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WEEK 14 ndash FROM 30 MARCH TO 3 APRIL 2020
EURONEXT CAPITAL MARKETS UPDATE
8 APRIL 2020
2 ESMA published a statement on publication deadlines on 27 March 2020 httpswwwesmaeuropaeusitesdefaultfileslibraryesma31-67-742_public_statement_on_publication_deadlines_under_the_tdpdf
EXECUTIVE SUMMARYWeekly update for issuers and market members
EQUITY PERFORMANCE IN EUROPE ndash MAIN INDICES BOUNCED BACK BY FIRST INFLOWS LAST WEEK
Since February 2020 the impact of COVID-19 can be seen across selected Euronext indices with an average decrease of 2712 Small and Midcaps issuers performances have been in line with theevolution of Blue Chips indices demonstrated by the respective -2996 and -2960 decrease of CAC Mid amp Small and AMX In parallel volatility has increased with the daily average in March 2020reaching 5757 and a daily highest peak of 8562 However over the last week volatility fell below the monthly average to 5023 Regarding the performance by sector of activity issuersoperating in the Utilities and Healthcare industries have performed the strongest year to date whilst Oil amp Gas as well as Industrials have struggled the most
Issuers from across Euronextrsquos Blue Chips indices have ended the previous week with significantly positive performances compared to their month-to-date and year-to-date figures as the marketcontinues to recover Issuers within the Oil amp Gas and the Consumer Staples industries specifically saw the biggest price performances across all major indices In comparison issuers from theFinancials sector struggled the most on average which is primarily due to many financial firms electing suspend dividend payments due to COVID-19
The increased volatility caused by uncertainty of COVID-19 has resulted in a daily average turnover over March 2020 to increase to euro1609bn this being more than 2 times the daily averageturnover of the year 2019 Additional liquidity has been primarily seen in Blue Chips especially through the total turnover in March 2020 which has almost doubled the trading volumes of January2020 However the trading value across all Euronext locations fell by 2297 compared to the previous week to a total of euro4833bn Midcap issuers listed on Compartment B had slightly highertrading volumes with a peak of euro533bn in March 2020 whilst small cap issuers listed on Compartment C and Euronext Growth have come back to levels slightly higher than January 2020
With respect to inflows and outflows in Europe by asset class last week has seen an overall outflow in all asset classes except for equities Indeed the latter have benefitted from a net inflowamounting to euro787bn an improvement compared to the previous week-end The categories Mixed Assets and Bonds experienced an outflow of euro125bn and euro387bn respectively lower comparedto the previous week-end figures Looking at Euronext markets more specifically monthly figures for March 2020 indicate that Financials Technology and Consumer Discretionary shares areexperiencing the largest outflows In contrast the sectors Healthcare Consumer Staples and Energy have benefitted from a net inflow
EURONEXT BLUE CHIPS PERFORMANCE ndash SIGNIFICANTLY POSITIVE PERFORMANCES WITH A RECOVERING MARKET
EURONEXT TRADING VALUES AND VOLUMES ndash VOLATILITY REMAINS HIGH BUT DECREASED BELOW ONE-MONTH AVERAGE
FUNDS FLOWS IN EUROPE ndash FIRST INFLOWS ON EQUITIES WHILE OUTFLOWS FOR OTHER ASSET CLASSES
MOST RECENT REGULATORY UPDATES ndash DIVIDEND POLICIES AND FINANCIAL REPORTING DEADLINE
Euronext published new guidelines on dividend policy and AGM changes to prevent the impact on derivatives Euronext also adjusted its policy on financial communications on Euronext Growthand Euronext Access following ESMArsquos statement For companies with a fiscal year ending 31 December 2019 the publication on their website must be effective no later than 30 April 2020However the sending of warnings to issuers unable to publish on time will be delayed of two months beyond the normal deadline
3
0
10
20
30
40
50
60
70
80
90
60
70
80
90
100
110
120
123119 12920 22620 32520
VolatilityPrice perfRebased Vstoxx
AEX
Bel20
CAC40
ISEQ
Oslo OBX
PSI20
CAC MidampSmall
AMX
EuroStoxx 600
Source Factset Euronext as of 3 April 2020 The Vstoxx indices are based on Euro Stoxx 50 real-time options prices and are designed to reflect the market expectations of near-term up to long-term volatility by
measuring the square root of the implied variance across all options of a given time to expiration
EQUITY PERFORMANCE IN EUROPE
INDEX EVOLUTION INDEX HISTORICAL PERFORMANCE
Market impact due to COVID-19
OVER PERFORMING INDUSTRIES ON EURONEXT REGULATED MARKETS UNDER PERFORMING INDUSTRIES ON EURONEXT REGULATED MARKETS MARKET YTD
-851 -1011
-1718-2126 -2129
-1498
-700
-1639 -1854 -1770
Utilities Health Care Basic Materials Financials Technology
Average Ytd Performance Average Mtd Performance
-4759
-2892 -2737-2211 -2168
-3718
-2037 -2012-1395 -1452
Oil amp Gas Industrials Consumer Services Telecom Consumer Goods
Average Ytd Performance Average Mtd Performance
Price Perf () 10Y 5Y
Since Feb-20
MTD YTD
AEXcopy 3415 -425 -2002 266 -2202
Bel20copy 658 -2428 -2688 355 -2778
CAC40copy 298 -1812 -2845 175 -3050
ISEQcopy 4744 -2059 -3163 -135 -3339
Oslo OBXcopy 3523 -1149 -2834 -083 -3272
PSI20copy -5146 -3418 -2436 -023 -2381
CAC Mid amp Smallcopy 3751 -1692 -2996 178 -3167
AMXcopy 1196 -1505 -2960 205 -2958
Stoxx600copy 2216 -1728 -1988 588 -2087
4
Major indices constituentsrsquo over and under performers
Source Factset Euronext as of 3 April 2020
EURONEXT BLUE CHIPS PERFORMANCE
INDEX OVER AND UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)ROYAL DUTCH SHELLA
167 -3418 366 1197 108ADYEN 6912 -544 -1030 -1181 109
TAKEAWAY 726 -1170 565 642 058 AEGON 21 -4861 -968 -1053 099
AHOLD DEL 224 065 543 444 108UNIBAIL-RODAMCO-WE 452 -6785 -1230 -783 120
UNILEVER DR 443 -1362 -124 114 096 ING GROEP NV 46 -5677 -338 -746 143
DSM KON 1043 -1016 077 048 071 RANDSTAD NV 289 -4686 -1007 -692 109
AEX
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company Name Last
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
PUBLICIS GROUPE SA
272 -3271 398 1642 122 SAFRAN 630 -5423 -2139 -2580 124
VIVENDI 194 -2486 -064 671 103 AIRBUS 495 -6206 -1657 -1875 160
CARREFOUR 151 094 468 619 075SOCIETE GENERALE
128 -5873 -1660 -1708 134
AIR LIQUIDE 1152 -872 -124 231 091 CAPGEMINI 675 -3800 -1231 -1344 078
MICHELIN 779 -2862 -392 183 095 VINCI 638 -3552 -1533 -1255 106
CA
C40
