An Extended Settlement (ES) contract is a contract between two parties, to buy or sell (i) a specific quantity of (ii) a specific underlying at (iii) a specific price for settlement at (iv) a specific future date when the contract matures or expires.
Please refer to the SGX website for more information.
ES contracts are listed as:
ShortName.ES.YYMM
where ShortName is the short name of the underlying security, while YYMM represents the spot month i.e. the month where the contract is traded.
Clients may start trading in the ES contract anytime between (around) 25th of the month prior to the spot month and the last trading day of the spot month, both dates inclusive. The overlaps allow clients to roll over their positions from one spot month to the next.
Settlement of ES contracts occurs on LTD + 3, where LTD is the Last Trading Day of the spot month.
Example
Client A buys one lot of UOB.ES.0911 on 28 October 2009.
Client A can choose to settle via any of the following options:
- Sell the UOB.ES.0911 contract latest by 30 November 2009 i.e. LTD.
- Sell the underlying UOB shares on 30 November 2009 itself i.e. LTD. Any sale of the underlying share prior to the Last Trading Day will result in short positions if the underlying shares are not already existent in Client A’s securities account.
- Take delivery of the underlying UOB shares, and make full payment for the UOB.ES.0911 contract, on LTD + 3.
- Roll over the position by purchasing one lot of UOB.ES.0912 and selling one lot of UOB.ES.0911 between 25 and 30 November 2009, i.e. overlapping period of the two spot months.
You can also speak with your Trading Representative about opening an ES account.
Please note that you can opt to trade ES contracts on either the SGX Internet Trading Platform or via the telephone with your Trading Representative, but not through both channels, as collateral furnished can only be used to support one channel.
As your ES account will be mapped to your Cash account, you will not receive a separate set of User ID and Password. Please login using your existing SGX Internet Trading Platform User ID and Password.
ES counters are listed together with their underlying shares in the Prices page’s alphabetical listings. Clients can also select ES Counter from the All Type/ES Counter selection box to search for ES counters.
Example
Select ES Counter > Select SGX > Type UOB > Click Go
Both UOB (underlying counter) and UOB.ES.0903 (ES counter) will be displayed.
Simply click on the ES counter name to place an order using an ES account.
| Initial Margin | Clients are required to put up Initial Margins i.e. collateral for both long and short positions, before new ES contracts can be entered into. This is computed by multiplying the counter’s initial margin rate with the value of the ES contract. Please refer to the list of UOB Kay Hian Extended Settlement Contracts Margin Requirements to view our margin rates. |
| Customer Asset Value | The collateral in a client’s account. |
| Mark-to-Market | All outstanding positions will be subjected to daily mark-to-market, the process of revaluing outstanding positions that are not liquidated to the daily settlement price at the end of each trading day. |
| Maintenance Margin | The component of margin which must be maintained in the client’s account following the deposit of an Initial Margin covering the client’s position in the ES contract. This is computed by multiplying the counter’s maintenance margin rate with the value of the ES contract. This value is determined from the daily last traded price of the underlying share. If the last traded price is not available for a particular date, the last traded price of the last available date will be used. |
| Variation Margin | The mark-to-market profits and losses, relative to the price at which the ES contracts were bought or sold, arising from the daily valuation of positions. Variation margin for a client’s account are computed daily based on outstanding contracts. A profit will reduce the amount of variation margin, while a loss will increase the amount of variation margin. |
When the Customer Asset Value of a client falls below the sum of the Maintenance Margin and Variation Margin, a margin call will be initiated. The client will then be required to top up the shortfall in margins up to the level of the sum of the Initial Margin and Variation Margin. The client’s account will also be suspended until the margin shortfall is fulfilled. Interest of (UOB Prime Rate + 1) will be levied on the debit balance until the shortfall is fulfilled.
Clients can fulfill a margin call via cash, cheque or EPS.
UOB Kay Hian will also have the full discretion to immediately liquidate the client’s outstanding ES contracts, should the Customer Asset Value of the client fall below 60% of the sum of Maintenance Margin and Variation Margin.
- Cash only
- Shares only
- Cash and Shares
The trading limits afforded by these share collateral are as follows:
Category B and Category C: 70% of actual market value
There will be a daily marked-to-market for shares used as collateral.
In order to put up share collateral, clients are required to open a designated ES D/A sub-account with us. The application form can be downloaded here. Once completed, please submit this form to your Trading Representative.
| CDP Share Transfer Fee | S$10 + GST per counter, per transfer |
| Sub-Account Maintenance Fee | S$15 + GST quarterly (with shares) |
| S$ 2 + GST quarterly (without shares) |