Whole Section

  • Chapter 18 — Exchange Options Trading

    • 18.1 Applicability and Definitions

      • 18.1.1 Applicability

        These Rules shall be applicable to the trading on SGX-ST of Options listed or quoted on SGX-ST, the terms and conditions of such Options, the exercise and settlement thereof, the handling of orders and the conduct of accounts and other matters relating to Options trading. Except as otherwise specified in this Chapter, the Rules and Directives shall, where applicable, apply to the trading of Options on SGX-ST.

      • 18.1.2 Definitions

        In this Chapter, (except where the context otherwise requires):—

        A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z

        Term Meaning
        B
        "Buyer"; the term "buyer" in relation to underlying securities refers to the buyer of the underlying securities covered by an exercised Option.
        C
        "Call Option" means an Option which gives the Purchaser thereof the right in accordance with the terms of the Option, to buy a Standard Quantity of the underlying security at the Exercise Price.
        "CDP System" refers to the computerised Central Depository System maintained by CDP whereby transfers of securities are effected on a book-entry basis.
        "Class of Options" or "Class" means in relation to any Option, either:—
        (1) all Call Options covering the same underlying security; or
        (2) all Put Options covering the same underlying security.
        "Customer"; the term "customer" in respect of any Trading Member shall include any Trading Representative, Director, employee or officer of the Trading Member.
        "Closing Purchase Transaction"; the term "closing purchase transaction" means an Option transaction which eliminates the short position created by an opening written transaction.
        "Closing Written Transaction"; the term "closing written transaction" means an Option transaction which eliminates the long position created by an opening purchase transaction.
        D
        "Depository Agent" means an entity registered as a Depository Agent with CDP for the purpose of maintaining sub-accounts for its own account and for the account of others.
        "Distribution"; the term "distribution", unless otherwise determined by SGX-ST, shall mean capital issue, stock split, consolidation, reconstruction, or other similar action (other than cash distribution made out of profits) in respect of any underlying security.
        E
        "Equity Market" means the market in stocks and shares conducted by SGX-ST.
        "Exercise Notice" means a notice (for the time being current) for the exercise of the Options as prescribed from time to time by the OCC, copies of which may be obtained from Trading Members.
        "Exercise Price" means the specified price per unit of the Standard Quantity at which the underlying security may be purchased or sold upon exercise of the Option subject to such adjustments by SGX-ST in accordance with Rule 18.10.
        "Expiration Date" means in relation to an Option, the last Friday of the Expiration Month in relation to such Option or if such day is not a Market Day on which the Equity Market for the underlying security is open for trading, the Market Day preceding that day.
        "Expiration Month" means in relation to an Option, the month in which the Option expires.
        "Explanatory Booklet" means a booklet approved from time to time by SGX-ST to be furnished to each customer of a Trading Member who opens an Options trading account which provides information to investors on the trading of Options.
        L
        "Lodgement"; the term "lodgement" and "lodged" in relation to an Exercise Notice shall refer to the notification of the exercise of an Option to the OCC by the Trading Member in accordance with the Regulations.
        "Long Position"; the term "long position" means the number of outstanding Options of a given Series of Options held by a Purchaser.
        O
        "OCC" means the Options Clearing Company (Pte) Limited or its successor company.
        "Opening Purchase Transaction"; the term "opening purchase transaction" means an Option transaction which creates a long position in the Option.
        "Opening Written Transaction"; the term "opening written transaction" means an Option transaction which creates a short position in the Option.
        "Option" means an option contract which is either a Put Option or a Call Option traded or reported through the Trading System.
        "Options Market" means the market in stock and share options conducted by SGX-ST.
        "Option transaction" means a transaction traded on or reported through the Trading System in relation to the purchase or writing of an Option.
        "Options trading account"; the term "options trading account" means a trading account opened by a customer with a Trading Member for the purpose of trading in Options.
        "Outstanding"; the term "outstanding" in relation to an Option means an Option which has not been the subject of a closing transaction nor been exercised nor reached its Expiration Date.
        P
        "Premium" or "premium" means in relation to an Option transaction, the price per unit of such Option agreed upon between the Purchaser and Writer in such transaction.
        "Purchaser" means in relation to an Option, the purchaser of the Option.
        "Put Option" means an Option which gives the Purchaser thereof the right in accordance with the terms of the Option, to sell a Standard Quantity of the underlying security at the Exercise Price.
        R
        "Regulations" means the Regulations for Options business of the OCC for the time being in force.
        S
        "Same side of the market" means in respect of Options positions either:—
        (1) long positions in Put Options and short positions in Call Options; or
        (2) short positions in Put Options and long positions in Call Options.
        "Seller"; the term "seller" in relation to underlying securities refers to the seller of the underlying securities covered by an exercised Option.
        "Series of Options" or "Series" means all Options of the same Class of Options having the same Exercise Price and Expiration Date.
        "Scrip-Covered Call Option" means a Call Option in which the obligations of the Writer have been fully secured by the deposit of the underlying security to be delivered to the buyer upon an exercise of the said Option.
        "Securities Account" means the securities account maintained by a direct account holder or a Depository Agent with CDP.
        "Short Position"; the term "short position" means the number of outstanding Options of a given Series of Options with respect to which a person is obligated as a Writer.
        "Standard Quantity" means in relation to an Option, the quantity of underlying securities prescribed from time to time by SGX-ST as the number of the underlying securities covered by the Option subject to such adjustments by SGX-ST in accordance with Rule 18.10.
        U
        "Underlying Securities"; the term "underlying securities" in relation to an Option means (in the case of a Call Option) the security which the Purchaser shall be entitled to buy upon the exercise of the Option and which the Writer shall be obligated to deliver or (in the case of a Put Option) the security which the Purchaser shall be entitled to sell upon the exercise of the Option and which the Writer shall be obligated to buy.
        "Uncovered"; the term "uncovered" in relation to any Call Option means that the Call Option is not a Scrip-Covered Call Option.
        W
        "Writer" means in relation to an Option, the seller of the Option.

