Derivatives Market introduces new policy for exercising options

Moscow Exchange's Derivatives Market is revamping its approach to the exercise of options. Beginning in March 2015, all options expiring in the money¹ will be exercised automatically.

The change marks a significant shift from the current methodology, with market participants no longer needing to submit a manual request to exercise options due to expire in the money.

"The new methodology eliminates risks associated with failing to file a timely request to exercise an option expiring in the money, reduces costs for market participants and simplifies the procedure for exercising options," notes Kirill Pestov, Derivatives Market Managing Director.

The first batch of options to be exercised automatically will be equity futures options expiring on 13 March 2015.

With the exception USD/RUB and EUR/RUB futures options, the new methodology provides for all in the money options to automatically be exercised and settle during the evening clearing session on the contract's expiration date. USD/RUB and EUR/RUB futures options expiring in the money will be exercised during the intraday clearing session.

In order to safeguard holders of synthetic positions, exactly half of an at the money² options position will be exercised automatically.
Participants can decline automatic exercising by entering a negative amount in the "Options Exercise Request". Automatic exercise can be declined up until 18:50 MSK on the date of expiration.

Participants are kindly requested to carefully review more detailed information about the new options exercise policy.

¹ "In the money" refers to a call option with a strike price below the market price of the underlying asset. For put options, in the money is when the strike price is above the market value of the underlying asset.

² An option is "at the money" when the strike price is equal to the market price of the underlying asset.

For further information, please contact the Public Relations Department at (495) 363-3232.