Equity and Index Options Listing Guidelines - for ASX equity markets
Listing Rules - Chapter 3 (PDF 117KB)
which ETOs are on issue
12 March 2010
Update no 02/10
Important information for ASX Listed Entities
Guidelines for ASX Listed Entities concerning their obligations regarding
the operation of the ASX Exchange Traded Options market
This Companies Update is intended to provide the following information to listed
- An explanation of how the ASX Exchange Traded Option ("ETO") market
- The requirements of the
ASX Listing Rules which are relevant to the ETO market; and
- An explanation of how certain actions undertaken by listed entities,
such as trading halts requested in connection with fundraising, can impact
the operation of the ETO market.
ASX has operated an ETO market since 1976. ETOs are different from
company options in that ETOs are in effect listed by the exchange.
A comprehensive document outlining the listed entities over which ASX may list
ETOs, strike prices, maturity dates, etc, can be found on our
website (PDF 107KB)
Classes over which ASX lists ETOs
ASX has a core "universe" of ETO "classes" over which it will list ETOs. At
present, those entities are (identified here by their ASX codes):
AGK, AIO, AMC, AMP, ANZ, ASX, AWC, AXA, BHP, BLD, BSL, BXB, CBA, CCL, COH, CPU, CSL, CSR, DJS,
FGL, FMG, FXJ, GPT, HVN, IAG, IFL, IPL, ITO, JHX, LEI, LGL, LLC, MAP, MQA, MQG,
MYR, NAB, NCM,
ORG, ORI, OSH, OST, OZL, PPX, QAN, QBE, RIO, SGP, STO, STW, SUN, TAH, TCL, TEN,
TLS, TOL, TTS, WBC, WDC, WES, WOR, WOW & WPL.
ASX announced in June 2009 that "classes" that fell outside this "universe"
would be subject to a phased de-listing. The "classes" that still have a small
number of ETOs listed are:
BBG, BLY, BTA, CWN, ELD, GNS, KZL, NWSLV, PEM, SHL & VBA.
ASX may also list ETOs over other "classes" if two market makers are willing to
nominate themselves for quoting obligations and that "class" meets the ASX
listing requirements (detailed in the listing requirements document). Currently
ASX has listed ETOs over MYR and WOR by this mechanism.
ASX may also list Low Exercise Price Options ("LEPOs"), but not regular call and
put options, over other "classes" on a case by case basis. The "classes"
currently listed with LEPOs only are:
ANN, CFX, CGF, GTP, HGG, PBG, SEV, SGT & TEL.
Expiry Months Listed
Generally ASX will list ETOs over the major "classes" in the first 6 months from
the listing date and then in the March, June, September and December cycle.
Obligations of Listed Companies regarding the ETO Market.
Most people familiar with ETOs are aware that the amount of an entity's dividend
is a pricing component determining the worth of call and put options.
3.20.2 (PDF 117KB) outlines a listed entity's compliance obligation
concerning dividend record dates. A footnote to listing rule 3.20.2 makes
reference to ETOs:
"An entity should take into account a number of factors when
determining when it is appropriate to tell ASX of a proposed record date,
including whether ETOs are issued in respect of any of the entity's
The intent of this is to ensure that listed entities are aware that an
entity's ex-dividend date materially affects the worth of call and put options,
especially if any unexpected change in these dates crosses over option expiries.
For example, if an entity's ex-dividend date regularly fell in the month of
March (before the scheduled ETO expiry date) the marketplace would generally
expect this and price March and April options accordingly. If, however, the
entity decided (for whatever reason) to postpone the ex-dividend date until
April (and did not give appropriate notice of this), that would affect the worth
of March and April options.
Trading Halts and the ETO Market
In recent years, there has been an increase in the number of listed entities
requesting trading halts in connection with various corporate actions (e.g.
capital raisings, etc) that they may be undertaking.
These corporate actions (and any associated trading halt) can impact the ETO
market, especially if the requested trading halt crosses over the ETO expiry
date for ETOs listed over that entity's securities. ASX Market Rules prohibit
the ETO market being open when the listed entity is in a trading halt.
Any such trading halt over the ETO expiry causes difficulty for options holders
and options writers concerning the expiry process. Only about 12% of open
positions in the ASX ETO market are exercised. Most open positions are rolled 1
or 2 days prior to expiry or on the expiry day, which cannot be actioned if the
entity is in a trading halt. Furthermore, options holders/writers are left
without any recent pricing history or a final closing price for the entity on
which to base their decisions concerning exercise. Difficulties may also arise
concerning stock borrowing, etc, to ensure successful settlement of all expiry
exercise obligations. Often the affected parties will be shareholders (using
options as an enhancement) in the entity which is subject to the trading halt.
To mitigate these difficulties ASX does and will re-open ETOs for 2 hours on the
afternoon of the expiry day when the entity is in a trading halt. ASX does this
to offer a mechanism whereby options holders/writers looking to roll or trade
out prior to the ETO expiry get a chance to do so. However, this is a somewhat
limited solution, as there will always be some degree of supposition about what
the buyers and sellers may perceive to be the appropriate "basis" price.
Expiry Dates in 2010 and 2011
For your reference, the ASX ETO Expiry dates for 2010 and 2011 are set out
ASX reminds listed entities, particularly those which also have ETOs listed, of
their disclosure obligations regarding informing ASX of any changes to their
dividend record dates under
3.20.2 (PDF 117KB).
Listed entities, which also have ETOs listed, are asked to consider the ETO
market when conducting a corporate action that would involve a trading halt over
the monthly ETO expiry day.
If you have any doubt as to whether ETOs are listed over your entity you can
check the file (updated weekly) on our
ASX advises that in deciding whether to agree to timetables for corporate
actions or issues which involve a trading halt or a suspension from quotation,
ASX will take into account the impact on the ETO market. If a trading halt or
suspension will be sought under a proposed timetable over a date which is an ETO
expiry date, ASX may require the timetable to be amended so that the impact on
the ETO market is minimised.
ASX encourages listed entities to consult with their Issuers Advisers well in
advance of announcing a timetable for any such corporate actions or issues.