        Amended on 3 April 20083 April 2008.

    • 18.2 Option Contracts to be Traded

      • 18.2.1 Approval of Options for Listing or Quotation and Trading

        SGX-ST may from time to time approve for listing or quotation and trading on SGX-ST, Put Options and Call Options in respect of approved underlying securities. Subject to giving prior notification, SGX-ST may remove the listing or quotation of any Series of Options when there are no outstanding positions in such Series.

      • 18.2.2 Approval of Underlying Securities

        SGX-ST may from time to time approve underlying securities as being suitable for Options trading on SGX-ST.

      • 18.2.3 Criteria for Approval of Underlying Securities

        SGX-ST may from time to time establish criteria to be considered in evaluating potential underlying securities for Option transactions. The fact that particular securities may meet the criteria does not necessarily mean that they will be approved as underlying securities. In special situations an underlying security may be approved even though it does not meet all of the criteria established.

      • 18.2.4 Withdrawal of Approval of Underlying Securities

        Whenever SGX-ST determines that underlying securities previously approved for Option transactions do not meet the then current requirements for continuance of such approval or for any other reason should no longer be approved, SGX-ST shall not open for trading any additional Series of Options covering those underlying securities and any opening purchase transactions in Options of that Series previously opened may be prohibited to the extent that SGX-ST shall deem necessary for the maintenance of a fair and orderly market or for the protection of Purchasers or Writers of Options.

    • 18.3 Option Transactions

      • 18.3.1 Registration

        Option transactions shall be registered with the OCC in accordance with its Regulations. An Option shall be deemed to be registered by the issuance of the contract statement by the OCC on behalf of the Trading Member to the Purchaser or Writer thereof.

      • 18.3.2 Responsibility on Registration

        (1) Every Trading Member shall be responsible for the Options registered in the name of such Trading Member for its own account or for the account of its customers.
        (2) Every Trading Member whose Options are registered with the OCC shall be bound by the Regulations. Any breach of the Regulations by the Trading Member shall be liable to be dealt with as if it were a breach of the Rules.
      • 18.3.3 Series of Options Open for Trading

        (1) SGX-ST shall, from time to time, open for trading Series of Options in respect of underlying securities approved for Options trading.
        (2) Only Options of a Series currently open for trading may be purchased or written on SGX-ST.
        (3) The opening of a new Series of Options shall not affect other Series of Options previously opened.
        (4) No transaction in Options of a particular Series shall be made after the close of the Equity Market of the underlying security on the Market Day preceding the Expiration Date of that Series of Options.
      • 18.3.4 Terms of Options

        (1) The Expiration Month and Exercise Price of each Series of Options shall be determined by SGX-ST at the time each Series of Options is first opened for trading.
        (2) The Standard Quantity shall be designated by SGX-ST, and in the absence of such designation the Standard Quantity shall be 1,000 shares.
        (3) Unless SGX-ST otherwise provides, Options shall expire in the months of March, June, September and December and a Series of Options of a given Expiration Month shall generally be opened for trading 3 to 6 months prior to such Expiration Month.
        (4) The Exercise Price of each Series of Options shall be fixed at a price which is reasonably close to the price which the underlying securities are traded on SGX-ST at the time such Series of Options is first opened for trading.
        (5) Additional Series of Options may be opened for trading as the market price of the underlying securities moves substantially from the initial Exercise Price or as determined by SGX-ST from time to time.
      • 18.3.5 Adjustments to Terms

        (1) The Standard Quantity and Exercise Price initially established for a particular Series of Options are subject to adjustment in accordance with Rule 18.10.
        (2) When such adjustments have been determined, announcement thereof shall be made by SGX-ST, effective from the time specified by such announcement.
      • 18.3.6 Suspension of Trading

        (1) The trading on SGX-ST of any or all Classes or Series of Options shall be halted or suspended whenever SGX-ST deems such action appropriate in the interest of maintaining a fair and orderly market and to protect investors.
        (2) Among the factors that may be considered are that:—
        (a) trading in the underlying securities has been halted or suspended on SGX-ST;
        (b) the opening of such underlying securities on SGX-ST has been delayed because of unusual circumstances;
        (c) SGX-ST has been advised that the issuer of the underlying securities is about to make an important announcement affecting such underlying securities; or
        (d) other unusual conditions or circumstances are present.
        (3) Rights to exercise not affected by suspension Unless otherwise decided by SGX-ST, the suspension in trading of Options shall not affect the right of Purchasers to exercise such Options during the period of suspension.
      • 18.3.7 Resumption of Trading

        The trading of Options that have been the subject of suspension under Rule 18.3.6(1) may be resumed upon the determination of SGX-ST that the conditions which led to the suspension are no longer present or that the interests of a fair and orderly market are best served by a resumption of trading.

