| 1. What is CBBC? |
CBBC are financial instruments that track the performance of an underlying instrument without requiring investors to pay the full price required to own the underlying instrument. CBBC are issued either as Bull or Bear certificates with a fixed expiry date, allowing investors to take bullish or bearish positions on the underlying instrument.
CBBC are issued with the condition that during their lifespan they will be called by the issuer when the price/level of the underlying instrument reaches a pre-specified price or level ("Call Price/Call Level").
If the price of the underlying instrument reaches the Call Price/Call Level at any time before the expiry date of the CBBC, the CBBC will be called by the issuer and trading of the CBBC will be suspended. Such an event is known as a Mandatory Call Event ("MCE"). The CBBC will expire early and will be delisted on the 4th market day after the MCE.
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| 2. What is Call Price/Call Level? |
A Call Price/Call Level is a pre-specified price or level of the underlying instrument. For Callable Bull Certificate, the Call Price/Call Level is either at or above the exercise price of the underlying instruments. As for the Callable Bear Certificate, the Call Price/Call Level is at or below the exercise price.
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| 3. What is a Mandatory Call Event? |
If the price of underlying instrument reaches the Call Price/Call Level at any time prior to the expiry date, the issuer will call the CBBC and trading of the CBBC will be suspended. This event is referred to as a Mandatory Call Event ("MCE"). The CBBC will expiry early and will be delisted on the 4th market day after the MCE.
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| 4. What is the cash settlement amount upon a Mandatory Call Event ("MCE")? |
If the Call Price/Call Level is equal to the exercise price, the investors will not receive any cash amount. However if the Call Price/Call Level is different from the exercise price, the investors will receive a cash settlement amount calculated as follows:
| » Callable Bull Certificates |
| Cash Settlement Amount = Number of Callable Bull Certificates x (Lowest Traded Price - Exercise Price) x |
1 |
| Exercise Ratio |
| » Callable Bear Certificates |
| Cash Settlement Amount = Number of Callable Bear Certificates x (Exercise Price - Highest Traded Price) x |
1 |
| Exercise Ratio |
where the Highest Traded Price refers to the highest traded price/level of the underlying instrument from the MCE to the end of the next main trading phase
| Example |
| Number of callable bull certificates |
: |
10,000 |
| Call Price |
: |
RM 1.50 |
| Exercise Ratio |
: |
2 CBBC per 1 share |
| Exercise Price |
: |
RM 1.00 |
| Expiry Date |
: |
30 December 2010 |
Scenario 1
A MCE occurs at 9:30 am and the lowest traded price from the MCE to the end of the next main trading phase is RM1.20. Are investors entitled to receive a cash settlement amount upon the MCE?
| No |
Trading Phase |
Time |
Traded Price (RM) |
| 1. |
Opening |
9:00 am |
2.00 |
| 2. |
Continuous Trading |
9:30 am |
1.40 |
| |
|
10:00 am |
1.70 |
| |
|
10:30 am |
1.50 |
| |
|
11:30 am |
1.60 |
| |
|
12:30 am |
1.30 |
| LUNCH |
| 3. |
*Opening |
2:30 pm |
0.90 |
| 4. |
Continuous Trading |
3:00 pm |
1.20 |
| |
|
3:30 pm |
1.35 |
| |
|
4:00 pm |
1.40 |
| 5. |
*Closing |
4:50 pm |
0.90 |
*Prices in these phases will not be used for the calculation of cash settlement amount upon a MCE
Yes. The MCE occurs at 9.30 am and the lowest traded price is higher than the exercise price of RM1.00. The cash settlement amount is RM1,000.
| Cash Settlement Amount |
= |
Number of Callable Bull Certificates |
x |
(Lowest Traded Price |
- |
Exercise Price) |
x |
1 |
| Exercise Ratio |
| |
| |
= |
10,000 |
x |
(RM 1.20 |
- |
RM 1.00) |
x |
1/2 |
| |
| |
= |
RM 1,000 |
Scenario 2
MCE occurs at 9:30 am and the lowest traded price from the MCE to the end of the next main trading phase is RM0.90. Are investors entitled to receive a cash settlement amount upon the MCE?
| No |
Trading Phase |
Time |
Traded Price (RM) |
| 1. |
Opening |
9:00 am |
2.00 |
| 2. |
Continuous Trading |
9:30 am |
1.40 |
| |
|
10:00 am |
1.70 |
| |
|
10:30 am |
1.50 |
| |
|
11:30 am |
1.60 |
| |
|
12:30 am |
1.30 |
| LUNCH |
| 3. |
*Opening |
2:30 pm |
1.10 |
| 4. |
Continuous Trading |
3:00 pm |
0.90 |
| |
|
3:30 pm |
1.20 |
| |
|
4:00 pm |
1.30 |
| 5. |
*Closing |
4:50 pm |
0.90 |
*Prices in these phases will not be used for the calculation of cash settlement amount upon a MCE
No. Investors will only receive cash amount if the lowest traded price from the MCE to the end of the next main trading phase is above the exercise price.
