Keytrade LuxembourgTrading rules
Euronext Amsterdam Derivative Market, Euronext Brussels Derivative Market, The Monep and the Liffe
Practical specifications of Keytrade Bank SA's service relating to the trading of options on certain European markets, and in particular the Euronext Brussels and Amsterdam Derivative Market, the MONEP and the LIFFE|
IMPORTANT NOTICE It is reminded that the options are financial instruments which are highly risky and that only informed investors should contemplate trading options (cf. "General risk warning concerning financial instruments"). |
Opening hours
| Market | Pre-opening | Opening | Pre-closing | Closing |
| Index PXL (Paris) | 7.45 am | 9.00 am | 5.30 pm | |
| Equities (Paris) | 7.15 am | 9.00 am | 5.25 pm | 5.30 pm |
| Index BXO (Brussels) | 8.15 am | 9.00 am | 5.30 pm | |
| Equities (Brussels) | 8.00 am | 9.00 am | 5.25 pm | 5.30 pm |
| Index SEI, ESX (FTSE 100) | 7.05 am | 9.02 am | 5.28 pm | 5.30 pm |
| Eurofirst 80 (FTSE) | 7.45 am | 9.00 am | 5.28 pm | 5.30 pm |
| Eurofirst 100 (FTSE) | 7.45 am | 9.00 am | 5.28 pm | 5.30 pm |
| Equities (FTSE) | 7.30 am | 9.02 am | 5.28 pm | 5.30 pm |
| Index AEX (Amsterdam) | 9.00 am | 5.30 pm | ||
| Equities (Amsterdam) | 8.00 am | 9.00 am | 5.25 pm | 5.30 pm |
Types of products that can be traded on the Keytrade Bank trading platform
The Keytrade Bank trading platform only allows the trading of options contracts; it cannot be used to trade futures contracts.
Types of options transactions
The Keytrade Bank trading system for the aforementioned markets allows "opening buy" transactions (order to purchase an options contract), and "closing sell" transactions (order to sell an options contract). Short selling transactions involving "opening sell" and "closing buy", i.e. the sale or issue of options by clients is permitted under following conditions:
- The issue of index options is not authorised.
- The issuer of a "call" option must dispose of the underlying securities in his account at all times in such a manner as to be able to meet the possible exercise of the "call" option (assignment). The underlying securities will be frozen in the account of the issuer as a guarantee pending expiration or exercise of the option.
- The account of the issuer of a "put" option must carry the cash amount necessary to meet the possible exercise of the "put" option (assignment). The cash amount necessary to meet the possible assignment will be frozen on the account of the issuer of the option pending expiration or exercise of the option.
Placing a buy or sell options order
Order transmission method
Client's orders to trade options contracts on these markets may only be transmitted by the Keytrade Bank electronic routing system, in accordance with the provisions of Keytrade Bank's general terms and conditions, which remain fully applicable to the trading of options.
Types of ordersIn the Keytrade Bank trading system, the options orders may only be expressed in two ways:
- "day orders": in this case, these may be executed until the last trading session on the date that they are transmitted by Keytrade Bank to the relevant market. If they are not executed within that period, they are automatically cancelled at the end of this session;
- or "GTC" ("Good-Till-Cancelled") orders: when the series of options covered by the GTC orders expire, these GTC orders are automatically cancelled upon expiration. However, the principal may at any time cancel a GTC order prior to the expiration of this period.
In the Keytrade Bank transaction system, orders may be placed:
- "at the market price", i.e., without any price indication, to be executed at the best price immediately available, and provided ( only MONEP, LIFFE and Brussels Derivatives) that the entire order can be executed (all or none order).
For the three markets, MONEP, LIFFE and Brussels Derivatives, the partial executions of ‘market price’ orders will not be possible. Orders will only be executed if they can be processed in their entirety. It is therefore possible that an order will not be executed because the market's liquidity is insufficient. It is reminded that the client has to take the initiative of informing himself on the causes of the non-execution of an order; - "at a limit price", i.e. at a maximum price indicated by the client in the case of a buy order, or at a minimum price indicated by the client in the case of a sell order. Unlike ‘market price orders’on MONEP, LIFFE and Brussels Derivatives, partial executions of ‘limit price orders’ are possible.
Given the high volatility of options prices, market price orders are not recommended as they may be executed at prices that are far from those prevailing at the time that the orders are recorded. As a result, it is recommended that clients use limit price orders.