    • 18.4 Rights and Obligations of Purchasers and Writers

      • 18.4.1

        Subject to the Regulations and in accordance with the Rules and Directives:—

        (1) Call Option

        The Purchaser of a Call Option has the right, beginning 1 Market Day after the Option is registered and expiring on the Expiration Date, to purchase the Standard Quantity of the underlying securities represented by such Option at the Exercise Price from such person as the OCC may from time to time designate. The Writer of a registered Call Option is obligated, upon the allocation to him of an Exercise Notice by the OCC, to sell and deliver the Standard Quantity of the underlying securities represented by such Option to such person as the OCC may from time to time designate.
        (2) Put Option

        The Purchaser of a Put Option has the right, beginning 1 Market Day after the Option is registered and expiring on the Expiration Date, to sell and deliver the Standard Quantity of the underlying securities represented by such Option at the Exercise Price to such person as the OCC may from time to time designate. The Writer of a registered Put Option is obligated, upon the allocation to him of an Exercise Notice by the OCC, to purchase the Standard Quantity of the underlying securities represented by such Option from such person as the OCC may from time to time designate.
      • 18.4.2 Position Limits

        No person shall exceed the position limits prescribed by SGX-ST for outstanding positions in Options. Outstanding positions in Options in excess of the applicable position limits shall be liable to be closed off in accordance with Rule 18.5.6.

    • 18.5 Position Limits

      • 18.5.1 Members Prohibited from Opening Transactions that would Violate Individual Position Limits

        Except with the prior written approval of SGX-ST in each instance, no Trading Member shall, for any account in which it has an interest or for the account of any customer, effect an opening transaction in an Option of any Class dealt on SGX-ST if that Trading Member has reason to believe that as a result of such transaction the Trading Member or its customer would, acting alone or in concert with others directly or indirectly, hold or control or be obligated in respect of an aggregate position (whether short or long) in excess of the individual position limits set out as follows:—

        (1) 2,000 Options on the same side of the market where the issued capital of the issuer of the underlying securities is less than 400 million shares. The aggregate position limit for both sides of the market shall accordingly be 4,000 Options.
        (2) 3,000 Options on the same side of the market where the issued capital of the issuer of the underlying securities is between 400 million and 600 million shares (both numbers inclusive). The aggregate position limit for both sides of the market shall accordingly be 6,000 Options.
        (3) 4,000 Options on the same side of the market where the issued capital of the issuer of the underlying securities is more than 600 million shares. The aggregate position limit for both sides of the market shall accordingly be 8,000 Options.
      • 18.5.2 Market Position Limits

        Notwithstanding Rule 18.5.1 the total number of outstanding Options on both sides of the market of any underlying security shall not exceed 15% of the issued capital of the issuer of the underlying security. This limit shall be known as the market position limit.

      • 18.5.3 Position Limits Subject to Change

        SGX-ST may from time to time vary the individual position and market position limits in Rules 18.5.1 and 18.5.2 respectively by a circular issued to all Trading Members, such new position limits to take effect on such date specified therein. Such new position limits shall not, unless otherwise stated, affect existing Options positions.

      • 18.5.4 Definition of "Control"

        (1) For purposes of aggregation of Option positions under Rule 18.5.1, control may be presumed by SGX-ST:—
        (a) when a person has the power or ability to make investment decisions for an Options trading account; or
        (b) when a person has the power or ability to influence directly or indirectly the investment decisions of any person who makes investment decisions for an Options trading account. A person who has such power or ability shall be presumed to control such account unless and until the presumption is rebutted by evidence and a determination to the contrary has been made by SGX-ST.
        (2) Control will be presumed in the following circumstances:—
        (a) among all parties to a joint account who have authority to act on behalf of the Options trading account;
        (b) when a person holds an ownership interest of 10% or more in a Corporation (ownership interest of less than 10% will not preclude aggregation);
        (c) when Option trading accounts have common directors or management; or
        (d) where a person or entity has the authority to execute transactions in an Options trading account.
      • 18.5.5 Reports Relating to Position Limits

        (1) Each Trading Member shall, when required to do so or if it comes to their knowledge, file with SGX-ST a report, in such form as may be prescribed, giving the name and address of any customer who, on the previous Market Day, holds aggregate long or short positions on the same side of the market in excess of the individual position limits fixed by SGX-ST from time to time. The report shall indicate the number of Options comprising each such position.
        (2) In addition to the reports required under Rule 18.5.5(1), each Trading Member shall report promptly to SGX-ST any instance in which it has reason to believe that a customer, acting alone or in concert with others has exceeded or is attempting to exceed the individual or market position limits established by SGX-ST from time to time.
      • 18.5.6 Closing Off Positions

        Whenever SGX-ST shall determine that a person or group of persons acting in concert holds or controls, or is obligated in respect of, an aggregate position (whether long or short) in all Options of 1 or more Classes or Series dealt in on SGX-ST in excess of the applicable position limits, it may order all Trading Members carrying a position in Options of such Classes or Series for such person or persons to enter into closing transactions in respect of such outstanding positions as expeditiously as possible consistent with the maintenance of a fair and orderly market. Whenever such an order is given, no Trading Member shall accept any order to write, purchase or exercise any Option for the account of the person or persons named in the order, unless in each instance express approval therefor is given by SGX-ST, or until such order is rescinded.

