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CORPORATIONS REGULATIONS 2001 2001 No. 193 - REG 7.4.08

Exemption of short sale covered by exchange traded options
(1)
In this regulation:

"exchange traded options" means options registered with Options Clearing House Proprietary Limited, or the Sydney Futures Exchange Clearing House Pty Limited, according to their Business Rules.

"seller", in the case of a sale by an agent, means the principal.

"unobtained shares" means shares of a class that a seller has agreed to sell but over which he or she does not, at the time of the sale, have a presently exercisable and unconditional right to vest in the buyer.

(2)
Section 846 of the Act does not apply in relation to a sale of shares that consists of or includes unobtained shares if the seller is, at the time of the sale, able to obtain at least the number of shares of the same class as the unobtained shares by exercising exchange traded options.

(3)
The number of shares of a class that a seller is able to obtain at the time of a sale is to be calculated using the formula:

where:

"SIO" (number of Shares Immediately Obtainable) means the number of shares of the class that, at the time of the sale, the seller is able to obtain by exercising exchange traded options at a price:

(a)
that does not exceed the sale price payable to the seller under the sale; or

(b)
that exceeds the sale price by an amount that is no more than an amount deposited by the seller with Options Clearing House Proprietary Limited, or the Sydney Futures Exchange Clearing House Pty Limited, before and in relation to the sale.

"SSO" (number of Shares Subject to Options) means the number of shares of the class sold over which he or she has given or written exchange traded options that, at the time of sale, have not expired or been exercised.

"PS" (number of unobtained shares Previously Sold) means the number of unobtained shares previously sold in sales that have not been completed at the time of the sale.

(4)
The price payable by the seller for obtaining shares by exercising exchange traded options is to be calculated by reference first to the option with the lowest exercise price, then to the option with the second lowest exercise price, and so on in ascending order of price until the necessary number of options would have been exercised.



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