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
SONAE CAPITAL 04 -4356 599 870 171BCOMPORTUGUES
01 -5607 -1307 -1530 158
SEMAPA 80 -4206 258 474 104 NOVABASESGPS 25 -155 -487 -929 120
SONAE 06 -3385 212 442 117 PHAROL 01 -3635 -704 -785 140
GALP ENERGIA-NOM
104 -3047 -034 381 123 IBERSOLSGPS 46 -4250 -336 -631 243
ALTRI SGPS 36 -3581 066 329 067CTT CORREIOS PORT
22 -3072 -324 -316 117O
SLO
OB
X IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
BEL
20 IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company Name Last
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)ORIGIN ENT PLC 24 -3571 1937 2193 070 GLANBIA PLC 77 -2481 -2183 -1836 198DALATA HOTEL GP
26 -4990 445 1781 098 IRISH RES PROP 11 -3283 -1246 -1359 189
APPLEGREEN PLC 24 -5679 1101 1635 393 AIB GROUP PLC 09 -7122 -1252 -1157 114TOTAL PRODUCE PLC
09 -3706 588 651 297BANK OF IRELAND GP
16 -6712 -690 -1049 148
FLUTTER ENTERTAIN
794 -2418 -403 635 154KERRY GROUP PLC
925 -1679 -1212 -1007 125
ISEQ
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
DNO 04 -5825 6558 8054 253 FRONTLINE 73 -3865 -1790 -2354 268
BW OFFSHORE LIMITED
20 -6108 2785 5297 145NORWEGIAN AIR SHUTTLE
07 -7801 -819 -810 083
AKER BP 136 -4613 1701 3341 196 BW LPG 26 -6027 -715 -514 104
TGS-NOPEC GEOPHYSICAL COMPANY
122 -4796 1901 2810 123 NORSK HYDRO 18 -3683 -884 -465 091
SUBSEA 7 50 -4569 1506 2533 125TOMRA SYSTEMS
249 172 -281 -122 073
PSI
20 IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
TELENET GROUP 308 -2312 1224 807 091 ING GROEP NV 46 -5677 -338 -746 143
UMICORE 330 -2389 361 746 063 GBL 674 -2822 -584 -404 098
UCB 801 1298 139 606 085 BPOST 62 -3971 -342 -378 052
AHOLD DEL 224 065 543 444 108 ELIA 928 1732 415 -353 080
COLRUYT 506 895 278 314 124ACKERMANS VHAAREN 1147 -1790 -337 -280 073
5
-
5
10
15
20
25
30
Jan-19 May-19 Sep-19 Jan-20
Traded value in billions EUR
Source Euronext Optiq data (Amsterdam Brussels Dublin Lisbon and Paris) amp Oslo Bors Millennium data for Oslo markets as of 3 April 2020 Figures exclude trading volumes from Oslo markets
EURONEXT TRADING VALUES AND VOLUMES In the past week lower levels of volatility resulted in lower turnover
TRADED VALUE 2019 FY TO 2020 YTD
TRADED VALUE RECENT EVOLUTION BY EURONEXT LOCATION
28-Feb 241bn
9-Mar 236bn 20-Mar 247bn
2019 average78bn
TRADED VALUE ACROSS EURONEXT MARKETS
PeriodComp C and Euronext
Growth (eurobn)Comp B (eurobn) Comp A (eurobn)
Week 14 052 067 4360
Week 13 038 087 5512
Mar-20 164 533 31118
Feb-20 194 397 19844
Jan-20 128 300 15348
Q1 2020 460 1199 64495
Q1 2019 237 748 42371
TRADED VALUE ACROSS EURONEXT MARKETS
- 20 40 60 80
100 120
Week1
2020
Week2
2020
Week3
2020
Week4
2020
Week5
2020
Week6
2020
Week7
2020
Week8
2020
Week9
2020
Week10
2020
Week11
2020
Week12
2020
Week13
2020
Week14
2020
Traded value in billions EURParis
Oslo
Lisbon
Dublin
Brussels
Amsterdam
-
5
10
15
20
25
2019-01-02
2019-05-13
2019-09-16
2020-01-23
Traded Value in billions EUR
Compartment A
-
100
200
300
400
500
600
2019-01-02
2019-05-13
2019-09-16
2020-01-23
Traded Value in millions EUR
Euronext Growth Compartment C Compartment B
-
5
10
15
20
25
30
2-Jan 1-Feb 2-Mar 1-Apr
Traded value in billions EUR
6
21
21
4
1
5
3
10
J A N F E B M A R
Paris
Olso
Lisbon
Dublin
Amsterdam
12
3
14
Source Euronext as of 3 April 2020 Corporate bond issuances 2020 YTD excluding listings from financial and public issuers
DCM ACTIVITY ON EURONEXT MARKETS
EXAMPLES OF CORPORATE BONDS ISSUANCES 2020 YTD NUMBER OF CORPORATE BONDS ISSUANCES BY EURONEXT LOCATION
Issuer NameDate of
IssuanceMarket Location
Amount Issued (eurom)
SALVADOR CAETANO AUTO SGPS SA 310320 Euronext Access Lisbon 25
NORGES GRUPPEN ASA 300320 Oslo Bors Oslo 29
ENGIE 270320 Euronext Paris 1000
MMB SCF 250320 Euronext Paris 120
UNILEVER NV 250320 Euronext Amsterdam 1000
DANONE 170320 Euronext Paris 800
SCHNEIDER ELECTRIC SE 110320 Euronext Paris 800
KORIAN 100320 Euronext Access Paris 400
TEREGA SAS 270220 Euronext Paris 400
CRH-CSE DE REFINANCT HABITAT 070220 Euronext Paris 1250
THALES 290120 Euronext Paris 500
NEOPOST SA 230120 Euronext Paris 325
TURKIYE IS BANKASI AS 22012020 Euronext Dublin 679
SFL CORPORATION LTD 21012020 Oslo Bors Oslo 59
ARKEMA 210120 Euronext Paris 300
AIR FRANCE KLM 160120 Euronext Paris 750
MOTA-ENGIL SGPS SA 150120 Euronext Access Lisbon 50
SECIL-COMPANHIA GERAL DE CAL E CIMENTO SA
150120 Euronext Access Lisbon 60
Euronext fixed-income listing activity
Jan-20 Feb-20 Mar-20
Oslo
7 Source Thomson Reuters Lipper with 1-month figures until 31 March 2020 and 1-week figures until 1 April 2020 Includes Mutual Funds and ETFs All equities listed on Euronext markets including Oslo equities
FUNDS FLOWS IN EUROPE
INFLOWS AND OUTFLOWS EVOLUTION IN EU-27 ZONE BY ASSET CLASS FLOWS ON EURONEXT EQUITIES BY INDUSTRIES
Inflows and outflows on European equities
Asset Class Flows 1Y (eurobn) Flows 1M (eurobn) Flows 1W (eurobn)
Bond 26007 -13531 -387
Money Market 5094 -10975 -7724
Other -2034 -1792 -266
Mixed Assets -3737 -3691 -125
Equity -7794 -5121 787
Funds Flows in billions EUR
-20000 -15000 -10000 -5000 000 5000 10000 15000 20000 25000 30000
Flows 1Y(in euroB)
Flows 1M(in euroB)
Flows 1W(in euroB)
Equity Mixed Assets Other Money Market Bond
-15
-10
-05
00
05
10
15
12M YTD 1M
8
Does Euronext intend or do the regulators intend to extend the deadline for publishingaccounts (Growth and Access)In accordance with Chapter 4 of the Euronext Growth Market Rules companies admitted onAccess (Paris Brussels Lisbon) and Growth (Paris and Lisbon) are required to publish anannual report including audited annual financial statements and consolidated financialstatements if applicable and an annual management report This publication must be madewithin four months of the end of your financial year
For companies with a fiscal year ending 31 December 2019 the publication (on the companywebsite) must be effective no later than 30 April 2020
Euronext will monitor the communications made (publication of financial statements orannouncement of postponement) after the 30 April 2020 deadline As part of its controlsEuronext will follow the recommendations of ESMA and the national regulators (eg FSMAAMF) the reminder to non-compliant issuers will be postponed for a period of two monthsbeyond the deadline for annual financial reports for a financial year ending between 31December and 31 March