      • 18.5.7 Trading Member's Duty to Inform Customers of Position Limits

        It shall be the responsibility of each Trading Member and Trading Representative accepting orders for opening transactions (purchase or written) in Options to inform customers of the applicable position limits and not to accept orders from any customer if the Trading Member or Trading Representative has reason to believe that the customer, acting alone or in concert with others, has exceeded or is attempting to exceed such position limits.

      • 18.5.8 Limit on Uncovered Short Positions

        Whenever SGX-ST or the OCC shall determine in light of current conditions in the Options Market or in the Equity Market that there are outstanding an excessive number of percent of uncovered short positions in Options of a given Class dealt in on SGX-ST, SGX-ST or the OCC may prohibit any further opening written transactions in Options of that Class unless the short position is created by a Scrip-Covered Call Option and it may prohibit the uncovering of existing Scrip-Covered Call Options in 1 or more Series of that Class as it deems appropriate in the interests of maintaining a fair and orderly market in such Options or in the underlying securities, or otherwise deems advisable in the public interest or for the protection of investors.

      • 18.5.9 Other Restrictions on Option Transactions and Exercises

        SGX-ST or the OCC shall be empowered to impose, from time to time in its discretion, such restrictions on Option transactions or the exercise of Options in 1 or more Series of Options of any Class dealt in on SGX-ST as SGX-ST or the OCC deems advisable in the interests of maintaining a fair and orderly market in Options, or in the underlying securities or otherwise deems advisable in the public interest or for the protection of investors. During the effectiveness of such restrictions, no Trading Member shall, for any account in which it has an interest or for the account of any customer effect any Option transaction or accept Exercise Notices to exercise any Option in contravention of such restrictions.

    • 18.6 Dealings

      • 18.6.1 Trading Hours

        Unless otherwise determined by SGX-ST, the trading hours for Options shall be the same as the Equity Market. SGX-ST may by notice extend or vary the trading hours for the Options Market.

      • 18.6.2 Trading on the Trading System

        (1) When transacting with or on behalf of customers, Trading Members must indicate to the customers the current best bid and ask prices as reflected in the Trading System.
        (2) All Options transactions shall be cleared and settled through the OCC in accordance with its Regulations.

        Amended on 3 April 20083 April 2008.

      • 18.6.3 Minimum Bids

        Unless otherwise determined by SGX-ST, minimum bids for Options trading shall be the same rate prevailing for minimum bids in the Equity Market.

      • 18.6.4 Direct Business

        (1) All Direct Business in Options must be reported to SGX-ST within 10 minutes of execution through the married trade reporting system of the Trading System.
        (2) SGX-ST trading of Options of any Class shall be limited to the hours during which SGX-ST is open for trading.
        (3) No Trading Member shall effect any crossing or married transaction involving an aggregate of less than 100 Options of the same Class.

        Amended on 3 April 20083 April 2008.

      • 18.6.5 Settlement of Premiums

        (1) All Purchasers shall pay all Premiums due on Options purchased to their Trading Members by 12.30 p.m. on the Market Day following the Options transaction date.
        (2) Premiums due to Writers on all Options written (except for Scrip-Covered Call Options) may be withheld by Trading Members and applied in set-off (whether partial or whole) against the margins required to be deposited by the Writers.
        (3) All Writers of Scrip-Covered Call Options shall be entitled to receive all Premiums due on such Options from their Trading Members by 12.30 p.m. on the Market Day following the Options transaction date.
      • 18.6.6 Failure by Customers to Pay Premium

        If a customer fails to make payment of the Premiums payable to a Trading Member despite being requested to do so by the Trading Member, then the Trading Member shall be entitled to enter into a closing purchase or written transaction as the case may be, in respect of the same Option for which the Premiums were due, charging any loss arising therefrom (including commissions and other costs) to the defaulting customer.

      • 18.6.7 Failure to Pay Premium or Deliver — Trading Member

        Failure by a customer to pay the Premiums due shall not affect the Trading Member's obligations as the registered holder of the Options to the OCC under the Regulations. The Trading Member affected shall have recourse in accordance with the foregoing Rule 18.6.6.

      • 18.6.8 Closing Transactions

        All closing transactions shall be made through the same Trading Member with whom the opening purchase or opening written transaction is executed or where the outstanding Options position has been transferred to another Trading Member in accordance with Rule 18.7.7 the closing transaction shall be made through that Trading Member.

