The following is a brief description of Finnish stock loans. For a detailed contract specification, please consult chapter four in the Rules and Regulations for OMX Derivatives Markets, which is available here on the website.
Forward based contracts, with mandatory return to lender on expiration day or after early exercise. Two type of loan transactions, LEX-loan (used for hedge, speculations et cetera) and Delivery Failure-loans (used to cover a delivery).
Contract base:
The type of share which is apparent from the quotation list. The share should be listed at OMX Nordic Exchange Helsinki, or any other exchange or market approved by the exchange.
Contract size:
Normally 100 shares per contract. Re-calculation may occur in certain cases. (See Re-calculation)
Maturity/Exercise months:
Contracts with twelve months lifetime are listed according to quotation list.
Series designation:
Indicate the designation of the contract base, expiration year and date, expiration month. The prefix "L" indicates that is a stock lending series.
Premium:
The price of a loan is shown as an annual yield in percent with two decimals. The premium is calculated from the actual first trading day, until the third settlement day after expiration, or if the loan is early exercised the settlement day of the early exercise. The shortest lending period is one calendar day, even if the actual lending period is shorter. The premium is based on the closing value of the underlying share from previous trading day.
Premium settlement day:
The third Finnish bank day after the registration of the loan.
Expiration day:
The third Friday of the expiration month of the end year, or if this day is a bank holiday, the bank day prior to the normal expiration day.
Last trading day:
Until expiration day.
Exercise:
Delivery free of payment of the underlying share. Early exercise can be requested until expiration day.
Settlement day:
Delivery occurs on the third Finnish bank day after expiration or the settlement day of the early exercise. All new loans and returns can be done T+0, T+1, T+3 or T+5.
Setting-off:
All loans can be closed during the maturity called early exercise.
Listing of new expiration month:
First listing day occurs four days prior to expiration.
Re-calculation:
Re-calculation can occur in certain cases in the event the share capital of the company is increased or decreased or the company is dissolved or ceases to exist through a merger as well as certain other events in accordance with the provisions set forth in the re-calculation rules.
All information provided herein shall be deemed to be general information and under no circumstances constitute any recommendation regarding investments. The reader shall be personally liable for risks associated with any investment based on the information provided in this document. Notwithstanding that the accuracy of the information provided herein has been verified, NASDAQ OMX, or any other subsidiary of NASDAQ OMX, assumes no liability with respect to the accuracy or use of such information. Trading in options and other derivatives instruments may involve risks, advice therefore with your bank or broker before executing a trade. For current rules for trading and clearing of options and futures please see Rules and Regulations for OMX Derivatives Markets.
