ICE Clear Europe Ltd. Option Exercise/Abandonment Guidance Document. v.1.1

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1 ICE Clear Europe Ltd Option Exercise/Abandonment Guidance Document v.1.1

2 Which Option Contracts does this relate to? Option ICE Brent Crude ICE Gasoil ICE Richards Bay Coal ICE Rotterdam Coal ICE Newcastle Coal ICE UK Natural Gas ICE WTI ICE MISO Cinergy MISO Cinergy Hub Mid-C Financial Peak Option ICE Mid C Mini Peak ICE PJM WM Mini Peak ICE PJM WM Peak ICE SP-15 DA Mini ICE SP-15 DA TRS Code B G AFR ATW NCF M T MCG CIN MDC MDF PMI PJM SPY SPM (Which Option Contracts does this relate to?)

3 Disclaimer NYSE.Euronext provide Clearing Members with access to the Trade Registration System ( TRS ) within which Clearing Members are able to process the exercise/abandonment of option contracts on the markets operated by IntercontinentalExchange, Inc. and ICE Futures Europe. This guidance document is provided by ICE Clear Europe Limited to assist Clearing Members, and their Representatives, in relation to their use of the exercise/abandonment functionality in TRS. In providing this guidance document ICE Clear Europe Limited does not make any representations or warranties, express or implied, including, without limitation, implied warranties of fitness for a particular purpose in relation to the exercise/abandonment functionality in TRS. No oral or written information or advice given by ICE Clear Europe Limited, including the contents of this document,in relation to the exercise/abandonment functionality in TRS shall create a warranty and neither a Clearing Member, nor a Clearing Member s Representative, may rely upon such information or advice. Neither ICE Clear Europe Limited, nor any of its officers, employees, agents, or licensors shall be liable in any way to any Clearing Member or a Clearing Member s Representative, to any other person or entity for any losses, damages, costs or expenses, including, but not limited to, loss of profits, loss of use or direct, indirect, incidental or consequential damages, even if they were foreseen, foreseeable, known or otherwise arising from: a) any faults with the option exercise/abandonment functionality in TRS, however those faults may arise; or, b) the suspension, termination or inability to access or use the option exercise/abandonment functionality in TRS, or any inaccuracies or omissions in any information provided, however such suspension, termination, inability to access, inaccuracy or omission may arise; or, c) any other cause in connection with the furnishing, performance, maintenance or use of or inability to use all or any part of the option exercise/abandonment functionality in TRS; or, d) any losses resulting from unauthorised access, alteration, or any other misuse of the option exercise/abandonment functionality in TRS. (Disclaimer) 2

4 Contents 1. Process Overview Page Manually Abandoning/ Exercising an Option in TRS(15 Screen) Pages Manually Exercising an Option in TRS(17 Screen) Pages Deleting a Manual Exercise Pages 17 23

5 Process Overview The purpose of this document is to clarify the process involved in Exercising/Abandoning Positions using the new Option Expiries screen in TRS (Screen 15) as well as showing the manual exercise of options in the Exercise Notification (screen 17). Screen 15 is only available on a products last trade date(ltd) and is relevant where a Clearing Member requires an In the money (ITM) long option (dictated by the option reference price) to be abandoned or the manual exercise of an out of the money option (dictated by the option reference price). These requests are normally advised/required very close to the exercise deadline so a solid understanding of the procedure is required by all Clearing Members. (Process Overview) 1

6 Key Points The new TRS Option Expiries screen(15) is only available on an option contracts expiry date. The 17 screen is not available for early exercises on a contracts last trade date These processes only relate to the option contracts listed at the beginning of this document. (Process Overview) 2

7 Basic Concepts In order for a Call Option to be considered In the money,by TRS, its exercise price (strike) must be below the option reference price published by ICE. In order for a Put Option to be considered In the money,by TRS, its exercise price (strike) must be above the option reference price published by ICE. Some ICE Futures Europe options expire into futures contracts,that are continuing to trade, and do not expire until a future date. In these cases, an option can be in/out of the money according to the option reference price (which is what the expiry process is based on) but their exercise can become undesirable based on the price movement of the underlying future. This means that the period of underlying futures trading between the release of the reference price and the option exercise deadline is extremely important to monitor in order to try to anticipate exercise/abandon requests from clients/traders. (Process Overview) 3

8 Manually Abandoning/Exercising Options in TRS(15 Screen) In TRS, Select option 15(Option Expiries) by either typing 15 or using the arrow keys to move to it, followed by the Enter key. An input box will appear just below option 20 on the Main menu. Manually Abandoning/Exercising Options in TRS 4