    • 18.7 Doing Business with the Public

      • 18.7.1 Approval of Customer's Options Trading Account

        (1) No Trading Member shall accept an order from a customer to purchase or write an Option unless the following conditions are satisfied:—
        (a) the customer has opened an Options trading account with the Trading Member on such terms as may from time to time be approved or prescribed by the OCC; and
        (b) such customer owns a Securities Account.
        (2) No Trading Representative of a Trading Member shall recommend to a customer or execute on behalf of a customer an opening Option transaction unless the customer has opened an Options trading account.
      • 18.7.2 Diligence in Opening Account

        Before opening an Options trading account, a Trading Member shall exercise due diligence to learn the essential facts concerning the customer. A record of this information shall be maintained by the Trading Member. Based upon such information, an Executive Director of the Trading Member shall approve in writing the opening of the customer's Options trading account.

      • 18.7.3 Undertaking to be Obtained

        (1) Upon the approval of the customer's Options trading account, a Trading Member shall obtain from the customer a written undertaking, agreement and acknowledgement that:—
        (a) all Options transactions shall be subject to the Rules and Directives of SGX-ST and the Regulations;
        (b) the customer will not violate, either alone or in concert with others, the individual position limits established pursuant to this Rule;
        (c) the customer has received the documents furnished in accordance with Rule 18.7.4 and has read and understood the contents thereof and is aware of the special risks involved in the trading of Options as outlined therein;
        (d) if at any time the customer should exceed the individual position limits prescribed by SGX-ST, his outstanding Options positions in excess of the individual position limit shall be liable to be closed out by the Trading Member and any losses, charges and expenses arising from the closing of his Options positions shall be charged to his account; and
        (e) the customer shall at all times promptly furnish, maintain and top-up such deposits and margins as shall be required by the Trading Member from time to time in respect of the short positions in his Options trading account.
        (2) The OCC may from time to time make such changes and/or prescribe additional items to be included in the said written undertaking, agreement and acknowledgement as it may deem necessary for the efficient functioning of the Options Market.
      • 18.7.4 Documents to be Furnished

        (1) Prior to the approval of the customer's Options trading account, a Trading Member shall furnish the customer with a current Explanatory Booklet. Thereafter each new or revised current Explanatory Booklet and any updates and addenda thereto shall be distributed to every customer having an Options trading account as soon as possible upon receipt of the revised Explanatory Booklet or updates and addenda thereto by the Trading Member.
        (2) Prior to the approval of the customer's Options trading account, a Trading Member shall furnish the customer with a risk disclosure statement which shall be in such form and manner as may from time to time be approved or prescribed by the OCC.
      • 18.7.5 Contract Statements to Customers

        The contract statements for the Option transactions of a Trading Member's customer shall be sent to the customer by the OCC on behalf of the said Trading Member on the next Market Day after an Option transaction date indicating, in respect of each Option transaction:—

        (1) the Option transaction date and quantity of Options purchased or written;
        (2) the underlying securities;
        (3) the Expiration Month;
        (4) the Exercise Price;
        (5) the aggregate Premium due, commission, clearing fees, stamp duties (if any) and any other charges; and
        (6) whether the transaction is an opening or closing transaction.
      • 18.7.6 Required Courses/Fees

        (1) No Trading Representative of a Trading Member shall solicit orders for, advise on trades concerning, or trade for the public in, Options unless he has successfully completed such course or courses of studies as may from time to time be required by SGX-ST to deal in Options.
        (2) SGX-ST may at any time from time to time prescribe a fee which shall be payable before approval for Option trading privileges is granted or continued.
      • 18.7.7 Transfers of Options Positions

        A customer who intends to transfer his outstanding Options position from one Trading Member to another shall obtain the consent to the transfer from the Trading Member with whom he has his outstanding Options positions and shall obtain the transferee Trading Member's consent to accept his outstanding Options positions before the transfer.

      • 18.7.8 Transactions with Issuers

        No Trading Member shall accept an order for the account of any company which is the issuer of underlying securities or for the account of any subsidiary of such company for the writing or purchase of an Option with respect to underlying securities of that issuer.

      • 18.7.9 Due Authorisation for Option Transactions

        No Option transactions shall be effected on behalf of customers without proper authorisation being given by the customers.

      • 18.7.10 Taking of Orders by Customers

        When taking an order, the Trading Member shall establish proper procedures to ensure that the customers' orders shall contain the following details:—

        (1) whether it is a Call or Put Option;
        (2) the underlying security;
        (3) the Expiration Date;
        (4) the Exercise Price;
        (5) the number of Options to be written or purchased; and
        (6) whether the transaction is an opening or closing transaction. Where the customer fails to specify whether it is an opening or closing transaction, the transaction will be deemed to be an opening transaction.
      • 18.7.11 Communication with the Public

        (1) Any communication of the Trading Member with the public which discusses the uses or advantages of Options shall include a warning to the effect that Options may not be suitable for every investor and shall reflect the special risks attendant on Options transactions and Options investment strategies.
        (2) Any statement in such communication that refers to the potential opportunities presented by Options trading shall be balanced by a statement of the corresponding risks.
        (3) Past performance figures, including annualised rates of return, shall be truthful, factual and accurate.
        (4) Projections or predictions of future events shall be clearly labelled or indicated as forecasts and shall contain the bases or assumptions upon which the projection, prediction or forecast is made.
    • 18.8 Margins and Scrip-Covered Call Options

      • 18.8.1 Margins Payable on Opening Written Transactions

        Customers of Trading Members shall be required by Trading Members to deposit proper and adequate margins in respect of any opening written transaction effected on their behalf by the Trading Member as security for the due performance of their obligations as Writers of the Option in accordance with Rule 18.8.3.