What if my company is unable to publish its annual financial accounts by end of April due toCOVID-19In the current exceptional circumstances and in anticipation of the difficulties encountered bysome companies issuers that are unable to publish their financial reports within the deadlinesmust notify Euronext (for Euronext Access and Euronext Growth) or the competent regulator(for the regulated markets and Euronext Growth Brussels) and inform the market (in advance)by indicating the reasons for the delay and an expected publication date
FINANCIAL REPORTING
CORPORATE ACTIONS AND FINANCIAL REPORTINGEuronext is committed to ensure business continuity
During the confinement period will Euronext be able to manage corporate eventsEuronextrsquos teams are fully mobilised to ensure the continuity of market activities under thebest possible conditions Most of Euronextrsquos teams are working remotely whilst operating afully functional infrastructure Currently all corporate events are proceeding normally
What if my company has already announced a cash distribution and needs to cancel itFor any corporate event (creation update cancellation) please contact Euronexts CorporateActions Department (corporateactionsfreuronextcom) and your main contact at Euronextas soon as possible and no later than two trading days prior to the corporate event
A cash distribution has already been announced but I need to move the payment date to alater date What is the procedureThe payment date is not covered by Euronextrsquos rules As a market operator Euronext does notplay any particular role but has to be informed and inform the market no later than twotrading days prior to the event You can contact your paying agent and CSD that will assist youon this matter
Does Euronext have in place a plan or strategy for pandemic planning and has it beenreviewed in the context of COVID-19Yes Euronext has a pandemic plan in place The pandemic plan and business continuity planshave been leveraged with respect to COVID-19 Reinforced actions include daily monitoring ofgovernment guidance to enable agile decision-making Euronextrsquos federal and decentralisedmodel supports the arrangements put in place and avoids high concentration of any of itscritical departments to preempt as much as possible risks in any one of its locations
CORPORATE ACTIONS
More information can be found at the following link wwweuronextcomenfor-investorsmarket-qualityresilience-during-volatility ESMA published a statement on publication deadlines on 27 March 2020 httpswwwesmaeuropaeusitesdefaultfileslibraryesma31-67-742_public_statement_on_publication_deadlines_under_the_tdpdf
9
DIVIDEND POLICIES AND EQUITY DERIVATIVES (16)Understand the impact of dividends on derivatives
How the postponement of AGMs and dividend policies can impact the pricing of yourderivativesDerivatives classes may have been introduced on your companyrsquos shares A derivative listingon Euronext involves a number of benefits including but not limited to enhancing interestand liquidity in a companyrsquos share and as various studies have shown a possible stabilisingeffect on the underlying share price during the day
In the unprecedented context brought on by COVID-19 several European national competentauthorities are considering exceptional measures such as allowing the postponement ofAGMs for issuers or reviewing public funding in light of dividend policies These measures canimpact your dividend policy and subsequently the pricing of your derivatives You can readthe best practices to maximise the smooth pricing of derivatives onhttpsconnecteuronextcomensupportderivatives-markets
To protect investors it is important that you avoid announcing any high impact corporateactions with price-sensitive consequences on or just before an expiry Friday Nor it ispreferable to change a dividend date so that it moves from before a certain expiry Friday toafter that expiry Friday This has an immediate impact on the pricing of the derivativesbecause dividends are an important part of the formation of option prices The price of aderivative (options and futures) is based on the following
bull Underlying share pricebull Volatilitybull Interest ratebull Dividendbull Lifetime of the contract
What are the expiry dates for options in 2020Options expire several times a year The standard expiry date is the third Friday of the expirymonth (calendar month) unless the third Friday is a public holiday and the exchange is closedin which case it is the third Thursday List of all upcoming expiry dates for year 2020
April 17042020 May 15052020 June 19062020July 17072020
August 21082020 September 18092020
October 16102020 November 20112020 December 18122020
Ordinary of extraordinary Wording mattersIt is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinaryif in current environmentbull Its payment is postponed later in 2020bull It is reducedbull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
EXPIRY DATES AND EXTRAORDINARY DIVIDENDSKEY TAKEAWAYS ON DIVIDEND POLICIES
10
How is the price of an option calculated
Market Makers are the lubricant of our options markets they have agreed to a contract tocontinuous put prices into the market at which others may trade with them in this wayproviding liquidity to our markets When doing so Market Makers (MMs) generally do not dothis based on a directional view of the market but based on a risk neutral pricing model
In other words the Market Maker calculates the prices of the options based on a pricing model(for Equity Options that would normally be the Cox Ross amp Rubinstein model or a variant thereof) A number of parameters are used to calculate option prices in such models including
Current price of the underlying shares
Current interest rates
Expected volatility during the lifetime of the option
Expected dividend payments during the lifetime of the option
In this document we concentrate on the impact of the last one the expected dividends
Why are dividends important for the price of an option
If a share pays out a dividend the share price will at that point in time drop by the dividendamount The date on which the share trades ex-dividend is the crucial moment there If a sharetrades at euro70 on a certain day (day 1) and the next day (day 2) the share trades ex-dividend withthe dividend amount being euro150 the model assumes the share price on the ex-dividend datewill be euro6850 Reasoning behind this if I can buy a share at euro70 on day 1 on day 2 I will receiveeuro150 dividend so effectively my share will be worth only euro6850 on day 2
So the pricing model anticipates a theoretical drop in the share price on the ex-dividend dateequal to the dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (26)
HOW DO YOU PRICE AN OPTION
What is the impact on option holders around dividend