The execution of an order is always conditional upon the existence of an adequate counterparty for partial execution (in the case of a limit price order) or total execution (in the case of a market price order).
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Remarks: 1. an option acquired by a client may be sold at any time before its expiry. The exercise of options on client’s initiative is not possible 2. If a client sells an option largely ‘out of the money’ (cabinet trade or cab on LIFFE), the client will be charged trading fees superior to the sell price of it’s option. |
Exercise/Assignment of options prior to expiration
I) Long position
Exercise by the client of (long position) options prior to the expiration thereof is not possible within the framework of the services offered by Keytrade Bank SA.
II) Short position
In the event of issue by the client of (short position) options, there is always the possibility that the client may be required to meet his obligation to deliver. The risk, therefore, is that the underlying securities may have to be sold, following the issue of a "call" option, or purchased, following the issue of a "put" option.
Keytrade Bank is notified by the clearing organization, each day, of the total number of contracts called for delivery. Keytrade Bank draws up a list of clients required to meet their obligations based on the LIFO system (Last In, First Out). This means that the last positions opened will be the first positions assigned.
In the event of an assignment, Keytrade Bank proceeds with the purchase or sale of the underlying securities, operating against the client. The statements of account indicate all positions assigned and the underlying securities purchased or delivered in relation to these assignments. The transaction date corresponds to the option exercise date, i.e., the working day preceding the assignment.
If the issuer of an option is required to assign, but does not possess all the underlying securities to be delivered, Keytrade Bank will purchase the balance of the shares required for assignment, for the account of the client, at the best price.
Expiry: what to do on the expiration date of the options?
I) Long position
Options contracts always have a fixed expiration date. The option must necessarily be sold or exercised at the latest on their it's expiration date, being understood that the exercise is only possible at the expiry.
During the week preceding the option's expiration date, Keytrade Bank will try, to the extent possible, to send an e-mail to the client informing him of his position in those of his options that are expiring. This e-mail does not exempt the client from verifying himself the situation of his options and their expiration date. Keytrade Bank may of course not be held responsible for the failure of receipt of such an e-mail by the client due to transmission problems of e-mails, the communication of an incorrect e-mail address by the client, the lack of communication of an e-mail address by the client, or to any other reason beyond the control of Keytrade Bank.
- Automatic sale or "auto-sell"
On the last transaction date for the series of options that are expiring, transactions in these options will be possible until the end of quotation, depending on the type of option. After this end of quotation, it will no longer be possible to sell the option, which will then become worthless.
Normally the options are sold automatically by Keytrade Bank, for the account of the client, the day of their expiry, i.e., on their last trading day. The client may however deactivate the "autosell" function in the "option management" window of its trading interface, in order to avoid this automatic sale. The attention of the client is drawn to the fact that the function "autosell" which is activated by default does of course not guarantee the sale of the options on their expiration date, the execution of the sale depending on the market conditions (market price, liquidity, etc.).
If the options cannot be sold within the framework of this automatic sell program, they will be automatically exercised at the expiry, if they are "in the money" and if the Stock Exchange has automatically exercised this option “in the money”. In addition, the account of the client must contains an adequate provision, in accordance with what is mentioned hereunder under sections 2 and 3.
Expiring options which are in the client's portfolio on the last trading day at 2 p.m. and for which no sell order is in process will, to the extent possible, be offered for sale at the market price as of 2 p.m. on the last trading day.
Orders to sell (closing sell) or to purchase (opening buy) in the client's portfolio , registered by the market will remain the client's responsibility until the options in question have expired. As a result, the "auto-sell" function will only be operational on options for which the client does not have a pending sell order. The attention of the client is drawn to the fact that, if his sell orders cannot be executed before the expiry of the options concerned, these options will become worthless after their expiry, subject to the automatic exercise as provided for under point 2 hereunder, if the option is "in the money" and the account of the client contains an adequate provision.
The deactivation of the function "auto-sell" by the client does not eliminate the possibility for the client to sell his options.
- Automatic exercise in certain cases
If the function "auto-sell" has been deactivated by the client, or if the options could not be sold in the framework of the "auto-sell" function, or still, if a sell order transmitted by the client could not be executed, the "in the money" options contracts will be automatically exercised at their expiry in accordance with the following specifications and only if the following conditions are fulfilled:
- For index options that are "in the money", exercise at expiry consists of a cash payment resulting from the difference between the value of the settlement index and the option's exercise price;
- For equity options that are "in the money", exercise at expiry consists of the purchase or sale of the underlying security at the price agreed in advance (exercise price) in the market in which this security is traded, and will only take place if the account of the client contains an adequate provision, as mentioned hereunder under section 3 "Provision required for the automatic exercise".
