Mumbai: Traders and hedgers on HDFC have been warned by their brokers to exit all their derivatives positions in the mortgage financier by July 12 or face compulsory delivery in the underlying HDFC stocks .
This is pursuant to the merger of HDFC with HDFC Bank taking effect from 1 July and the bank and HDFC fixing 13 July as the record date for ascertaining the shareholders of HDFC who will be eligible to receive shares of the merged HDFC Bank.
The warning by brokers comes after National Stock Exchange (NSE) in a circular dated 5 July said that all futures and options (F&O) contracts associated with Housing Development Finance Corporation Ltd (HDFC) would expire on July 12.
“All existing monthly and weekly contracts in the underlying HDFC contracts with expiry dates post July 12,2023, shall expire on July 12, 2023,” according to NSE statement.
HDFC will cease to exist from 13 July and will be replaced by LTI Mindtree on the Nifty 50 benchmark index.
The settlement price for the F&O contracts will be the settlement price of security HDFC in the Capital Market segment on July 12. The pay in/pay out of final MTM settlement of all Futures contracts on HDFC will be on July 13 (T+1 day).
Rajesh Palviya, derivatives head at Axis Securities, said brokers had intimated clients about the contract expiry being advanced to 12 July.
All positions in the existing futures and options contracts on the underlying HDFC will cease to exist pursuant to the final settlement on July 12, and will result in physical settlement. Such physical obligations of F&O segment will be netted with obligation in Capital market for trade date 12 July 2023 and will be settled in Capital market segment on 13 July 2023, the NSE said in the statement.
The net obligation in HDFC security will be settled in Capital market segment under Normal market type in settlement number 2023130. Any delivery shortages in the security will be directly closed out, the exchange circular stated.
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Updated: 12 Jul 2023, 01:33 AM IST