Implementation Rules relating to the Exchange Rules Page - 1 - Implementation Rules relating to the Exchange Rules of the Stuttgart Stock Exchange for Electronic Trading of Derivative Securities on the Stuttgart Stock Exchange, particularly in the EUWAX Trading Segment Please note: This is an unofficial English translation provided for information purposes. Only the original German text published on the internet sites of Stuttgart Stock Exchange (www.boerse-stuttgart.de) is binding.
Implementation Rules relating to the Exchange Rules Page - 2-1 Preamble... 4 2 Basic Principles of the Market Model for the EUWAX Trading Segment... 4 3 Description of Trading in the EUWAX Trading Segment... 7 3.1. Trading Models in the EUWAX Trading Segment... 7 3.1.1. Features common to the trading models... 7 3.1.2. Trading models according to liquidity priority... 7 3.1.3. Grouping and regrouping of derivative securities in the trading models... 9 3.2. QLP information... 11 3.2.1. QLP A (= general) information... 11 3.2.2. QLP S (= situation-specific) information... 11 3.3. Obligations of the Market-Maker... 11 3.3.1. Relationship of applicant for the EUWAX trading segment and Market- Maker... 11 3.3.2. Quoting obligations of the Market-Maker... 12 3.3.3. Format of Market-Maker quotes... 12 3.3.4. Exceptions to the Market-Maker's quoting obligation... 13 3.3.5. Notification of quotation interruption by the Market-Maker... 14 3.3.6. Availability and organisational requirements... 14 3.3.7. Technical requirements on the Market-Maker... 14 3.4. Identification of potentially executable situations... 15 3.5. Pricing algorithm... 15 3.6. Price determination... 16 3.7. Special cases of price determination... 16 3.7.1. Price determination with partial executions... 16 3.7.2. Price determination without turnover... 16 3.7.3. Monitoring of specific trading hours... 17 3.7.4. Securities with only one auction per day... 17 3.7.5. Price determination in sold out Securities... 17 3.7.6. Knocked out securities... 18 3.8. Notations / References... 18 3.9. Mistrades... 19 3.9.1 Fundamentals... 19 3.9.2 Prerequisites for application... 19 3.9.3 Deadlines... 19 3.9.4 Content and substantiation of the application... 20 3.9.5 Decision by the Board of Management... 20 3.9.6 Cooperation of three experts... 21 3.9.7 "Sold-out" situation / redemption of an issue... 22 3.9.8 Declaration of the EUWAX Committee regarding propriety trading amongst EUWAX-Issuers... 23 3.9.9 Administration fee... 23 3.10. "Ex officio" cancellation... 23 4. Provisions for the Trading of Derivative Securities in the EUWAX-Regulated Segment... 23 5. Duties of the Quality Liquidity Provider (QLP)... 24 5.1. General provisions regarding the QLP's duties... 24 5.2. Plausibility checks of Market-Maker quotes... 24
Implementation Rules relating to the Exchange Rules Page - 3-5.3. Provision of liquidity... 25 5.4. Provision of bid/offer information... 25 5.5. Exceptions... 25 6. Effective Date... 26
Implementation Rules relating to the Exchange Rules Page - 4-1 Preamble This document substantiates the provisions of the Exchange Rules of the Stuttgart Stock Exchange ("Exchange Rules") and describes the market model of the Stuttgart Stock Exchange (Baden-Württembergische Wertpapierbörse) as well as the trading models resulting from this market model for trading in derivative securities at the Stuttgart Stock Exchange (particularly in the EUWAX trading segment). Price determination according to this market model takes place in electronic trading pursuant to the auction principle. In order to substantiate the provisions of the Exchange Rules, the Board of Management (Börsengeschäftsführung) of the Stuttgart Stock Exchange has issued these Implementation Rules pursuant to section 7 (4) as well as pursuant to sections 12 (8) No. 2, 30 (4), 32 (5), 33 (2) - (4), 34 (4), 36 (2), 37 (4), 49 (3), 50 (2) and 56 of the Exchange Rules. In case of conflicts, the provisions of the Exchange Rules shall prevail over these Implementation Rules insofar as these Implementation Rules contradict the Exchange Rules. 2 Basic Principles of the Market Model for the EUWAX Trading Segment The market model for the EUWAX trading segment of the Stuttgart Stock Exchange is based on the following basic principles: 1. Prices are established (Preisfindung) and determined (Preisermittlung) electronically. This is an "electronic auction model" and therefore an electronic trading system. 2. As a matter of principle, the securities are traded in consecutive auctions (continuous auction trading). Auction is defined as taking into account all orders that are in the order book at the time the price is determined. However, prices are determined at least once a day on the stock exchange. 3. The entity on whose application own securities or securities of an affiliate of such entity within the meaning of sections 15 et seq. of the German Stock Corporation Act (Aktiengesetz, "AktG") have been admitted to the EUWAX trading segment undertakes to provide quotes for these securities as a Market-Maker and to provide binding bid and ask prices on a continuous basis for these securities, or on request from the Quality-Liquidity