Automatic exercise only concerns options that are "in the money", for as little as one-hundredth of a euro (share options) or for one-hundredth of a point (index options), excluding trading expenses (commission, broker's fees, taxes).
Strictly "at par" or "out of the money" options are not exercised automatically. The client decides alone and under his own responsibility if he decides to sell these two types of options on the day of their expiry.
- Provision required for the automatic exercise
Considering the afore-mentioned exercise specification for "in the money" index options, these options will be exercised, in accordance with the above specifications.
As mentioned above under point 2, an "in the money" equity option will be automatically exercised at expiration only if the account of the client contains an adequate provision as follows. In case of a call option, the provision on the account of the client will be adequate or sufficient if at expiration of the option in question the account of the client contains in cash the amount required for the purchase of the underlying equities at the agreed exercise price, increased by the applicable trading expenses (commission, broker's fees, taxes). In case of a put option, the provision on the account of the client will be adequate or sufficient if at expiration of the option in question the account of the client contains the underlying equities, as well as the sum of the applicable trading expenses (commission, broker's fees, taxes).
The aforementioned provision (in equities and/or cash) will, in case of automatic exercise, be blocked on the account of the client at the end of the trading session of the expiration date, until the exercise of the option has been effectively realised. The client may not dispose of these equities and/or cash during this blocking period.
II) Short position
If an option sold by the client (opening sell) is "in the money" upon expiration, the client will receive an assignment from the counterpart. He will, in consequence, be required to deliver the underlying securities at the option exercise price, in the case of a "call" option, or purchase the underlying securities, at the [option] exercise price, in the case of a "put" option.
If the client wishes to avoid a possible assignment and related costs, he should close out the position by purchasing the option "short" (closing buy) prior to expiration of the option.
If the client covers his short option position by buying back the position on D-Day and that an assignment has been exercised on the same D-day by a counterpart, which detains the option issued by the client, the clearing will be able to inform Keytrade Bank only D-Day +1. This will be the date on which Keytrade Bank will assign the client to face his commitment in case of option issuing.
As a consequence, the client can find himself assigned because of his short position whereas he has effectively covered his position by the buying back of this position. THE CLIENT ACCEPTS THAT HE CAN BE ASSIGNED AT ANY MOMENT WHEREAS HE HAS ALREADY BOUGHT BACK HIS POSITION AND ACCEPTS ALL CONSEQUENCES.
Explanatory Notes on markets
The Explanatory Notes relating to the markets on which Keytrade Bank offers a service of trading of options, are the following:
- Explanatory Note on the Euronext Brussels Derivative Instruments Market;
- Explanatory Note entitled "Les instruments financiers à terme du MONEP";
- Explanatory Note on the specific LIFFE rules.
The attention of the clients is drawn to the fact that Keytrade Bank only offers the services described above and not necessarily all the services and operating processes mentioned in these Explanatory Notes. Subject to this provision, in case of contradiction between these Practical Specifications and the Explanatory Notes, our conditions shall prevail.
In any case, the service offered by Keytrade Bank and the execution of the client's orders on options remain submitted to the rules of the markets concerned, on which Keytrade Bank acts as an intermediary, on behalf of the client.
In case of lack of understanding of, or doubts regarding, these rules and operating processes, the client is invited to ask for further information to Keytrade Bank.
Pricing- European markets Liffe, Amsterdam, Brussels, Paris
| Amsterdam, Brussels, Paris | € 2,95 |
| per contract with a min. of € 14,95 per transaction | |
Exercise*/Assignment:
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| London | £ 2,50 |
| per contract with a min. of £ 14,95 per transaction | |
Exercise*/Assignment:
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Remark :
If you wish to use the revenue of a sell, you must take into account the value date of the generated cash.
Value dates per market:
| Euronext (Brussels, Amsterdam, Paris) | D+3 |
| London stock exchange | D+3 |
| Milan | D+3 |
| Xetra (Franckfurt) | D+2 |
| Switzerland | D+3 |
| Madrid | D+3 |
| OMX (Helsinki, Stockholm, Copenhagen) | D+3 |
| US markets | D+3 |
| Canadian markets | D+3 |
| European options | D+1 |
| US options | D+1 |
| Funds | D+3 (the value date is stipulated by the issuer) |
| Bonds | D+3 |
| Currency exchange | D+2 |
February 2004 edition