|
| 5. What is the cash settlement amount at expiry? |
The cash settlement amount at expiry will be calculated as follows:
| » Callable Bull Certificates |
| Cash Settlement Amount = Number of Callable Bull Certificates x (Closing Price - Exercise Price) x |
1 |
| Exercise Ratio |
| » Callable Bear Certificates |
| Cash Settlement Amount = Number of Callable Bear Certificates x (Exercise Price - Closing Price) x |
1 |
| Exercise Ratio |
Where the Closing Price is either:
(a) The closing price of the underlying instrument on one (1) market day prior to the expiry date;
(b) Average closing price of 5 market days prior to the expiry date; or
(c) Arithmetic mean of 1-day volume weighted average price for 5 market days prior to the expiry date.
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| 6. What are the eligible underlying instruments for the issuance of CBBC? |
Below are the eligible underlying instruments for the issuance of CBBC:
(a) Shares or exchange-traded fund listed on Bursa Securities;
(b) Shares or exchange-traded fund quoted on foreign securities exchange; and
(c) Indices approved by Bursa Securities.
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| 7. When is the last trading day of a CBBC? |
The last trading day of a CBBC is the earlier of (a) the date on which the MCE has occurred and (b) two market days before the expiry date of the CBBC.
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| 8. When will investors receive the cash settlement amount? |
The cash settlement amount will be paid to investors within 7 market days from:
(a) the delisting date (in the case of MCE); or
(b) the expiry date.
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| 9. Will there be any adjustment effect to CBBC if the underlying instruments undertake corporate exercises? |
The Call Price/Level, exercise price and exercise ratio of the CBBC will be adjusted in the event the underlying instrument undertakes corporate exercises such as bonus issue, rights issue, equity splits, consolidation or capital repayment.
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| 10. What happens to the CBBC if the underlying instrument is suspended from trading? |
If the underlying instrument is suspended from trading, the CBBC will also be suspended from trading until trading of the underlying instrument resumes.
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| 11. How are CBBC different from call / put warrants? |
The table below sets out the comparison between CBBC and warrants:
| Product Features |
CBBC |
Call / Put Warrants |
| Exercise Style |
European |
American / European |
| Cost of funds disclosed |
Yes |
No |
| Call Price |
Applicable |
Not applicable |
| Settlement |
Cash |
Cash / Physical |
| Mandatory Call Event |
Yes |
No |
| Early Termination |
Yes |
No |
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| 12. Who is the market maker? |
CIMB Bank will be the market maker for all CIMB-issued CBBC. The process of market making involves maintaining bid and offer prices on the trading system of Bursa Securities on each market day, over the life of the CBBC. The minimum quantity of CBBC for which we will make a market shall be 10 board lots. The maximum spread between the bid and offer price will not, under ordinary circumstances, exceed 20 minimum bids.
However, you should note that there will be circumstances under which we may not be able to, and shall not be obliged to, maintain bid and offer prices, nor reply to a request for prices. You may refer to our Base Prospectus for details of such circumstances.
Although we will be market making to provide liquidity for the CBBC on Bursa Securities, the level of liquidity will depend on market forces and the price at which the CBBC will trade on Bursa Securities subsequent to its listing.
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| 13. Where can we obtain further details on CBBC? |
The information can be obtained from our First Supplementary Base Prospectus and term sheets. However, to assist investors further, you may browse our warrants portal at www.cimbbank.com/warrants. The warrants portal is a dedicated website to provide public investors with timely market insights on structured warrants including CBBC e.g. prices, term sheets and tutorial. The website is aimed to be a one-stop information centre for investors to obtain key information on structured warrants issued by CIMB as well as other issuers in Malaysia. Alternatively, you may also visit Bursa's website at www.bursamalaysia.com
In addition, CIMB also issues a daily bulletin called "Warrants Digest". Investors who are interested to receive this bulletin may provide their e-mail addresses to be added into the mailing list.
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| 14. What are the transaction fees involved for investing in CBBC? |
In general, investing in CBBC is similar to investing in shares. The transaction fees involved include brokerage fees, clearing fee and stamp duty.
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| 15. Who can I contact if I still have further queries on CBBC? |
Please email us at edu@cimb.com
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CBBC Call LeveL Monitoring