Implementation Rules relating to the Exchange Rules Page - 5 - Provider, for a specific security or order volume (quoting). It may instruct third parties to provide quotes on its behalf. Details are set out in Chapter 3.3 hereof. 4. Each security is assigned a Quality-Liquidity Provider (QLP) who is responsible for providing quotes for that particular security. Under certain circumstances and subject to certain conditions, the QLP shall enter binding QLP quotes (QLP S information) or price estimates (QLP A information) into the system. Exceptions to this general obligation are set out in Chapter 5.5 hereof. 5. Trading within the EUWAX trading segment may take the form of various trading models. These trading models differ in terms of the rights and duties of the QLP and the Market- Maker. These trading models are set out in Chapter 3.1 hereof. 6. In accordance with Chapter 3.1.3.1, the applicant for the EUWAX trading segment is entitled to choose from the various trading models for trading in the derivative securities for which the applicant provides quotes. In doing so, the applicant for the EUWAX trading segment must comply with the reorganisation periods and the conditions of the respective trading model with respect to all its leverage products as a class and all its investment products as a class (each class referred to as a "product group" within the meaning of section 47 of the Exchange Rules) as per the classification carried out by the Board of Management. 7. The best-price principle applies to electronic trading. The binding quote provided by the QLP (QLP S information) is taken into account when determining the price (Preisermittlung). The electronic trading system will not determine any Exchange price outside a quote provided by a QLP. When quoting, QLPs shall take into account quotes submitted by Market-Makers (Market-Maker quote). QLP S information must not be outside the quote provided by the Market-Maker. 8. Continuous auction trading takes place during the trading hours applicable to the security. No price determination or order execution may take place outside these trading hours. There will be no regular separate closing auction. The last price determined shall be the closing price. The start of end-of-day processing is time-controlled.
Implementation Rules relating to the Exchange Rules Page - 6-9. The market model is order and quote-driven, i.e. the process of identifying potentially executable order book situations can be triggered either by an order or a price estimate (QLP A information). The price determination process commences with the placing of a binding QLP quote (QLP S information). 10. The quotation is effected either in units or as a percentage. 11. Bid and offer information (= price estimates) and prices determined including volumes are published. 12. The QLP shall carry out a plausibility check of the quotes provided by the Market-Maker at the QLP's request. Details on the plausibility check are set out in Chapter 5.2 hereof. 13. The order book in the electronic trading system is blocked ( frozen ) during price determination: the electronic order book remains blocked for new order placements, as well as for order modifications or deletions during this phase. Order placements, modifications or deletions, which are submitted to the electronic trading system during an order book freeze, are entered into the order book once the freeze has been lifted, in line with their entry sequence. Only then may the price be determined again. 14. QLPs may effect open transactions subject to designation of the counterparty (Aufgabegeschäfte) in electronic trading in accordance with the Conditions for Trading at the Stuttgart Stock Exchange. 15. Partial executions are avoided as far as possible. In the event of partial executions, volumes are generally allocated on a percentage basis. Any departures from the percentage allocation require the prior consent of the Board of Management. If partial executions are undertaken, a corresponding notation is published. Details are set out in Chapter 3.7.1 hereof. 16. Notice of execution of the order is given shortly after the respective closing of the transaction. During the day, settlement notes are prepared which include the counterparty's data. Settlement notes for transactions which are still subject to the designation of the counterparty are only forwarded at the end of the day.
Implementation Rules relating to the Exchange Rules Page - 7-17. Price determinations through the system cannot be cancelled. However, under certain circumstances, transactions and orders may be withdrawn and prices may be corrected. The details relating to the cancellation of stock exchange transactions and price corrections are set out in Chapter 3.10 hereof as well as in the Conditions for Trading on the Stuttgart Stock Exchange. In the case of derivative securities which are traded outside of the EUWAX trading segment of the Stuttgart Stock Exchange, certain exceptions from the above basic principles apply. These exceptions are set out in Chapter 4 hereof. 3 Description of Trading in the EUWAX Trading Segment 3.1. Trading Models in the EUWAX Trading Segment Trade within the trading segment may take the form of various trading models. These trading models differ in terms of the rights and duties of the QLP and the Market-Maker; these differences are reflected in the differing parameter settings. The trading models in the EUWAX trading segment are defined in Chapter 3.1.2 hereof. 3.1.1. Features common to the trading models Price determination and order execution are carried out electronically for all trading models. The price determination process starts with a request for liquidity to the QLP. This request will be handled by the QLP as set out in greater detail in this Chapter 3. Any Market-Maker quotes that are relevant for price determination and order execution, and are forwarded by the Market-Maker at the request of the QLP, are checked for plausibility by the QLP in each trading model. Details on this plausibility check are set out in Chapter 5.2 hereof. 3.1.2. Trading models according to liquidity priority The EUWAX trading segment distinguishes between three different trading models. These trading models only differ insofar as whether the QLP is required to use available third-party liquidity (= Market-Maker liquidity) or whether it may provide its own liquidity.