Dividends are paid to shareholders not to option holders
What happens to the option when a dividend is paid on the underlying shares
The answer is not necessarily the same for all options but letrsquos look at a put option first If thereis an option like this one the right to sell the underlying shares at euro75 (eg an August 75 Putoption) And the example is the same as above According to the pricing model there will be adrop in the share price on the ex-date of euro150 and if the share price was euro70 before the ex-date it will (theoretically) be euro6850 on the ex-date The option which gives the holder the rightto sell the shares at euro75 has now become more valuable if I have the right to sell the shares ateuro75 with the share price at euro6850 the option has an intrinsic value of euro650 (75 ndash 6850) whereit had an intrinsic value of euro500 the day before (75 ndash 70)
So for put options there is a pricing effect around dividends
time
shar
e pr
ice
Dividend
Understand the impact of dividends on derivatives
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
2 ESMA published a statement on publication deadlines on 27 March 2020 httpswwwesmaeuropaeusitesdefaultfileslibraryesma31-67-742_public_statement_on_publication_deadlines_under_the_tdpdf
EXECUTIVE SUMMARYWeekly update for issuers and market members
EQUITY PERFORMANCE IN EUROPE ndash MAIN INDICES BOUNCED BACK BY FIRST INFLOWS LAST WEEK
Since February 2020 the impact of COVID-19 can be seen across selected Euronext indices with an average decrease of 2712 Small and Midcaps issuers performances have been in line with theevolution of Blue Chips indices demonstrated by the respective -2996 and -2960 decrease of CAC Mid amp Small and AMX In parallel volatility has increased with the daily average in March 2020reaching 5757 and a daily highest peak of 8562 However over the last week volatility fell below the monthly average to 5023 Regarding the performance by sector of activity issuersoperating in the Utilities and Healthcare industries have performed the strongest year to date whilst Oil amp Gas as well as Industrials have struggled the most
Issuers from across Euronextrsquos Blue Chips indices have ended the previous week with significantly positive performances compared to their month-to-date and year-to-date figures as the marketcontinues to recover Issuers within the Oil amp Gas and the Consumer Staples industries specifically saw the biggest price performances across all major indices In comparison issuers from theFinancials sector struggled the most on average which is primarily due to many financial firms electing suspend dividend payments due to COVID-19
The increased volatility caused by uncertainty of COVID-19 has resulted in a daily average turnover over March 2020 to increase to euro1609bn this being more than 2 times the daily averageturnover of the year 2019 Additional liquidity has been primarily seen in Blue Chips especially through the total turnover in March 2020 which has almost doubled the trading volumes of January2020 However the trading value across all Euronext locations fell by 2297 compared to the previous week to a total of euro4833bn Midcap issuers listed on Compartment B had slightly highertrading volumes with a peak of euro533bn in March 2020 whilst small cap issuers listed on Compartment C and Euronext Growth have come back to levels slightly higher than January 2020
With respect to inflows and outflows in Europe by asset class last week has seen an overall outflow in all asset classes except for equities Indeed the latter have benefitted from a net inflowamounting to euro787bn an improvement compared to the previous week-end The categories Mixed Assets and Bonds experienced an outflow of euro125bn and euro387bn respectively lower comparedto the previous week-end figures Looking at Euronext markets more specifically monthly figures for March 2020 indicate that Financials Technology and Consumer Discretionary shares areexperiencing the largest outflows In contrast the sectors Healthcare Consumer Staples and Energy have benefitted from a net inflow
EURONEXT BLUE CHIPS PERFORMANCE ndash SIGNIFICANTLY POSITIVE PERFORMANCES WITH A RECOVERING MARKET
EURONEXT TRADING VALUES AND VOLUMES ndash VOLATILITY REMAINS HIGH BUT DECREASED BELOW ONE-MONTH AVERAGE
FUNDS FLOWS IN EUROPE ndash FIRST INFLOWS ON EQUITIES WHILE OUTFLOWS FOR OTHER ASSET CLASSES
MOST RECENT REGULATORY UPDATES ndash DIVIDEND POLICIES AND FINANCIAL REPORTING DEADLINE
Euronext published new guidelines on dividend policy and AGM changes to prevent the impact on derivatives Euronext also adjusted its policy on financial communications on Euronext Growthand Euronext Access following ESMArsquos statement For companies with a fiscal year ending 31 December 2019 the publication on their website must be effective no later than 30 April 2020However the sending of warnings to issuers unable to publish on time will be delayed of two months beyond the normal deadline
3
0
10
20
30
40
50
60
70
80
90
60
70
80
90
100
110
120
123119 12920 22620 32520
VolatilityPrice perfRebased Vstoxx
AEX
Bel20
CAC40
ISEQ
Oslo OBX
PSI20
CAC MidampSmall
AMX
EuroStoxx 600
Source Factset Euronext as of 3 April 2020 The Vstoxx indices are based on Euro Stoxx 50 real-time options prices and are designed to reflect the market expectations of near-term up to long-term volatility by
measuring the square root of the implied variance across all options of a given time to expiration
EQUITY PERFORMANCE IN EUROPE
INDEX EVOLUTION INDEX HISTORICAL PERFORMANCE
Market impact due to COVID-19
OVER PERFORMING INDUSTRIES ON EURONEXT REGULATED MARKETS UNDER PERFORMING INDUSTRIES ON EURONEXT REGULATED MARKETS MARKET YTD
-851 -1011
-1718-2126 -2129
-1498
-700
-1639 -1854 -1770
Utilities Health Care Basic Materials Financials Technology
Average Ytd Performance Average Mtd Performance
-4759
-2892 -2737-2211 -2168
-3718
-2037 -2012-1395 -1452
Oil amp Gas Industrials Consumer Services Telecom Consumer Goods
Average Ytd Performance Average Mtd Performance
Price Perf () 10Y 5Y
Since Feb-20
MTD YTD
AEXcopy 3415 -425 -2002 266 -2202
Bel20copy 658 -2428 -2688 355 -2778
CAC40copy 298 -1812 -2845 175 -3050
ISEQcopy 4744 -2059 -3163 -135 -3339
Oslo OBXcopy 3523 -1149 -2834 -083 -3272
PSI20copy -5146 -3418 -2436 -023 -2381
CAC Mid amp Smallcopy 3751 -1692 -2996 178 -3167
AMXcopy 1196 -1505 -2960 205 -2958
Stoxx600copy 2216 -1728 -1988 588 -2087
4
Major indices constituentsrsquo over and under performers
Source Factset Euronext as of 3 April 2020