      • 18.8.2 Scrip-Covered Call Options

        (1) No margins shall be required to be deposited by Writers of Scrip-Covered Call Options.
        (2) The Writer of a Scrip-Covered Call Option shall submit a request to the CDP through the Trading Member on the prescribed form for a transfer of the underlying securities from the Writer's Securities Account to a Securities Account designated by the Trading Member as security for his obligation to deliver the underlying securities upon an exercise of the Scrip-Covered Call Option.
        (3) The underlying securities shall be released and returned to the Securities Account of the Scrip-Covered Call Option Writer upon request by the said Writer and upon confirmation and endorsement by the Trading Member to the OCC that:—
        (a) the Scrip-Covered Call Option has expired, or
        (b) the short position created by the Scrip-Covered Call Option has been eliminated by a closing purchase transaction, or
        (c) subject to Rule 18.5.8, the said Writer has adequate margins deposited with the Trading Member or deposits additional margins in respect of the said Option in lieu of the underlying securities to be released.
        (4) The Writer shall be entitled to all distributions accruing on the underlying securities.
        (5) Trading Members shall be authorised and entitled to transfer the underlying securities transferred to its Securities Account in accordance with Rule 18.8.2(2) to the OCC subject to the Regulations.
      • 18.8.3 Margin Securities

        Trading Members shall accept the deposit of margin securities from their customers in respect of their opening written transactions on the following terms:—

        (1) The Writer of an Option shall submit a request to the CDP through the Trading Member on the prescribed form for a transfer of the margin securities from the Writer's Securities Account to a Securities Account designated by the Trading Member.
        (2) The margin securities shall be released and returned to the customer's Securities Account upon request made by the customer to the Trading Member who shall confirm and endorse such requests to the OCC on grounds that the customer has adequate margins deposited for his outstanding short positions or has deposited additional margins in lieu of the margin securities to be released.
        (3) The customer shall be entitled to all distributions accruing on margin securities subject to Rule 18.8.3(4).
        (4) A Trading Member shall be entitled to sell or utilise any or all of the margin securities together with any distributions accruing in respect thereof to satisfy any amounts due and owing to the Trading Member by the customer in respect of his Options trading account.
        (5) Trading Members shall be authorised and entitled to transfer the margin securities transferred to its Securities Account in accordance with Rule 18.8.3(1) to the OCC subject to the Regulations.
      • 18.8.4 Margin Requirements

        (1) The OCC may from time to time prescribe the amount of margin required to be deposited in respect of customers' and Trading Members' outstanding short positions and all matters in connection thereto. Trading Members shall adhere to such prescribed margin and all matters prescribed by the OCC and/or the Regulations in connection thereto. Such matters shall include, without limitation:—
        (a) the forms of margin acceptable for deposit;
        (b) the procedures and manner of acceptance, deposit, release and withdrawal of cash deposited as margin, marginable securities and underlying securities of Scrip-Covered Call Options; and
        (c) the establishment and operation of trust accounts for cash deposited as margin by customers.
        (2) All requests for the deposit and release of underlying securities for Scrip-Covered Call Options or margins securities or cash margins shall be made through Trading Members and the OCC or the CDP shall not be obliged to communicate with or take instructions directly from customers of Trading Members.
        (3) All requests for the release of securities or cash margins shall be made on the prescribed form and shall be lodged by the customer with the Trading Member with whom he has deposited the said securities before 12.30 p.m. on any Market Day in order to obtain a release of the securities by 9.00 a.m. the following Market Day, subject to the Trading Member's confirmation and endorsement of the release.
      • 18.8.5 Maintenance of Margin

        (1) The margins deposited, if in the form of marginable securities, shall be marked-to-market daily and Trading Members shall require their customers to top up their margin deposits to maintain the margins at the amounts prescribed by the OCC.
        (2) Where a customer fails to pay the initial margin prescribed by the OCC, the Trading Member shall close off the customer's short position by 5.00 p.m. on the Market Day following the Options transaction date or on such later date as may be allowed by SGX-ST, upon such terms and conditions as the Trading Member may think fit, charging any loss arising therefrom (including commission and other costs) to the defaulting customer.
        (3) Where a customer fails to top up his margin deposits after being requested to do so by a Trading Member, then the Trading Member shall be entitled, and shall, if directed by SGX-ST or the OCC, close off the short position at such time and upon such terms and conditions as it may think fit, charging any loss arising therefrom (including commission and other costs) to the defaulting customer.
      • 18.8.6 Margin Prescribed is Minimum

        The amount of margin prescribed by the OCC is the minimum which must be required initially and subsequently maintained. However, nothing in this Chapter shall be construed as preventing a Trading Member from requiring higher margins from its customers.