Implementation Rules relating to the Exchange Rules Page - 8-3.1.2.1. Trading model A For trading model A, the QLP is free to choose the type of liquidity. Own liquidity of the QLP (= QLP liquidity) and third-party liquidity (= Market-Maker liquidity) have the same priority in trading model A. Whether or not the QLP and/or third parties provide liquidity is within the QLP's discretion to be exercised on a case-by-case basis. 3.1.2.2. Trading model B Market-Maker liquidity has higher priority than QLP liquidity in trading model B. Under trading model B, Market-Maker liquidity has a higher priority than QLP liquidity and must be used in preference by the QLP. The QLP may only make its own QLP liquidity available if an electronic request to the Market-Maker is not answered within five seconds or the Market-Maker offers less that the required volume. Within the Market-Maker quote that has passed the plausibility check, the QLP may make its own liquidity available at any time in order to enable executions or to avoid partial executions. This trading model B may only be selected if there is a direct link from the responsible Market-Maker to the QLP in the form of an electronic communications system which allows for a full record of the QLP's communications with the Market-Maker (requests and replies). If communication by means of this electronic communications system is not possible for technical reasons, all derivative securities for which the Market-Maker concerned provides quotes shall be traded in accordance with the rules of trading model A for the duration of the malfunction. 3.1.2.3. Trading model C As a matter of principle, the QLP may not provide any liquidity in trading model C. The QLP may not provide its own liquidity unless the QLP liquidity (which may only be made available by the QLP within the Market-Maker quote) serves to avoid partial executions within the Market-Maker quote or to facilitate economically viable partial executions.
Implementation Rules relating to the Exchange Rules Page - 9 - This trading model C may only be selected if there is a direct link from the Market- Maker to the QLP in the form of an electronic communications system which allows for a full record of the QLP's communications with the Market-Maker (requests and replies). If there is an order book situation that has been identified as being executable, the QLP shall enquire of the Market-Maker electronically whether the Market-Maker is prepared to provide Market-Maker liquidity. The liquidity must be provided by the Market-Maker within five seconds (required response time). If there is no response received within 15 seconds, the situation will be logged as being "not executable". Nevertheless, the QLP shall continue to try to acquire liquidity from the Market-Maker in order to enable order execution. The Board of Management shall be notified thereof. If communication by means of said electronic communications system is not possible for technical reasons, all derivative securities for which the Market-Maker concerned provides quotes shall be traded in accordance with the rules of trading model A for the duration of the malfunction. 3.1.3. Grouping and regrouping of derivative securities in the trading models 3.1.3.1. Selection of the trading model The applicant for the EUWAX trading segment may select one of the above trading models for the derivative securities which are traded in the EUWAX trading segment upon its application, broken down by product groups, provided that the prerequisites for the respective trading model have been met. The selection shall be made by written declaration to the Board of Management. The Board of Management shall decide on the classification and shall implement the relevant classification in the respective trading model within three trading days following receipt of the written declaration of the applicant for the EUWAX trading segment. 3.1.3.2. Specifically: requirements for Market-Maker's response times in trading model C The response times of a Market-Maker for the securities in any given product class shall be measured and recorded by the Board of Management or a third party instructed by the latter.
Implementation Rules relating to the Exchange Rules Page - 10-85% of the requests directed to the Market-Maker during the course of any day in connection with the securities in any given product group must be answered by the Market-Maker within five seconds and 95% of the requests must be answered by the Market-Maker within 15 seconds. Malfunctions reported by the Market-Maker, during which communication by means of the electronic communications system is not possible for technical reasons, shall be excluded from the calculation. Likewise, requests exceeding EUR 50,000 shall also be excluded from the calculation. If the requirements on the response time are not satisfied by the Market-Maker during two days within an assessment period of ten trading days, the Board of Management may regroup the derivative securities, which are traded upon the application of the applicant for the EUWAX trading segment in the EUWAX trading segment and are allocated to the relevant product group, with effect from the following day in accordance with Chapter 3.1.3.3 hereof. Re-admission to trading model C is possible at the request of the applicant for the EUWAX trading segment if the requirements of trading model C on the response time are satisfied by the competent Market-Maker on five consecutive trading days. 3.1.3.3. Regrouping If the requirements of the Exchange Rules and these Implementation Rules in respect of the selection of a specific trading model for derivative securities are no longer being met, or if the requirements for a regrouping in accordance with Chapter 3.1.3.2 hereof are satisfied, the Board of Management may regroup all derivative securities traded in the EUWAX trading segment on the application of the applicant for the EUWAX trading segment (which are allocated to the relevant product group) to another trading model in the EUWAX trading segment, whose requirements are met by the applicant for the EUWAX trading segment. Where securities that were regrouped as a result of the subsequent failure to satisfy the relevant requirements then meet the requirements of several trading models with respect to the relevant product group, the applicant for the EUWAX trading segment may, at any time from announcement by the Board of Management of the regrouping until 60 minutes before the start of the general trading hours of the next trading day notify the Board of Management of the eligible trading model to which said product group shall be allocated. Where this option is not exercised, the Board of Management is entitled to decide on the selection of the trading model.