EURONEXT BLUE CHIPS PERFORMANCE
INDEX OVER AND UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)ROYAL DUTCH SHELLA
167 -3418 366 1197 108ADYEN 6912 -544 -1030 -1181 109
TAKEAWAY 726 -1170 565 642 058 AEGON 21 -4861 -968 -1053 099
AHOLD DEL 224 065 543 444 108UNIBAIL-RODAMCO-WE 452 -6785 -1230 -783 120
UNILEVER DR 443 -1362 -124 114 096 ING GROEP NV 46 -5677 -338 -746 143
DSM KON 1043 -1016 077 048 071 RANDSTAD NV 289 -4686 -1007 -692 109
AEX
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company Name Last
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
PUBLICIS GROUPE SA
272 -3271 398 1642 122 SAFRAN 630 -5423 -2139 -2580 124
VIVENDI 194 -2486 -064 671 103 AIRBUS 495 -6206 -1657 -1875 160
CARREFOUR 151 094 468 619 075SOCIETE GENERALE
128 -5873 -1660 -1708 134
AIR LIQUIDE 1152 -872 -124 231 091 CAPGEMINI 675 -3800 -1231 -1344 078
MICHELIN 779 -2862 -392 183 095 VINCI 638 -3552 -1533 -1255 106
CA
C40
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
SONAE CAPITAL 04 -4356 599 870 171BCOMPORTUGUES
01 -5607 -1307 -1530 158
SEMAPA 80 -4206 258 474 104 NOVABASESGPS 25 -155 -487 -929 120
SONAE 06 -3385 212 442 117 PHAROL 01 -3635 -704 -785 140
GALP ENERGIA-NOM
104 -3047 -034 381 123 IBERSOLSGPS 46 -4250 -336 -631 243
ALTRI SGPS 36 -3581 066 329 067CTT CORREIOS PORT
22 -3072 -324 -316 117O
SLO
OB
X IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
BEL
20 IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company Name Last
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)ORIGIN ENT PLC 24 -3571 1937 2193 070 GLANBIA PLC 77 -2481 -2183 -1836 198DALATA HOTEL GP
26 -4990 445 1781 098 IRISH RES PROP 11 -3283 -1246 -1359 189
APPLEGREEN PLC 24 -5679 1101 1635 393 AIB GROUP PLC 09 -7122 -1252 -1157 114TOTAL PRODUCE PLC
09 -3706 588 651 297BANK OF IRELAND GP
16 -6712 -690 -1049 148
FLUTTER ENTERTAIN
794 -2418 -403 635 154KERRY GROUP PLC
925 -1679 -1212 -1007 125
ISEQ
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
DNO 04 -5825 6558 8054 253 FRONTLINE 73 -3865 -1790 -2354 268
BW OFFSHORE LIMITED
20 -6108 2785 5297 145NORWEGIAN AIR SHUTTLE
07 -7801 -819 -810 083
AKER BP 136 -4613 1701 3341 196 BW LPG 26 -6027 -715 -514 104
TGS-NOPEC GEOPHYSICAL COMPANY
122 -4796 1901 2810 123 NORSK HYDRO 18 -3683 -884 -465 091
SUBSEA 7 50 -4569 1506 2533 125TOMRA SYSTEMS
249 172 -281 -122 073
PSI
20 IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
TELENET GROUP 308 -2312 1224 807 091 ING GROEP NV 46 -5677 -338 -746 143
UMICORE 330 -2389 361 746 063 GBL 674 -2822 -584 -404 098
UCB 801 1298 139 606 085 BPOST 62 -3971 -342 -378 052
AHOLD DEL 224 065 543 444 108 ELIA 928 1732 415 -353 080
COLRUYT 506 895 278 314 124ACKERMANS VHAAREN 1147 -1790 -337 -280 073
5
-
5
10
15
20
25
30
Jan-19 May-19 Sep-19 Jan-20
Traded value in billions EUR
Source Euronext Optiq data (Amsterdam Brussels Dublin Lisbon and Paris) amp Oslo Bors Millennium data for Oslo markets as of 3 April 2020 Figures exclude trading volumes from Oslo markets
EURONEXT TRADING VALUES AND VOLUMES In the past week lower levels of volatility resulted in lower turnover
TRADED VALUE 2019 FY TO 2020 YTD
TRADED VALUE RECENT EVOLUTION BY EURONEXT LOCATION
28-Feb 241bn
9-Mar 236bn 20-Mar 247bn
2019 average78bn
TRADED VALUE ACROSS EURONEXT MARKETS
PeriodComp C and Euronext
Growth (eurobn)Comp B (eurobn) Comp A (eurobn)
Week 14 052 067 4360
Week 13 038 087 5512
Mar-20 164 533 31118
Feb-20 194 397 19844
Jan-20 128 300 15348
Q1 2020 460 1199 64495
Q1 2019 237 748 42371
TRADED VALUE ACROSS EURONEXT MARKETS
- 20 40 60 80
100 120
Week1
2020
Week2
2020
Week3
2020
Week4
2020
Week5
2020
Week6
2020
Week7
2020
Week8
2020
Week9
2020
Week10
2020
Week11
2020
Week12
2020
Week13
2020
Week14
2020
Traded value in billions EURParis
Oslo
Lisbon
Dublin
Brussels
Amsterdam
-
5
10
15
20
25
2019-01-02
2019-05-13
2019-09-16
2020-01-23
Traded Value in billions EUR
Compartment A
-
100
200
300
400
500
600
2019-01-02
2019-05-13
2019-09-16
2020-01-23
Traded Value in millions EUR
Euronext Growth Compartment C Compartment B
-
5
10
15
20
25
30
2-Jan 1-Feb 2-Mar 1-Apr
Traded value in billions EUR
6
21
21
4
1
5
3
10
J A N F E B M A R
Paris
Olso
Lisbon
Dublin
Amsterdam
12
3
14
Source Euronext as of 3 April 2020 Corporate bond issuances 2020 YTD excluding listings from financial and public issuers
DCM ACTIVITY ON EURONEXT MARKETS
EXAMPLES OF CORPORATE BONDS ISSUANCES 2020 YTD NUMBER OF CORPORATE BONDS ISSUANCES BY EURONEXT LOCATION
Issuer NameDate of
IssuanceMarket Location
Amount Issued (eurom)
SALVADOR CAETANO AUTO SGPS SA 310320 Euronext Access Lisbon 25
NORGES GRUPPEN ASA 300320 Oslo Bors Oslo 29
ENGIE 270320 Euronext Paris 1000
MMB SCF 250320 Euronext Paris 120
UNILEVER NV 250320 Euronext Amsterdam 1000
DANONE 170320 Euronext Paris 800
SCHNEIDER ELECTRIC SE 110320 Euronext Paris 800
KORIAN 100320 Euronext Access Paris 400
TEREGA SAS 270220 Euronext Paris 400
CRH-CSE DE REFINANCT HABITAT 070220 Euronext Paris 1250
THALES 290120 Euronext Paris 500
NEOPOST SA 230120 Euronext Paris 325
TURKIYE IS BANKASI AS 22012020 Euronext Dublin 679
SFL CORPORATION LTD 21012020 Oslo Bors Oslo 59
ARKEMA 210120 Euronext Paris 300
AIR FRANCE KLM 160120 Euronext Paris 750
MOTA-ENGIL SGPS SA 150120 Euronext Access Lisbon 50
SECIL-COMPANHIA GERAL DE CAL E CIMENTO SA
150120 Euronext Access Lisbon 60
Euronext fixed-income listing activity
Jan-20 Feb-20 Mar-20
Oslo
7 Source Thomson Reuters Lipper with 1-month figures until 31 March 2020 and 1-week figures until 1 April 2020 Includes Mutual Funds and ETFs All equities listed on Euronext markets including Oslo equities
FUNDS FLOWS IN EUROPE
INFLOWS AND OUTFLOWS EVOLUTION IN EU-27 ZONE BY ASSET CLASS FLOWS ON EURONEXT EQUITIES BY INDUSTRIES
Inflows and outflows on European equities
Asset Class Flows 1Y (eurobn) Flows 1M (eurobn) Flows 1W (eurobn)
Bond 26007 -13531 -387
Money Market 5094 -10975 -7724
Other -2034 -1792 -266
Mixed Assets -3737 -3691 -125
Equity -7794 -5121 787
Funds Flows in billions EUR
-20000 -15000 -10000 -5000 000 5000 10000 15000 20000 25000 30000
Flows 1Y(in euroB)
Flows 1M(in euroB)
Flows 1W(in euroB)
Equity Mixed Assets Other Money Market Bond
-15
-10
-05
00
05
10
15
12M YTD 1M
8
Does Euronext intend or do the regulators intend to extend the deadline for publishingaccounts (Growth and Access)In accordance with Chapter 4 of the Euronext Growth Market Rules companies admitted onAccess (Paris Brussels Lisbon) and Growth (Paris and Lisbon) are required to publish anannual report including audited annual financial statements and consolidated financialstatements if applicable and an annual management report This publication must be madewithin four months of the end of your financial year
