Corporate Actions
Bonus, mergers, stock splits and more
🔹 Impact of Mergers on F&O Contracts
In a merger, two or more companies combine to form a single entity. This consolidation can affect the stock's price and the number of outstanding shares, necessitating adjustments in F&O contracts.
🛠️ Adjustments typically include:
⏳ Early Expiry of Existing Contracts: All existing F&O contracts may expire before the merger's ex-date.
🆕 Introduction of New Contracts: Post-merger, new F&O contracts may be introduced for the merged entity with standardized terms.
🔹 Impact of Demergers on F&O Contracts
In a demerger, a company splits into two or more entities. This action can lead to a change in the company's valuation and shareholding structure, affecting its F&O contracts.
🛠️ Adjustments typically include:
⏳ Early Expiry of Existing Contracts: All existing F&O contracts may expire before the demerger's ex-date.
🆕 Introduction of New Contracts: New F&O contracts are introduced for the demerged entities based on the revised valuations.
🔹 Example
In the case of ITC's demerger of its hotel business, all existing F&O contracts with expiry dates of January 30, February 27, and March 27, 2025, were set to expire on January 3, 2025.
New contracts were introduced from January 6, 2025, reflecting the revised structure of the company.
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