In pursuance of SEBI guidelines for adjustment of Futures & Options Contracts on announcement of corporate actions, the members of the Equity Derivatives Segment are hereby informed the following:
HINDUSTAN CONSTRUCTION CO LTD (Scrip Code: 500185) has informed the Exchange that It has approved Rights issue of 49 Rights Equity share for every 100 Equity Shares held by shareholders in the company as on the record date. Issue price- Rs.10 per Equity share (including premium of Rs.9 per Equity share).
In view of the above and in compliance with the aforementioned SEBI guidelines, the Exchange shall make the necessary adjustments for all the available Futures & Options contracts on the underlying scrip HINDUSTAN CONSTRUCTION CO LTD (Derivatives Asset Code – HINC), on November 19, 2018 end of day, the ‘ex-date’ being November 20, 2018.
The adjustments to be made on account of the above corporate action in line with SEBI guidelines are given below:
A) Adjustment Factor:
If the ratio of Rights Issue is say A: B and the Issue price of Rights Issue is S, the adjustment factor is defined as (P-E)/P where P= Spot price on last cum date and
(Benefits per share) E = (P-S) x A / (A+B).
Underlying close price on the last cum date (P): 13.98#
Issue price of the rights (S): 10
Number of Existing Shares (B) = 100
Rights Entitlement (A)= 49
Total Entitlement (A+B)= 149
Benefit per Right Entitlement
= (P – S) x Rights Entitlement
= (13.98-10) x49 = Rs.195.02
Benefits per share (E)
= (195.02/149) = Rs.1.308859
Hence, Adjustment Factor is
= (13.98 -1.308859) / 13.98
Therefore, the adjustment factor in this case would be 0.906376
# the figure is only an indicative value for the purpose of example.
B) Adjustments for Futures and Options Contracts:
1. Strike Price: The adjusted strike price will be arrived at by multiplying the Existing Strike price by the adjustment factor .
2. Change in Market Lot: The adjusted market lot will be arrived at by dividing the existing market lot of by the adjustment factor . Example of the revised market lot would therefore be as under:
18000 (existing market lot for November 2018 contract) / 0.906376 (adjustment factor) = 19859 (revised market lot)
3. Futures price: The adjusted futures price will be arrived at by multiplying the old futures price by the adjustment factor.
The details of the revised adjustment factor and market lot will be informed to members separately on November 19, 2018.
For any further clarifications, Trading members are requested to contact their designated Relationship Managers.
For and on Behalf of BSE Ltd.
Sr.GM – Trading Operations
AGM – Trading Operations