Mandatory Call Events

A mandatory call event occurs when, at anytime during a trading day between the first trading day and the trading day immediately preceding the expiry date of the CBBC, the spot price or level of the underlying asset is:

• at or below the call price or level in respect of a bull CBBC; or
• at or above the call price or level in respect of a bear CBBC.

A trading day includes the pre-opening session and the closing auction session.

Announcements on MCE time are published by issuers on HKEXnews website. In respect of mandatory call events occurring in the morning trading session, the announcements may be published in the same trading session or no later than 1:00 p.m. In respect of mandatory call events occurring in the afternoon trading session, the announcements may be published in the same trading session or as soon as practicable after market close.

MCE time is also posted on “MCE time” webpage under the Products Corner for Callable Bull/Bear Contract on HKEX website. The information is generally available within 45 minutes from the occurrence of a mandatory call event. Investors should refer to the announcement published by issuers on HKEXnews website for the official MCE time.

In addition, some issuers may post MCE time on their own websites.

For “Category N” CBBCs, the answer is no. If a mandatory call event occurs, you will lose all of your investment.

For “Category R” CBBCs, the answer is maybe. You may receive a residual value when a Category R CBBC is being called before expiry. The residual value is calculated generally in accordance with the following principles:

(a)  For a Category R “bull” CBBC – (The lowest spot price or level of the underlying asset in the MCE valuation period minus the strike price or level) divided by the entitlement ratio.

(b)  For a Category R “bear” CBBC – (The strike price or level minus the highest spot price or level of the underlying asset in the MCE valuation period) divided by the entitlement ratio.

For a CBBC, MCE valuation period is a period commencing from the time upon which a mandatory call event occurs in the trading session of the Exchange up to and including the end of the following trading session.

Pre-opening session and morning session are considered as one trading session. The afternoon session and the closing auction session are considered as another trading session. In the case of half day trading, the pre-opening session, the morning session and the closing auction session are considered as one trading session.

Please see the listing documents of the relevant CBBC for further details.

Mandatory call event may occur at any time during the trading day. If it occurs during the continuous trading session, no further trade can be concluded via auto-matching. In addition, all trades concluded manually after the mandatory call event will be cancelled.

Please note that since there may be a time gap between the mandatory call event and termination of trading of the CBBC, some CBBC trades concluded after the occurrence of the mandatory call event may be cancelled even though they have been confirmed by brokers.

Investors should therefore apply special caution when a CBBC is trading close to the call prices or levels.