For companies with a fiscal year ending 31 December 2019 the publication (on the companywebsite) must be effective no later than 30 April 2020
Euronext will monitor the communications made (publication of financial statements orannouncement of postponement) after the 30 April 2020 deadline As part of its controlsEuronext will follow the recommendations of ESMA and the national regulators (eg FSMAAMF) the reminder to non-compliant issuers will be postponed for a period of two monthsbeyond the deadline for annual financial reports for a financial year ending between 31December and 31 March
What if my company is unable to publish its annual financial accounts by end of April due toCOVID-19In the current exceptional circumstances and in anticipation of the difficulties encountered bysome companies issuers that are unable to publish their financial reports within the deadlinesmust notify Euronext (for Euronext Access and Euronext Growth) or the competent regulator(for the regulated markets and Euronext Growth Brussels) and inform the market (in advance)by indicating the reasons for the delay and an expected publication date
FINANCIAL REPORTING
CORPORATE ACTIONS AND FINANCIAL REPORTINGEuronext is committed to ensure business continuity
During the confinement period will Euronext be able to manage corporate eventsEuronextrsquos teams are fully mobilised to ensure the continuity of market activities under thebest possible conditions Most of Euronextrsquos teams are working remotely whilst operating afully functional infrastructure Currently all corporate events are proceeding normally
What if my company has already announced a cash distribution and needs to cancel itFor any corporate event (creation update cancellation) please contact Euronexts CorporateActions Department (corporateactionsfreuronextcom) and your main contact at Euronextas soon as possible and no later than two trading days prior to the corporate event
A cash distribution has already been announced but I need to move the payment date to alater date What is the procedureThe payment date is not covered by Euronextrsquos rules As a market operator Euronext does notplay any particular role but has to be informed and inform the market no later than twotrading days prior to the event You can contact your paying agent and CSD that will assist youon this matter
Does Euronext have in place a plan or strategy for pandemic planning and has it beenreviewed in the context of COVID-19Yes Euronext has a pandemic plan in place The pandemic plan and business continuity planshave been leveraged with respect to COVID-19 Reinforced actions include daily monitoring ofgovernment guidance to enable agile decision-making Euronextrsquos federal and decentralisedmodel supports the arrangements put in place and avoids high concentration of any of itscritical departments to preempt as much as possible risks in any one of its locations
CORPORATE ACTIONS
More information can be found at the following link wwweuronextcomenfor-investorsmarket-qualityresilience-during-volatility ESMA published a statement on publication deadlines on 27 March 2020 httpswwwesmaeuropaeusitesdefaultfileslibraryesma31-67-742_public_statement_on_publication_deadlines_under_the_tdpdf
9
DIVIDEND POLICIES AND EQUITY DERIVATIVES (16)Understand the impact of dividends on derivatives
How the postponement of AGMs and dividend policies can impact the pricing of yourderivativesDerivatives classes may have been introduced on your companyrsquos shares A derivative listingon Euronext involves a number of benefits including but not limited to enhancing interestand liquidity in a companyrsquos share and as various studies have shown a possible stabilisingeffect on the underlying share price during the day
In the unprecedented context brought on by COVID-19 several European national competentauthorities are considering exceptional measures such as allowing the postponement ofAGMs for issuers or reviewing public funding in light of dividend policies These measures canimpact your dividend policy and subsequently the pricing of your derivatives You can readthe best practices to maximise the smooth pricing of derivatives onhttpsconnecteuronextcomensupportderivatives-markets
To protect investors it is important that you avoid announcing any high impact corporateactions with price-sensitive consequences on or just before an expiry Friday Nor it ispreferable to change a dividend date so that it moves from before a certain expiry Friday toafter that expiry Friday This has an immediate impact on the pricing of the derivativesbecause dividends are an important part of the formation of option prices The price of aderivative (options and futures) is based on the following
bull Underlying share pricebull Volatilitybull Interest ratebull Dividendbull Lifetime of the contract
What are the expiry dates for options in 2020Options expire several times a year The standard expiry date is the third Friday of the expirymonth (calendar month) unless the third Friday is a public holiday and the exchange is closedin which case it is the third Thursday List of all upcoming expiry dates for year 2020
April 17042020 May 15052020 June 19062020July 17072020
August 21082020 September 18092020
October 16102020 November 20112020 December 18122020
Ordinary of extraordinary Wording mattersIt is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinaryif in current environmentbull Its payment is postponed later in 2020bull It is reducedbull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
EXPIRY DATES AND EXTRAORDINARY DIVIDENDSKEY TAKEAWAYS ON DIVIDEND POLICIES
10
How is the price of an option calculated
Market Makers are the lubricant of our options markets they have agreed to a contract tocontinuous put prices into the market at which others may trade with them in this wayproviding liquidity to our markets When doing so Market Makers (MMs) generally do not dothis based on a directional view of the market but based on a risk neutral pricing model
In other words the Market Maker calculates the prices of the options based on a pricing model(for Equity Options that would normally be the Cox Ross amp Rubinstein model or a variant thereof) A number of parameters are used to calculate option prices in such models including
Current price of the underlying shares
Current interest rates
Expected volatility during the lifetime of the option