    • 18.9 Exercise of Option by Customers

      • 18.9.1 Exercise Cut-Off Time

        For every Series of Options traded on SGX-ST, the exercise cut-off time; being the latest time prior to the expiration of such Series at which a Trading Member will accept exercise instructions from customers, shall be not later than 12.30 p.m. on the Expiration Date.

      • 18.9.2 Exercise through Trading Member

        The holder of an unexpired outstanding Option may exercise the Option only through the Trading Member with whom he has the outstanding long position in the Option by submitting an Exercise Notice duly completed and signed by the exercising Option holder.

      • 18.9.3 Allocation of Exercise Notices to Customers

        (1) Exercise Notices shall be allocated to Trading Members or its customers by the OCC pursuant to the Regulations.
        (2) The allocation of Exercise Notices by the OCC shall be on the basis of computerised random selection.
        (3) Trading Members shall notify their allocated customers on the same Market Day of receipt of an exercise allocation from the OCC of the exercised allocation.
      • 18.9.4 Notification to the OCC of Exercise Notices

        (1) An Exercise Notice shall take effect on the date of its notification to the OCC (the "Exercise Date"). An Exercise Notice shall be notified to the OCC in accordance with the Regulations.
        (2) An Exercise Notice lodged by a customer before 12.30 p.m. with a Trading Member shall be notified to the OCC by 5.00 p.m. on the same day.
        (3) An Exercise Notice lodged by a customer after 12.30 p.m. with a Trading Member shall be notified to the OCC the next Market Day.
      • 18.9.5 Effect of Exercise of Option — Deemed Contract

        Subject to Rule 18.9.7, upon the allocation of an Exercise Notice of an Option, the exercise shall take effect as if it were a purchase and sale of the underlying security on SGX-ST and the Rules and Directives of SGX-ST shall thereafter apply to the exercise as if it were a contract for the purchase and sale of the underlying security.

      • 18.9.6 Option Exercisable Upon Payment of Premium

        Trading Members shall not accept the lodgement of any Exercise Notice by a customer unless and until the aggregate Premium payable in respect of the Option has been paid in full.

      • 18.9.7 Due Date of the Contract for the Underlying Securities Upon Exercise

        Unless otherwise provided by SGX-ST, the due date for the contract for the purchase and sale of the underlying security upon the exercise of an Option shall be the fourth Market Day after the Exercise Date.

    • 18.10 Adjustments

      • 18.10.1 Adjustments in the Event of a Distribution

        In the event of a distribution in respect of any underlying securities, the number of outstanding Options and/or the Standard Quantity and/or the Exercise Price with respect to all Options outstanding in those underlying securities shall be adjusted, effective on the relevant "ex-date" of dealings in the underlying securities in the Equity Market in accordance with this clause.

      • 18.10.2 Rounding Off Fractions

        The adjusted Exercise Price shall be rounded to the nearest 1 cent and the adjusted Standard Quantity shall be rounded to the nearest whole share.

      • 18.10.3 Bonus Issue

        (1) In the case of a bonus issue whereby the issuer of the underlying securities issues 1 or more bonus shares in respect of each existing share, the Standard Quantity shall be increased by the same number of shares issued in respect of each existing share, and the Exercise Price shall be proportionately reduced. No adjustment in the number of Options outstanding shall be made.
        (2) In the case of a bonus issue where the issuer of the underlying securities issues less than 1 bonus share in respect of each existing share, the Exercise Price shall be proportionately reduced. Whenever the Exercise Price has been reduced in accordance with this clause, the Standard Quantity shall be proportionately increased. No adjustment in the number of Options outstanding shall be made.
      • 18.10.4 Rights Issue

        In the case when underlying securities become entitled to rights, the Exercise Price for the underlying securities ex rights shall be calculated by deducting from the Exercise Price for the underlying securities the value of the rights accruing to such underlying securities calculated on the last done price, or in the case where the underlying securities is a Prescribed Security, the closing price, of the underlying securities on the last day on which such underlying securities are traded cum rights, unless otherwise determined by SGX-ST.

        Amended on 24 February 201424 February 2014.

      • 18.10.5 Other Distribution

        In the case of any distribution for which adjustment is not provided in any of the foregoing clauses, or in the case of any event for which adjustment is provided in one of the foregoing clauses but is not considered by SGX-ST to be appropriate under the circumstances, SGX-ST shall make such adjustments in the Exercise Price, Standard Quantity or number of Options with respect to the Options affected by such event as SGX-ST in its sole discretion determines to be fair to the Purchasers and Writers of such Options.

      • 18.10.6 Dividends

        In the event of a dividend declared in respect of any underlying securities, no adjustments shall be made to the number of outstanding Options or the Standard Quantity or the Exercise Price with respect to all Options outstanding in those underlying securities.

    • 18.11 Delivery and Settlement Procedures in the Event of A Distribution

      In the event of a distribution, delivery and settlement procedures following the lodgement of an Exercise Notice with the OCC shall be as follows:—

      • 18.11.1 Bonus Issue — Exercise Notice during "Cum Bonus" Period

        Where the distribution is in the form of a bonus issue and the Exercise Notice is lodged with the OCC on or after the date the Option Series has commenced trading "cum bonus" but before the "ex date", delivery shall be effected of the Standard Quantity of the underlying securities, including the bonus securities. Where the accruing bonus securities have yet to be received from the issuer, delivery of the bonus securities shall be effected as soon as the issued accruing bonus securities are received from the issuer.