Implementation Rules relating to the Exchange Rules Page - 11-3.2. QLP information 3.2.1. QLP A (= general) information The QLP is required to continuously provide so-called QLP A information (= price estimates) and to make them available for publication. This is based on permanent Market-Maker quotes whereby the QLP shall quote a volume that is regularly traded. The QLP A information provided by the QLP shall consist of the following data: BID and/or ASK and/or price estimate bid size and/or price estimate ask size. 3.2.2. QLP S (= situation-specific) information The QLP can pro-actively provide QLP S information for a specific order book situation or on the basis of a potentially executable situation. QLP S information must not be outside the quote provided by the Market-Maker. To enable the QLP to respond in a binding manner to any given order book situation, the order book is temporarily blocked by the system before the QLP provides the QLP S information. The QLP S information shall contain the following data: price limit for liquidity to be provided by the QLP and/or orders with "KV" numbers (German Securities Settlement Organisation (Kassenverein) numbers) if liquidity provided by the Market-Maker is to be used. 3.3. Obligations of the Market-Maker 3.3.1. Relationship of applicant for the EUWAX trading segment and Market-Maker Market-Makers are trading participants at the Exchange who quote, on a continuous basis and upon request by a QLP, binding bid and ask prices with regard to a specific securities quantity or order volume for the securities they make markets for (quoting function). The applicant for the EUWAX trading segment shall provide quotes as a Market-Maker for the derivative securities which are traded in the EUWAX trading segment upon its application.
Implementation Rules relating to the Exchange Rules Page - 12 - The applicant for the EUWAX trading segment may appoint a third party as Market-Maker for the securities admitted to the EUWAX trading segment upon the applicant's application. In this case, the Market-Maker's duties pursuant to the Exchange Rules and the present Implementation Rules shall remain incumbent upon the applicant for the EUWAX trading segment, who shall be obliged to ascertain compliance with such duties by the Market-Maker instructed. 3.3.2. Quoting obligations of the Market-Maker During the trading hours of the derivative securities for which the Market-Maker provides quotes, the Market-Maker shall provide such quotes without interruption (continuous quoting). Upon the QLP's request, the Market-Maker shall provide the QLP with a binding bid and offer price (including volume) to be forwarded by the QLP (following completed communication between the Market-Maker and the QLP) as an order of the Market-Maker in connection with the QLP S information to the electronic trading system of the Exchange (response to requests). The minimum trading volume for which a quote provided by a Market-Maker must be valid is (i) EUR 3,000 for leveraged products (warrants, knock-out products and exotic products) or EUR 10,000 for investment products (investment certificates including related structures, reverse convertibles), respectively; or (ii) 10,000 securities (for securities quoted in units) or a nominal value of EUR 10,000 (for securities quoted as a percentage), respectively. Where a Market-Maker undertakes a commitment to quote for a securities quantity or order volume exceeding these minimum levels, the amount in euro and the number of securities for which quotes must be valid, shall be increased by the same factor. Market-Makers may at any time quote for an order volume or securities quantity exceeding their commitment. If the Market-Maker is no longer able to fulfil its continuous quotation obligation for more than one trading day and if the quotation interruption is not notified by the Market-Maker the Board of Management may revoke the admission to the EUWAX trading segment. 3.3.3. Format of Market-Maker quotes Market-Maker quotes may only be made available up to an amount of EUR 0.10 with three digits after the decimal point.
Implementation Rules relating to the Exchange Rules Page - 13-3.3.4. Exceptions to the Market-Maker's quoting obligation Exceptions to the Market-Maker's quoting obligation exist only where the quote for a binding bid and offer price cannot reasonably be expected, i.e. specifically in the case of: special circumstances within the sphere of the Market-Maker (e.g. disruption of the telephone system, technical disruptions, power failure); or a special market situation characterised by one of the following: o extraordinary market movements of the underlying, owing to special circumstances in its home market or special events, when determining the price of the security taken into consideration as the underlying instrument (or used as a hedge regarding the underlying); or o serious disruptions of the economic or political situation (e.g. terror attacks, market crashes); or o the suspension of trading in the underlying instrument. In the cases outlined above, the Market-Maker shall be obliged to submit a quote showing a value of zero on both the bid and ask sides. Exceptions to the Market-Maker's quoting obligation also exists if the only quoting of a binding offer price is unreasonable (Bid-Only'). In addition to the exceptions set out above, this may specifically occur in the case of: a specific issue of securitized derivatives is sold out (Sold Out); the original risk/return profile of a securitized derivative has changed by reaching or breaching a threshold substantially; if for a securitized derivative a predetermined threshold has theoretically been breached outside the trading hours of the reference market for the underlying (pending knock-out). The obligation of the Market-Maker to continue providing binding market-driven bid prices persists.