Expected dividend payments during the lifetime of the option
In this document we concentrate on the impact of the last one the expected dividends
Why are dividends important for the price of an option
If a share pays out a dividend the share price will at that point in time drop by the dividendamount The date on which the share trades ex-dividend is the crucial moment there If a sharetrades at euro70 on a certain day (day 1) and the next day (day 2) the share trades ex-dividend withthe dividend amount being euro150 the model assumes the share price on the ex-dividend datewill be euro6850 Reasoning behind this if I can buy a share at euro70 on day 1 on day 2 I will receiveeuro150 dividend so effectively my share will be worth only euro6850 on day 2
So the pricing model anticipates a theoretical drop in the share price on the ex-dividend dateequal to the dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (26)
HOW DO YOU PRICE AN OPTION
What is the impact on option holders around dividend
Dividends are paid to shareholders not to option holders
What happens to the option when a dividend is paid on the underlying shares
The answer is not necessarily the same for all options but letrsquos look at a put option first If thereis an option like this one the right to sell the underlying shares at euro75 (eg an August 75 Putoption) And the example is the same as above According to the pricing model there will be adrop in the share price on the ex-date of euro150 and if the share price was euro70 before the ex-date it will (theoretically) be euro6850 on the ex-date The option which gives the holder the rightto sell the shares at euro75 has now become more valuable if I have the right to sell the shares ateuro75 with the share price at euro6850 the option has an intrinsic value of euro650 (75 ndash 6850) whereit had an intrinsic value of euro500 the day before (75 ndash 70)
So for put options there is a pricing effect around dividends
time
shar
e pr
ice
Dividend
Understand the impact of dividends on derivatives
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
3
0
10
20
30
40
50
60
70
80
90
60
70
80
90
100
110
120
123119 12920 22620 32520
VolatilityPrice perfRebased Vstoxx
AEX
Bel20
CAC40
ISEQ
Oslo OBX
PSI20
CAC MidampSmall
AMX
EuroStoxx 600
Source Factset Euronext as of 3 April 2020 The Vstoxx indices are based on Euro Stoxx 50 real-time options prices and are designed to reflect the market expectations of near-term up to long-term volatility by
measuring the square root of the implied variance across all options of a given time to expiration
EQUITY PERFORMANCE IN EUROPE
INDEX EVOLUTION INDEX HISTORICAL PERFORMANCE
Market impact due to COVID-19
OVER PERFORMING INDUSTRIES ON EURONEXT REGULATED MARKETS UNDER PERFORMING INDUSTRIES ON EURONEXT REGULATED MARKETS MARKET YTD
-851 -1011
-1718-2126 -2129
-1498
-700
-1639 -1854 -1770
Utilities Health Care Basic Materials Financials Technology
Average Ytd Performance Average Mtd Performance
-4759
-2892 -2737-2211 -2168
-3718
-2037 -2012-1395 -1452
Oil amp Gas Industrials Consumer Services Telecom Consumer Goods
Average Ytd Performance Average Mtd Performance
Price Perf () 10Y 5Y
Since Feb-20
MTD YTD
AEXcopy 3415 -425 -2002 266 -2202
Bel20copy 658 -2428 -2688 355 -2778
CAC40copy 298 -1812 -2845 175 -3050
ISEQcopy 4744 -2059 -3163 -135 -3339
Oslo OBXcopy 3523 -1149 -2834 -083 -3272
PSI20copy -5146 -3418 -2436 -023 -2381
CAC Mid amp Smallcopy 3751 -1692 -2996 178 -3167
AMXcopy 1196 -1505 -2960 205 -2958
Stoxx600copy 2216 -1728 -1988 588 -2087
4
Major indices constituentsrsquo over and under performers
Source Factset Euronext as of 3 April 2020
EURONEXT BLUE CHIPS PERFORMANCE
INDEX OVER AND UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)ROYAL DUTCH SHELLA
167 -3418 366 1197 108ADYEN 6912 -544 -1030 -1181 109
TAKEAWAY 726 -1170 565 642 058 AEGON 21 -4861 -968 -1053 099
AHOLD DEL 224 065 543 444 108UNIBAIL-RODAMCO-WE 452 -6785 -1230 -783 120
UNILEVER DR 443 -1362 -124 114 096 ING GROEP NV 46 -5677 -338 -746 143
DSM KON 1043 -1016 077 048 071 RANDSTAD NV 289 -4686 -1007 -692 109
AEX
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company Name Last
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
PUBLICIS GROUPE SA
272 -3271 398 1642 122 SAFRAN 630 -5423 -2139 -2580 124
VIVENDI 194 -2486 -064 671 103 AIRBUS 495 -6206 -1657 -1875 160
CARREFOUR 151 094 468 619 075SOCIETE GENERALE
128 -5873 -1660 -1708 134
AIR LIQUIDE 1152 -872 -124 231 091 CAPGEMINI 675 -3800 -1231 -1344 078
MICHELIN 779 -2862 -392 183 095 VINCI 638 -3552 -1533 -1255 106
CA
C40
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
SONAE CAPITAL 04 -4356 599 870 171BCOMPORTUGUES
01 -5607 -1307 -1530 158
SEMAPA 80 -4206 258 474 104 NOVABASESGPS 25 -155 -487 -929 120
SONAE 06 -3385 212 442 117 PHAROL 01 -3635 -704 -785 140
GALP ENERGIA-NOM
104 -3047 -034 381 123 IBERSOLSGPS 46 -4250 -336 -631 243
ALTRI SGPS 36 -3581 066 329 067CTT CORREIOS PORT
22 -3072 -324 -316 117O
SLO
OB
X IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
BEL
20 IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company Name Last
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)ORIGIN ENT PLC 24 -3571 1937 2193 070 GLANBIA PLC 77 -2481 -2183 -1836 198DALATA HOTEL GP
26 -4990 445 1781 098 IRISH RES PROP 11 -3283 -1246 -1359 189
APPLEGREEN PLC 24 -5679 1101 1635 393 AIB GROUP PLC 09 -7122 -1252 -1157 114TOTAL PRODUCE PLC
09 -3706 588 651 297BANK OF IRELAND GP
16 -6712 -690 -1049 148
FLUTTER ENTERTAIN
794 -2418 -403 635 154KERRY GROUP PLC
925 -1679 -1212 -1007 125
ISEQ
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
DNO 04 -5825 6558 8054 253 FRONTLINE 73 -3865 -1790 -2354 268
BW OFFSHORE LIMITED
20 -6108 2785 5297 145NORWEGIAN AIR SHUTTLE
07 -7801 -819 -810 083
AKER BP 136 -4613 1701 3341 196 BW LPG 26 -6027 -715 -514 104
TGS-NOPEC GEOPHYSICAL COMPANY
122 -4796 1901 2810 123 NORSK HYDRO 18 -3683 -884 -465 091
SUBSEA 7 50 -4569 1506 2533 125TOMRA SYSTEMS
249 172 -281 -122 073
PSI
20 IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
TELENET GROUP 308 -2312 1224 807 091 ING GROEP NV 46 -5677 -338 -746 143
UMICORE 330 -2389 361 746 063 GBL 674 -2822 -584 -404 098
UCB 801 1298 139 606 085 BPOST 62 -3971 -342 -378 052
AHOLD DEL 224 065 543 444 108 ELIA 928 1732 415 -353 080
COLRUYT 506 895 278 314 124ACKERMANS VHAAREN 1147 -1790 -337 -280 073
5
-
5
10
15
20
25
30
Jan-19 May-19 Sep-19 Jan-20
Traded value in billions EUR
Source Euronext Optiq data (Amsterdam Brussels Dublin Lisbon and Paris) amp Oslo Bors Millennium data for Oslo markets as of 3 April 2020 Figures exclude trading volumes from Oslo markets