      • 18.11.2 Bonus Issue — Exercise Notice before "Cum Bonus" Period

        Where the distribution is in the form of a bonus issue and the Exercise Notice is lodged with the OCC before the period the Option Series has commenced trading "cum bonus" (notwithstanding the seller be advised of the allocation on or after the Option Series commenced trading "cum") delivery shall be effected of the Standard Quantity of the underlying securities only.

      • 18.11.3 Bonus and Rights Issues — Exercise Notices On or After "Ex Date"

        (1) Where the Exercise Notice in respect of an Option Series entitled to a distribution in the form of a bonus or a rights issue is lodged with the OCC on or after the "ex date", the buyer shall not be entitled to the bonus securities or the rights entitlements.
        (2) Delivery and settlement procedures in respect of exercised Options adjusted in accordance with the provisions of Rule 18.10 shall be in accordance with such procedures as SGX-ST or the OCC may from time to time prescribe.
      • 18.11.4 Rights Issue — Exercise Notice During "Cum Rights" Period

        (1) Where the distribution is in the form of a rights issue and the Exercise Notice is lodged with the OCC on or after the date the Option Series has commenced trading "cum rights" delivery shall be effected of the Standard Quantity of the underlying securities and the rights entitlements arising in respect thereof.
        (2) Where the accruing rights entitlements have yet to be received from the issuer, delivery of the rights entitlements shall be effected as soon as the issued accruing rights entitlements are received from the issuer.
      • 18.11.5 Rights Issue — Exercise Notice Before "Cum Rights" Period

        Where the distribution is in the form of a rights issue and the Exercise Notice is lodged with the OCC before the period the Option Series has commenced trading "cum rights" (notwithstanding the seller be advised of the allocation on or after the Option Series commenced trading "cum") delivery shall be effected of the Standard Quantity of the underlying securities only.

      • 18.11.6 Other Distribution

        In the event of any distribution not covered by the foregoing Rules or in the case of any event in respect of which the foregoing Rules apply but is not considered by SGX-ST to be appropriate under the circumstances, SGX-ST or the OCC shall prescribe such delivery and settlement procedures as SGX-ST or the OCC in its sole discretion determines to be fair to the Purchasers or Writers of such Options.

      • 18.11.7 Dividends

        In the event of a dividend declared in respect of any underlying securities:—

        (1) An Exercise Notice lodged with the OCC prior to the "ex dividend date" of dealings in the underlying securities in SGX-ST shall entitle the buyer to the dividend (notwithstanding that the seller is advised of the allocation on or after the "ex dividend date" of dealings in the underlying securities in SGX-ST).
        (2) An Exercise Notice lodged with the OCC on or after the "ex dividend date" of dealings in the underlying securities in SGX-ST shall not entitle the buyer to the dividend.
      • 18.11.8 Seller of Underlying Securities in Short Position

        In lieu of delivery of the underlying securities where the seller is in a short position, the OCC may from time to time:—

        (1) fix cash settlement prices with respect to the underlying securities; or
        (2) instruct CDP to institute buying-in procedures against the seller in accordance with the Clearing Rules.
    • 18.12 Transaction Costs

      • 18.12.1 Commission on Options

        Unless otherwise determined by SGX-ST, the rates of charge for commission on both opening and closing Option transactions shall be the same as the rates of charge for commission in the Equity Market.

      • 18.12.2 Clearing Fees

        A clearing fee of 0.05% of the aggregate Premium, subject to a maximum fee of $200, shall be payable to the OCC, such clearing fee to be collected and paid by the Trading Member to the OCC. The OCC may, at its discretion, waive or reduce the clearing fees payable by any person trading in Options under a scheme approved by SGX-ST.

      • 18.12.3 Commission and Clearing Fees on Exercise of Options

        The prevailing commission rates pertaining to sale and purchase transactions in the Equity Market shall be applicable to the acquisition or disposition of the underlying securities on the exercise of an Option and shall be calculated on the aggregate Exercise Price of the underlying securities.

      • 18.12.4 Stamp Duty

        (1) Stamp duty (if any) on Option transactions (both opening and closing) shall be borne by the customer for whose account the Option was transacted.
        (2) On exercise of an Option, stamp duty on the contract statement for the acquisition or disposition of the underlying securities shall be payable.
    • 18.13 Miscellaneous

      • 18.13.1 OCC to Issue Notices and Communications

        The OCC shall be empowered to issue notices, guidelines, circulars and announcements in respect of any matter in this Chapter on behalf of SGX-ST.

      • 18.13.2 Disciplinary Action for Breach of Regulations

        Any breach of the Regulations shall be deemed to be a breach of this Chapter and SGX-ST may take disciplinary action in accordance with the Rules against any Trading Member (notwithstanding that it was acting in its capacity as a Clearing Member of the OCC) for violation of the Regulations or for errors, delays and conduct detrimental to the operations of the OCC.