Forward Metal Contracts Specifications

Transcription

1 Forward Specifications 1. Definitions Contract (specifications): The terms and rules under which the transactions shall be executed and settled. Metal price (MT): The price of the underlying metal in United States Dollars per metric ton, specified by BM&FBOVESPA from among the alternatives selected by the parties and described in Annexes I and II herein. PTAX rate: The exchange rate of Brazilian Reals (BRL) per US Dollar for cash delivery, traded in the foreign exchange market, pursuant to the provisions of Resolution No. 3265/2005 of the National Monetary Council (CMN), calculated and published by the Central Bank of Brazil (BACEN) through SISBACEN, transaction PTAX800, option 5, closing offered quotation, for settlement in two days, utilizing the maximum of six decimal places, also published by BACEN with the denomination closing PTAX, pursuant to Communication 10742, of February 17, Business day: The day that is a trading day at BM&FBOVESPA. 2. Underlying asset The underlying metal price, as defined in item Price quotation To be freely agreed upon by the parties and expressed in United States Dollars per metric ton to three decimal 4. Contract size Number of metric tons freely agreed upon by the parties, subject to the minimum and maximum limits established by BM&FBOVESPA. 5. Expiration date To be freely agreed upon by the parties, subject to the minimum and maximum limits established by BM&FBOVESPA. 6. Trade data Upon trading Metal ticker symbol Specific code for the underlying metal, in accordance with the price alternatives defined in Annex I herein. Type of settlement price for the metal Price of metal for settlement purposes, in accordance with the alternatives defined in Annex II herein. Contract size (Q m ) Number of metric tons traded between the parties, subject to the limits established by BM&FBOVESPA. Price quotation(cm R ) Price of the metal, as defined in item 3, to three decimal places Trade date Expiration date Trade code Guarantee feature C = The settlement of the contract shall be guaranteed by the BM&FBOVESPA Derivatives Clearinghouse - BM&F Segment. S = The settlement of the contract shall not be guaranteed by the BM&FBOVESPA Derivatives Clearinghouse - BM&F Segment. Market side C = buy. V = sell. Upon an early settlement The parties may agree to an early settlement of their contract, that is, before the expiration date, from the first business day subsequent to the trade date, or the minimum term determined by BM&FBOVESPA, to the first business day preceding the expiration date. To this end they must report: the contract number; percentage rate of the contract to be settled; the settlement value.