Implementation Rules relating to the Exchange Rules Page - 14-3.3.5. Notification of quotation interruption by the Market-Maker The Market-Maker is required to notify the Board of Management (by e-mail to stoerung@boerse-stuttgart.de), without undue delay, of any quotation interruption as per Chapter 3.3.4 above that exceeds 15 minutes. If the quotation interruption is attributed to the sale out of the issue (sold-out), the Market Maker additionally has to inform its compliance office. Likewise, the Market-Maker is required to give notice, once the continuous quoting can be resumed. From the reports must show clearly which securities are affected. Such notifications shall clearly identify the affected securities.. The maximum validity of a quotation interruption notice is one month. Where a quotation interruption persists after this period, the Market-Maker is required to issue a new notification. Regardless of such a notification by the Market-Maker, the Board of Management shall be entitled to advice of any quotation interruption, that has come to its attention, on the website of Börse Stuttgart (www.boerse-stuttgart.de). Such information shall be published on the internet for the duration of five Exchange trading days following the resumption of quotation. If quotation has been interrupted due to the suspension of the derivative by the Stuttgart Stock Exchange, the Issuer is relieved from its notification duties. 3.3.6. Availability and organisational requirements The Board of Management and the QLP must be able to contact the Market-Maker during the trading hours of the securities for which the Market-Maker provides quotes. The Market- Maker shall ensure that all necessary material and human resources are available in order to perform quotations. 3.3.7. Technical requirements on the Market-Maker
Implementation Rules relating to the Exchange Rules Page - 15 - For the execution of transactions pursuant to a quote, each Market-Maker must use a separate XONTRO ID number (so-called "KV" number), which is maintained in the XONTRO bank (Kreditinstitute) trader group and is used solely for the settlement of transactions pursuant to a quote for derivate securities which are traded in the EUWAX trading segment upon application of an applicant for the EUWAX trading segment. 3.4. Identification of potentially executable situations The process of identifying a potentially executable situation is triggered by the following events: trading hours for the respective security have commenced; placement of new order; receipt of order change; receipt of order cancellation; arrival of new QLP A information, resulting in orders already contained in the system now being apparently executable: o buy market order or limit ASK, o sell market order or limit BID, o stop-loss orders with limit BID, o stop-buy orders with limit ASK. 3.5. Pricing algorithm There is a single pricing algorithm, which is used to determine the auction price in accordance with the principle of maximum volume execution. In principle, no price can be established if no QLP S information is available. As a rule, the following provisions apply for establishing prices: Price levels that have the largest turnover within the given framework (QLP S information) must be identified. When searching for the largest possible turnover, all sales at "bid" or lower limited sales and all purchases at "ask" or higher limited purchases shall be regarded as being fully executable. a. If there are several possible price levels, those with the lowest surplus must be identified.
Implementation Rules relating to the Exchange Rules Page - 16 - b. Where this results in more than one price limit, having the highest turnover and the lowest surplus, being eligible for inclusion into the determination of the auction price, a further review shall take place. i. If there is no surplus, the auction price closest to the last determined price shall be identified. ii. The auction price is stipulated according to the highest price limit identified if the surplus for all limits identified is on the buy side (surplus of demand). iii. The auction price is stipulated according to the lowest price limit identified if the surplus for all limits identified is on the sell side (surplus of supply). iv. If price limits with a surplus on both the buying and selling sides are identified, the price limit closest to the price last determined shall be identified. If both price limits are equidistant from the last price determined, the price limit having the demand surplus shall be selected, as full execution of the sell order is preferable. 3.6. Price determination Once the price has been successfully established (with or without liquidity being made available), final price determination will be triggered by the system. The price can only be freshly determined once the executed orders have been fully updated and all provisional order book changes have been processed. 3.7. Special cases of price determination 3.7.1. Price determination with partial executions Despite liquidity having been made available by the QLP using its own or third-party liquidity, it is possible that some orders cannot be executed in full by the electronic trading system. The assignment by the electronic trading system to assignable orders is carried out on a percentage basis. If a different assignment is required in individual cases in order to guarantee economically sensible partial execution, prior consent from the Board of Management must be obtained. The corresponding notation shall be published. 3.7.2. Price determination without turnover