9 Type C= followed by code for the expiring option eg C=B for Brent (Manually Abandoning/Exercising Options in TRS) 5

10 Type the Line number of the expiring contract followed by the Enter key. (Manually Abandoning/Exercising Options in TRS) 5

11 This brings up all the Long positions you have. Type the line number on the left of the screen to select the position you want to Abandon/Exercise followed by the Enter key. (Manually Abandoning/Exercising Options in TRS) 6

12 This now shows which position account is holding the positions. Select the line number you want to Abandon/Exercise followed by the Enter key. (Manually Abandoning/Exercising Options in TRS) 7

13 The cursor will now be in the Man Exr field so either type the number of lots you wish to Exercise or tab to the Abandon field and populate it with the number of lots you wish to Abandon, followed by Shift F6 to commit the action. Exercise Abandon (Manually Abandoning/Exercising Options in TRS) 8

14 The positions Abandoned/Exercised will now show in in the Abandon or Man Exr column. If you wish to amend either an Exercise or an Abandon bring up the line in question, tab to the appropriate field and type Shift F3 to clear the field. Then type the correction followed by Shift F6 to commit the action. (Manually Abandoning/Exercising Options in TRS) 9

15 The instructions will also show in the TRS 11 Screen(Position Summary) by bringing up the expiring month in question and using the * key to toggle to view 2 (Manually Abandoning/Exercising Options in TRS) 10

16 Manually Exercising Options in TRS(Prior to LTD) In TRS, Select option 17(Exercise Notifications) by either typing 17 or using the arrow keys to move to it, followed by the Enter key. An input box will appear just below option 20 on the Main menu. (Manually Exercising an Option in TRS) 11

17 Type IN followed by the Enter key (Manually Exercising an Option in TRS) 12

18 You will now be prompted to confirm you want to input an exercise, type Y followed by the Enter key (Manually Exercising an Option in TRS) 13

19 You now need to enter the details of the option position you intend to exercise (see Description of required fields below) followed by Shift F6 to confirm. Note that to completely clear a field you can use Shift F3. Trd = Your Member 3 Letter code (XXX) Com = Contract (B) T = C (Call) or P (Put) A = H/N/S (House/Non/Seg) Expry = Month(OCT10) Exer = Option Strike(8000) Notiftn = Lots to Exercise(10) You can type a relevant reference in the Account ref field if you require one but this is not a dependency for the exercise to be accepted (Manually Exercising an Option in TRS) 14

20 In this example, Member XXX has exercised 10 lots (ignore the ghost zero to the right of the 10) of the OCT Calls. (Manually Exercising an Option in TRS) 15

21 Once you have exercised the position you can check the instruction in the 17 screen by typing AS L=0 C=B( If Brent is the contract code for the option you are checking) Once in this screen you can also edit (E) or Delete (D) the instruction by Typing E or D followed by the appropriate line number.(see pages ) (Manually Exercising an Option in TRS) 16

22 Deleting a manual Exercise In TRS, Select option 17(Exercise Notifications) by either typing 17 or using the arrow keys to move to it followed by the Enter key. An input box will appear just below option 20 on the menu screen: (Deleting a manual Exercise Request) 17

23 Type AS C=B (The contract you have just exercised a position in) followed by the Enter Key (Deleting a manual Exercise Request) 18

24 The screen will now show all manual exercises in this product that have been input today. (Deleting a manual Exercise Request) 19

25 To Delete the Exercise type D followed by the Enter key. (Deleting a manual Exercise Request) 20

26 Now type the relevant line number followed by the Enter key. (Deleting a manual Exercise Request) 21

27 You will now be prompted to Confirm if you want to delete the highlighted exercise, type Y followed by the Enter key. (Deleting a manual Exercise Request) 22

28 The status (St) will now change from RN to DN to acknowledge the deletion. Type F11 to exit the screen back to the main menu. (Deleting a manual Exercise Request) 23

29 Contacts For more information/questions please contact Marc Thomas Deliveries Analyst, Operations +44 (0) Francois Lepart Head of Operations +44 (0) (Contacts)

ICE Clear Europe Ltd. Option Exercise/Abandonment Guidance Document. v.1.0

ICE Clear Europe Ltd. Option Exercise/Abandonment Guidance Document. v.1.0 ICE Clear Europe Ltd Option Exercise/Abandonment Guidance Document v.1.0 Which Option Contracts does this relate to? Option ICE Brent Crude ICE Gasoil ICE Richards Bay Coal ICE Rotterdam Coal ICE Newcastle