2 As an alternative to the above mentioned percentage rate, the parties may indicate the amount of the contract to be settled, for this purpose defined as the previously established number of metric tons, subject to the minimum balance of metric tons to be determined by BM&FBOVESPA. After the application of the percentage rate defined for the early settlement or the reduction of the specified number of metric tons, should the balance of metric tons be lower than the minimum limit established by BM&FBOVESPA, the Exchange shall not allow the early settlement to be carried out. The proceeds from the early settlement, which are subject to the limits established by BM&FBOVESPA, shall be cash settled on the subsequent business. When the trade is registered without the guarantee feature, cash settlement shall be made directly between the parties on the subsequent business day, or on the early settlement date, if this has been mutually agreed upon between the parties. Early settlements are subject to the provisions set forth in the special conditions of item 11 herein, where applicable. 7. Settlement condition on expiration On the expiration date, the contract shall be cash settled in Brazilian Reals by the amount that results from the application of the following formula: VL t = (MT CM R ) Q m PTAX t 1 Where: VL t = the settlement value in Reals on date t (the expiration date); MT = the settlement price for the metal specified by BM&FBOVESPA in accordance with Annex I herein, which shall be equal to the spot price (S) or the average monthly price (A), in accordance with the alternative included in Annex II herein and defined by the parties upon registration of the contract; CM R = the forward price traded between the parties on the trade registration date; Q m = the total metric tons or their balance, should a portion of the contract have been early settled PTAX t 1 = the exchange rate, as defined in item 1 herein, corresponding to the first day preceding the expiration date, in accordance with the exchange rate alternative for price conversion specified by the parties. The settlement value, if positive, shall be credited to the buyer and debited to the seller. If negative, it shall be credited to the seller and debited to the buyer. Cash settlement shall be made on the expiration date, in accordance with the following criteria: (a) Trade registered with the guarantee feature: The settlement value shall be included in both parties financial reports issued by BM&FBOVESPA, and cash settled through the BM&FBOVESPA Derivatives Clearinghouse - BM&F Segment; (b) Trade registered without the guarantee feature: The settlement value shall be informed by BM&FBOVESPA, but shall not be included in the financial reports. The settlement value shall be cash settled directly between the parties, without the intervention of the BM&FBOVESPA Derivatives Clearinghouse - BM&F Segment. Should the expiration date established upon registration not correspond to a business day, it shall be transferred to the first subsequent business day. 8. Margin requirements For the contracts registered with the guarantee feature, collateral shall be required from all customers holding open positions and its amount shall be updated daily, in accordance with the margin calculation criteria for the Forward. For the contracts registered without the guarantee feature, BM&FBOVESPA s responsibility shall be limited to contract registration, position monitoring, and cash settlement value reporting. Therefore, BM&FBOVESPA is not liable for the settlement of such transactions, which, in turn, are not covered by the funds or other safeguard mechanisms referred to in Article 30, item (J), of the BM&FBOVESPA Bylaws. 9. Assets eligible to meet margin requirements Those assets and securities accepted by the BM&FBOVESPA Derivatives Clearinghouse - BM&F Segment. 10. Trading costs (fees) Consist of the Exchange, Registration and Permanence Fees, which are calculated as per BM&FBOVESPA methodology. Trading costs shall be due on the first business day following the trade date, or at other times and periodicity established by BM&FBOVESPA.

3 11. Special provisions In the event that the price for the metal corresponding to the first business day preceding the expiration date cannot be specified in accordance with the provisions defined by the parties on the trade date, BM&FBOVESPA may at its own discretion: (a) Arbitrate a price to settle the contract; or (b) Cash settle the contract at the last price specified by it in accordance with the alternatives defined in Annex II herein and defined by the parties upon registration of the contract. Also, should the Central Bank of Brazil not disclose the PTAX rate corresponding to the first day preceding the expiration date, BM&FBOVESPA may at its own discretion: (a) Postpone the contract settlement up until an official disclosure by the Central Bank; or (b) Cash settle the contract at an arbitrated value. In either case, the settlement value may also be indexed by an opportunity cost arbitrated by BM&FBOVESPA from the expiration date to the effective cash settlement date. Furthermore, should BM&FBOVESPA suspend the daily publication of any of the price alternatives for the underlying metal, or in the case of situations that hinder the free functioning of the physical market, it shall cash settle open positions in this contract at a value arbitrated at its own discretion, pursuant to the early settlement conditions defined herein. In this case, BM&FBOVESPA shall offer the parties a specified time frame during which they may voluntarily settle the contract between themselves, in accordance with the early settlement conditions herein. 12. Further regulations This contract shall be subject to Annexes I, II and III and, where applicable, to the legislation in force and to BM&FBOVESPA rules, regulations and procedures, as well as to the specific rules set forth by the Brazilian governmental authorities that may affect the terms stated herein. Should there be any situations not covered by this contract, as well as governmental measures or any other facts that affect the formation, calculation or publication of its variables, or even imply its discontinuity, BM&FBOVESPA may, at its own discretion, take the measures it deems necessary for the contract's cash settlement on an equivalent basis.

