Whole Section

  • 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.