Implementation Rules relating to the Exchange Rules Page - 17 - Prices may be determined without turnover. To this end, an auction shall take place in accordance with the general rules for price determination, which will lead to price determination in any case. Any such price determination may be carried out in particular if relevant orders exist that are, at present, not executable or where this is necessary to meet the requirement of determining the price at least once per day. 3.7.3. Monitoring of specific trading hours If derivative securities are traded, as per the Board of Management's decision, in consecutive auctions during specific trading hours (within the general trading hours), a period shall be defined (beginning and end), in which the process of identifying executable orders is activated. Existing orders may only be executed within these specific trading hours. The price shall be determined if necessary without turnover at the end of these specific trading hours and marked "SK" (closing price). Thereafter, the order book will be closed and any new orders will be accepted, to the extent possible, for the following trading day. The obligation of the Market-Maker to continuously provide binding sell and buy prices shall be restricted to the trading hours of the relevant securities. 3.7.4. Securities with only one auction per day At the request of the applicant for the EUWAX trading segment, only one auction per day may be held. From a time to be defined by the Board of Management, a single price determination process shall be commenced and price determination, if applicable without turnover, shall be carried out. The Market-Maker undertakes to provide binding sell and buy prices at least one hour before the predetermined time. This obligation only exists until the single price determination has been carried out. 3.7.5. Price determination in sold out Securities Prices for derivative securities with sold-out status are determined by the electronic trading system as follows: in the case of securities quoted in units and having a Market-Maker buy price of less than EUR 5.00, a maximum price of EUR 0.10 above the buy price; and for all other securities, a price of no more than 2% above the buy price.
Implementation Rules relating to the Exchange Rules Page - 18 - A higher divergence shall only be permissible in exceptional cases, upon prior approval by the Trading Surveillance Office. The Exchange will publish a list of sold-out securities on its website. 3.7.6. Knocked out securities 3.7.6.1 Where, in accordance with the provisions contained in the listing or sales prospectus, a derivative security becomes worthless as a result of the underlying reaching a predetermined limit or where, following such event, the derivative security is only traded at a fixed repurchase price (knock-out), the Market-Maker shall notify the Board of Management (knock-out@boerse-stuttgart.de) of any such knock-out event without undue delay. The Board of Management will temporarily suspend trading in the relevant derivative security or cease trading entirely. Price determination after successful reinstatement shall only be effected at a fixed knock-out price. 3.7.6.2 Once a repurchase price has been fixed for a security following a event in accordance with Chapter 3.7.6.1 above, any exchange trade, which is executed at a price other than such repurchase price, will be cancelled. 3.8. Notations / References The following notations/references are used: Notations/references for prices without turnover: o "G" = Geld (bids) o "B" = Brief (offers) o "- GT" = gestrichen Geld/Taxe (quotation cancelled, bids/estimated) o "- BT" = gestrichen Brief/Taxe (quotation cancelled, offers/estimated) o "-" = gestrichen (quotation cancelled) Notations/references for prices with partial execution (surplus remains in order book): o "bg" = bezahlt Geld (partially paid, bids) o "bb" = bezahlt Brief (partially paid, offers) o "ratg" = rationiert Geld (rationed, bids) o "ratg*" = rationiert Geld Sternchen (rationed, bids, asterisk)
Implementation Rules relating to the Exchange Rules Page - 19 - o "ratb" = rationiert Brief (rationed, offers) Notations/references for prices with full allocation: o b (bezahlt) o "C" = Kompensation (compensating transaction) 3.9. Mistrades 3.9.1 Fundamentals In addition to the error correction provisions contained in the Conditions for Trading on the Stuttgart Stock Exchange, price determination may be cancelled under the following conditions. 3.9.2 Prerequisites for application The determination of a price which evidently deviated significantly from prevailing market prices may only be revoked retrospectively if: a. the price determination in question resulted from technical failure; b. the price determination in question was based on a market-maker quote that was evidently not in line with prevailing market prices at the time of price determination; or c. the price of the underlying on which the calculation of the price of a derivative security is based (in the market in which price determination takes place) has been corrected by an entity officially entrusted with price correction responsibility. Incorrect entry of the order quantity shall not give rise to a right of cancellation with regard to price determination. 3.9.3 Deadlines Trading participants (including the QLP) and Market-Makers shall submit an application for subsequent cancellation of a price determination (application for error correction) to the Board of Management without undue delay when becoming aware of the grounds for cancellation. Where one of the parties concerned submits an application, said application shall apply to the entire matter concerning the specified securities ID numbers for a period of two hours. This shall apply independently of order size and the parties who took part in the individual price determinations. Said application may be submitted by e-mail
