new shares and cash.
Once again it is crucially important that this change is updated
internally and also that clients holding positions, either long or short,
are aware of the change to the option and to the delivery obligation.
Note the situation regarding the delivery instructions and the treat-
ment of bargains in CREST.
Naturally the Safeway series of options will not see any new series
introduced.
OTC derivatives
With OTC derivatives the terms are negotiated and this will include
what will happen in the event of a corporate action on the underlying
occurring. This may be anything from the termination of the position to
a choice of decision by either the issuer or the holder of the position.
It is vitally important that on the announcement of a corporate
action, the terms of any OTC transactions that are based on the
underlying on which the action is taking place are reviewed and that
there are procedures set down to deal with the event.
Impact of corporate actions 153
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