4 ITEM 1 PRICE OF ALUMINUM Variable code: AL. Concept: The price of aluminum expressed in United States Dollars per metric ton assaying not less than 99.7% purity. ALB: The BM&FBOVESPA referential price expressed in US Dollars per metric ton of aluminum, to three decimal

5 ITEM 2 PRICE OF LEAD Variable code: PB. Concept: The price of lead expressed in United States Dollars per metric ton assaying not less than 99.97% purity. PBB: The BM&FBOVESPA referential price expressed in US Dollars per metric ton of lead, to three decimal

6 ITEM 3 PRICE OF GRADE A COPPER Variable code: CB. Concept: The price of grade A copper expressed in United States Dollars per metric ton. CBB: The BM&FBOVESPA referential price expressed in US Dollars per metric ton of grade A copper, to three decimal

7 ITEM 4 PRICE OF TIN Variable code: SN. Concept: The price of tin expressed in United States Dollars per metric ton assaying not less than 99.85% purity. SNB: The BM&FBOVESPA referential price expressed in US Dollars per metric ton of tin, to three decimal

8 ITEM 5 PRICE OF NICKEL Variable code: NI. Concept: The price of nickel expressed in United States Dollars per metric ton assaying not less than 99.8% purity. NIB: The BM&FBOVESPA referential price expressed in US Dollars per metric ton of nickel, to three decimal

9 ITEM 6 PRICE OF ZINC Variable code: ZN. Concept: The price of zinc expressed in United States Dollars per metric ton assaying not less than % purity. ZNB: The BM&FBOVESPA referential price expressed in US Dollars per metric ton of zinc, to three decimal

10 I Alternatives to Be Used in the Settlement of Forward Price alternatives for the metal The following referential prices, which are specified by BM&FBOVESPA, shall be admitted to trading: Spot metal price (S): The metal price corresponding to the first business day preceding the expiration date; Average metal price (A): The arithmetic average price for the metal which considers the prices quoted during the calendar month immediately preceding the month of the expiration date. One of these two referential prices shall be used in the calculation of the settlement value (VL) on the expiration date.

11 II Special Procedures for the Transfer of Positions and/or Compulsory Settlement of Forward Pursuant to the provisions set forth in BM&FBOVESPA rules and regulations, a Clearing Member is liable to the Exchange for all the transactions it has been designated to register, beginning with its indication as the Clearing Member up to and including the final settlement of the contract(s), as well as for the collateral required, pledged, or to be replaced. In like manner, a Brokerage House and a Local shall be liable to the Clearing Member for the trades they execute, beginning with their registration up to and including their final settlement. Those rules and regulations are thoroughly applicable to the Forward that are registered with the guarantee feature. However, due to the fact that this contract has distinctive characteristics, BM&FBOVESPA, whenever it deems necessary, shall adopt specific procedures to solve matters concerning the position of a defaulting customer or a customer facing illiquidity or insolvency problems, or even extrajudicial liquidation, intervention, bankruptcy or composition with creditors, after the corresponding transaction has been confirmed by the Exchange. In these cases, BM&FBOVESPA shall allow the positions initiated in the Forward registered with the guarantee feature to be transferred to a third party, even though, as a general rule, this contract is not subject to third-party transfer. The customer position that fits into the situation where the proper settlement of the contract has been hindered may, at the Exchange s discretion and among other measures, be treated as follows: The position may be transferred to the proprietary account of the Clearing Member; The position may be transferred to the proprietary account of the Brokerage House; The position may be subject to an auction open to all market participants; The position may be early settled at a price arbitrated by the Exchange; Depending on the case, the position may be subject to a special procedure, to be determined at the Exchange s discretion. Under any of the procedures adopted to resolve the problem, should BM&FBOVESPA be obliged to foreclose the collateral of the contracting party that falls into any of the above-mentioned situations, it shall leave the collateral balance, if any, at the disposal of those entitled to it. Should there be an insufficiency of funds, BM&FBOVESPA shall debit the corresponding amount to the account of the Clearing Member, or to the account of the Brokerage House should the Clearing Member default. Note: These provisions shall not be applicable to the contracts registered by both parties without the guarantee feature.