Implementation Rules relating to the Exchange Rules Page - 20 - (mistrade@boerse-stuttgart.de) or via fax (+49 711 222985-567). The applicant shall forward a copy of the application to its compliance unit for their information. In addition, advance notification of the lodging of said application shall be given by telephone (+49 711 222985-682). The application must be submitted no later than two trading hours (based on the security's trading hours) after the price determination in question, unless prompt lodging of the application was not possible due to force majeure. In exceptional circumstances, an announcement by phone call shall be sufficient, provided that the application is submitted by e-mail or fax without delay. Notwithstanding the two-hour deadline, in those special or exceptional cases set out in the principles, price determinations of the current or the immediately preceding Exchange trading day may also be cancelled. 3.9.4 Content and substantiation of the application Said application must contain the following information as a minimum with regard to each price determination challenged: a. security, b. time of price determination, c. traded volume, d. trade price, e. prevailing market price and information as to its calculation (e.g. calculation formula and associated factors). The Market-Maker for the product shall also provide this information when said Market-Maker is not the applicant; and f. an explanation as to why incorrect price determination is claimed. Where an application for error correction is not lodged in time or any of the above-mentioned information is missing, said application will be rejected. In justified exceptional cases, the missing information may be furnished subsequently, but this must be done as soon as possible. 3.9.5 Decision by the Board of Management The Board of Management shall decide on the cancellation of the price determination
Implementation Rules relating to the Exchange Rules Page - 21 - challenged in accordance with the principles regularly agreed with the Exchange Supervisory Authority and the Trading Surveillance Office. The Board of Management shall inform both the trading participants concerned as well as the applicant's compliance unit of its decision without undue delay. The Board of Management will publish details on mistrade proceedings (applicant, WKN/ISIN, challenged price determination, status of mistrade process, prevailing market price as stipulated by the applicant) in a special "Mistrade" section on its website (www.boerse-stuttgart.de). 3.9.6 Cooperation of three experts Where it is not clearly identifiable whether the challenged price determination was evidently not in line with prevailing market prices, the Board of Management will consult three experts with regard to the admissibility of the application for error correction. These three randomly selected experts shall be representatives of trading participants who are not party to the trades executed on the basis of the challenged price determination. Said experts shall make their decisions based on a guideline agreed with the Board of Management. Every trading participant acting as a Market-Maker in the EUWAX trading segment shall nominate at least one expert. Said expert must possess sound knowledge regarding the valuation of and trading in derivative securities or an instrument group thereof. This knowledge may be demonstrated by having worked for several years in this area. The Board of Management maintains a list of all experts nominated by trading participants. This list also takes into consideration any restrictions imposed with regard to individual instrument groups. Trading participants are obliged to notify the Exchange of any changes regarding their nominated delegate. The Board of Management shall appoint the three experts, taking into consideration the above restrictions, except where delegates so nominated are biased because they are a party to the challenged trades, or as a result of other reasons, or where they are otherwise unable to participate at the time of their convocation or when the decision is made. The
Implementation Rules relating to the Exchange Rules Page - 22 - persons nominated by the Board of Management shall disclose, without undue delay, any circumstances which might give rise to doubts regarding their impartiality or independence. In the event of an expert being unable to participate in a decision for any of the reasons set out above, the Board of Management shall appoint another expert. The Board of Management shall not disclose the names of those persons involved in the decision. The Board of Management shall forward all information required for an assessment of the admissibility of the application for error correction to the experts. The experts shall make their decision regarding the admissibility of the application for error correction (always including determination of a price in line with prevailing market prices) separately and without undue delay, with their decisions being forwarded to the Board of Management individually. The Board of Management will then make a majority decision, based on these individual decisions. Where individual experts are unable to make a decision, up to two additional experts will be consulted. If no majority decision can be reached after this, the Board of Management shall reject the mistrade application. The Board of Management shall make its decision on the basis of the principles regarding the cancellation of prices and the experts' majority decision regarding the price in line with prevailing market prices. In exceptional cases, the Board of Management may deviate from the majority decision made by the three experts. 3.9.7 "Sold-out" situation / redemption of an issue a. Where, after the execution of a trade effected by the QLP in the course of fulfilling its duties, tradability is restricted ("sold-out" situation or redemption of an issue), the Board of Management may on request of the QLP and the Market-Maker also revoke the trade, if said application has been lodged outside the deadline prescribed in Chapter 3.9.3 or if the requirements of Chapter 3.9.2. have not been met.
Implementation Rules relating to the Exchange Rules Page - 23 - b. When making a decision with regard to the QLP's application, the Board of Management shall take into consideration both the interests of the trading participants in a price that corresponds to the actual market situation and the reliance of the trading participants in the validity of the price as determined and published. 3.9.8 Declaration of the EUWAX Committee regarding propriety trading amongst EUWAX- Issuers If an Issuer in the EUWAX segment becomes aware of a Market-Maker offering to enter into transactions at terms which are not in line with prevailing market conditions, such Issuer should notify the Exchange. Given its focus on private investors, the Stuttgart Stock Exchange considers proprietary trades amongst Issuers to be undesirable if such trades are concluded to exploit prices which are not in line with prevailing market conditions. 3.9.9 Administration fee As a rule, the applicant will be charged an administration fee of EUR 1,000 for the processing of an error correction application (identical facts, which may include several WKNs). 3.10. "Ex officio" cancellation In special cases, the Board of Management is authorised to cancel a price determination, provided that the Exchange Supervisory Authority has approved this in principle. 4. Provisions for the Trading of Derivative Securities in the EUWAX-Regulated Segment There is no obligation to provide Market-Maker quotes for derivative securities that are not admitted to the EUWAX trading segment. The provisions of Chapter 3 shall apply insofar as these do not require the Market-Maker to provide a quote.
Implementation Rules relating to the Exchange Rules Page - 24-5. Duties of the Quality Liquidity Provider (QLP) 5.1. General provisions regarding the QLP's duties The QLP has three principle tasks: a. plausibility checks of Market-Maker quotes, b. provision of liquidity and c. provision of bid/offer information (= price estimates). The compliance of the QLP with its duties under the Exchange Rules and the present Implementation Rules is monitored by the Trading Surveillance Office (Handelsüberwachungsstelle) as part of its statutory tasks and, if necessary, sanctioned by the Board of Management. In addition to the disclosure obligations under the German Exchange Act and the obligation to record its communications with Market-Makers, the QLP is under the obligation to disclose, upon request of the Trading Surveillance Office and the Board of Management, the precise details regarding the fulfilment of any and all obligations arising under the Exchange Rules and the present Implementation Rules. 5.2. Plausibility checks of Market-Maker quotes In order to avoid, to the greatest possible extent, prices that do not correspond to the market situation, the QLP shall check Market-Maker quotes for plausibility. The plausibility check regarding all Market-Maker data transmitted by the Market-Maker upon the QLP's request must include the following steps as a minimum: 1. The bid and offer sides of a Market-Maker quote provided in response to a quote request are checked for plausibility against the quotes continuously transmitted and the last price determined. In doing so, the QLP shall take into consideration that deviations from the quote are possible due to influencing factors of varying magnitude that are customary in the market However, no valuation under an option pricing model will be carried out.
Implementation Rules relating to the Exchange Rules Page - 25-2. Compliance with communicated voluntary undertakings on the part of the Market-Maker, is checked. 3. Compliance with the minimum quote volume under the Exchange Rules and the present Implementation Rules, and with communicated voluntary undertakings on the part of the Market-Maker, is checked if the QLP has requested at least the minimum volume. Where the QLP determines during the plausibility check of the Market-Maker data that said data is not plausible because it fails to meet the above-mentioned requirements, the QLP shall notify both the Board of Management and the Trading Surveillance Office without undue delay. The Market-Maker is then asked to either confirm the quote or to transmit a new quote. As long as no plausible Market-Maker quote is available, no price estimate may be published and the QLP may not transmit any QLP S information to the trading system. 5.3. Provision of liquidity The QLP shall provide own or third-party liquidity in a potentially executable order book situation, during which a request is addressed to the QLP, in accordance with the Exchange Rules and the present Implementation Rules and specifically in accordance with the trading model that applies to the relevant security (Chapter 3.1.2 hereof). 5.4. Provision of bid/offer information The QLP is required to continuously provide non-binding bid/offer information (= price estimates) for the securities for which it provides quotes and to forward them for distribution. The QLP shall base this information on volumes that are usually considered as being tradable. 5.5. Exceptions Exceptions to the QLP's duties defined in the preceding chapters exist only where compliance cannot reasonably be expected, i.e. specifically in the case of:
Implementation Rules relating to the Exchange Rules Page - 26-1. special circumstances with regard to the technology used (e.g. disruption of the telephone system, technical disruptions, computer failure, system bottlenecks, failure of software, power failure or similar system disruptions which make the orderly continuation of trading impossible; this also includes system disruption or failure in the relevant foreign exchange market); 2. unavailability of data from the Market-Maker or impossibility of trading their bid or ask prices; 3. special market situations (e.g. special market situations resulting from serious disruptions to the economic or political situation (e.g. force majeure, war, terror attacks, market crashes, industrial action/strikes, computer virus infections or hacker attacks)); or 4. to the extent that serious problems in trade delivery are to be expected. The QLP is required to notify the Board of Management (via e-mail to stoerung@boersestuttgart.de), without undue delay, of any interruption as per Nos. 1, 3 or 4 above that exceeds 15 minutes and results in the QLP not being able to fulfil its duties. This notwithstanding, the Board of Management is authorised to announce any such interruption on the internet (http://www.boerse-stuttgart.de). Such information shall be published on the internet for the duration of no less than five Exchange trading days following the resumption of the QLP's duties. 6. Effective Date These Implementation Rules shall come into effect on 1 December 2011.