EURONEXT TRADING VALUES AND VOLUMES In the past week lower levels of volatility resulted in lower turnover
TRADED VALUE 2019 FY TO 2020 YTD
TRADED VALUE RECENT EVOLUTION BY EURONEXT LOCATION
28-Feb 241bn
9-Mar 236bn 20-Mar 247bn
2019 average78bn
TRADED VALUE ACROSS EURONEXT MARKETS
PeriodComp C and Euronext
Growth (eurobn)Comp B (eurobn) Comp A (eurobn)
Week 14 052 067 4360
Week 13 038 087 5512
Mar-20 164 533 31118
Feb-20 194 397 19844
Jan-20 128 300 15348
Q1 2020 460 1199 64495
Q1 2019 237 748 42371
TRADED VALUE ACROSS EURONEXT MARKETS
- 20 40 60 80
100 120
Week1
2020
Week2
2020
Week3
2020
Week4
2020
Week5
2020
Week6
2020
Week7
2020
Week8
2020
Week9
2020
Week10
2020
Week11
2020
Week12
2020
Week13
2020
Week14
2020
Traded value in billions EURParis
Oslo
Lisbon
Dublin
Brussels
Amsterdam
-
5
10
15
20
25
2019-01-02
2019-05-13
2019-09-16
2020-01-23
Traded Value in billions EUR
Compartment A
-
100
200
300
400
500
600
2019-01-02
2019-05-13
2019-09-16
2020-01-23
Traded Value in millions EUR
Euronext Growth Compartment C Compartment B
-
5
10
15
20
25
30
2-Jan 1-Feb 2-Mar 1-Apr
Traded value in billions EUR
6
21
21
4
1
5
3
10
J A N F E B M A R
Paris
Olso
Lisbon
Dublin
Amsterdam
12
3
14
Source Euronext as of 3 April 2020 Corporate bond issuances 2020 YTD excluding listings from financial and public issuers
DCM ACTIVITY ON EURONEXT MARKETS
EXAMPLES OF CORPORATE BONDS ISSUANCES 2020 YTD NUMBER OF CORPORATE BONDS ISSUANCES BY EURONEXT LOCATION
Issuer NameDate of
IssuanceMarket Location
Amount Issued (eurom)
SALVADOR CAETANO AUTO SGPS SA 310320 Euronext Access Lisbon 25
NORGES GRUPPEN ASA 300320 Oslo Bors Oslo 29
ENGIE 270320 Euronext Paris 1000
MMB SCF 250320 Euronext Paris 120
UNILEVER NV 250320 Euronext Amsterdam 1000
DANONE 170320 Euronext Paris 800
SCHNEIDER ELECTRIC SE 110320 Euronext Paris 800
KORIAN 100320 Euronext Access Paris 400
TEREGA SAS 270220 Euronext Paris 400
CRH-CSE DE REFINANCT HABITAT 070220 Euronext Paris 1250
THALES 290120 Euronext Paris 500
NEOPOST SA 230120 Euronext Paris 325
TURKIYE IS BANKASI AS 22012020 Euronext Dublin 679
SFL CORPORATION LTD 21012020 Oslo Bors Oslo 59
ARKEMA 210120 Euronext Paris 300
AIR FRANCE KLM 160120 Euronext Paris 750
MOTA-ENGIL SGPS SA 150120 Euronext Access Lisbon 50
SECIL-COMPANHIA GERAL DE CAL E CIMENTO SA
150120 Euronext Access Lisbon 60
Euronext fixed-income listing activity
Jan-20 Feb-20 Mar-20
Oslo
7 Source Thomson Reuters Lipper with 1-month figures until 31 March 2020 and 1-week figures until 1 April 2020 Includes Mutual Funds and ETFs All equities listed on Euronext markets including Oslo equities
FUNDS FLOWS IN EUROPE
INFLOWS AND OUTFLOWS EVOLUTION IN EU-27 ZONE BY ASSET CLASS FLOWS ON EURONEXT EQUITIES BY INDUSTRIES
Inflows and outflows on European equities
Asset Class Flows 1Y (eurobn) Flows 1M (eurobn) Flows 1W (eurobn)
Bond 26007 -13531 -387
Money Market 5094 -10975 -7724
Other -2034 -1792 -266
Mixed Assets -3737 -3691 -125
Equity -7794 -5121 787
Funds Flows in billions EUR
-20000 -15000 -10000 -5000 000 5000 10000 15000 20000 25000 30000
Flows 1Y(in euroB)
Flows 1M(in euroB)
Flows 1W(in euroB)
Equity Mixed Assets Other Money Market Bond
-15
-10
-05
00
05
10
15
12M YTD 1M
8
Does Euronext intend or do the regulators intend to extend the deadline for publishingaccounts (Growth and Access)In accordance with Chapter 4 of the Euronext Growth Market Rules companies admitted onAccess (Paris Brussels Lisbon) and Growth (Paris and Lisbon) are required to publish anannual report including audited annual financial statements and consolidated financialstatements if applicable and an annual management report This publication must be madewithin four months of the end of your financial year
For companies with a fiscal year ending 31 December 2019 the publication (on the companywebsite) must be effective no later than 30 April 2020
Euronext will monitor the communications made (publication of financial statements orannouncement of postponement) after the 30 April 2020 deadline As part of its controlsEuronext will follow the recommendations of ESMA and the national regulators (eg FSMAAMF) the reminder to non-compliant issuers will be postponed for a period of two monthsbeyond the deadline for annual financial reports for a financial year ending between 31December and 31 March
What if my company is unable to publish its annual financial accounts by end of April due toCOVID-19In the current exceptional circumstances and in anticipation of the difficulties encountered bysome companies issuers that are unable to publish their financial reports within the deadlinesmust notify Euronext (for Euronext Access and Euronext Growth) or the competent regulator(for the regulated markets and Euronext Growth Brussels) and inform the market (in advance)by indicating the reasons for the delay and an expected publication date
FINANCIAL REPORTING
CORPORATE ACTIONS AND FINANCIAL REPORTINGEuronext is committed to ensure business continuity
During the confinement period will Euronext be able to manage corporate eventsEuronextrsquos teams are fully mobilised to ensure the continuity of market activities under thebest possible conditions Most of Euronextrsquos teams are working remotely whilst operating afully functional infrastructure Currently all corporate events are proceeding normally
What if my company has already announced a cash distribution and needs to cancel itFor any corporate event (creation update cancellation) please contact Euronexts CorporateActions Department (corporateactionsfreuronextcom) and your main contact at Euronextas soon as possible and no later than two trading days prior to the corporate event
A cash distribution has already been announced but I need to move the payment date to alater date What is the procedureThe payment date is not covered by Euronextrsquos rules As a market operator Euronext does notplay any particular role but has to be informed and inform the market no later than twotrading days prior to the event You can contact your paying agent and CSD that will assist youon this matter
Does Euronext have in place a plan or strategy for pandemic planning and has it beenreviewed in the context of COVID-19Yes Euronext has a pandemic plan in place The pandemic plan and business continuity planshave been leveraged with respect to COVID-19 Reinforced actions include daily monitoring ofgovernment guidance to enable agile decision-making Euronextrsquos federal and decentralisedmodel supports the arrangements put in place and avoids high concentration of any of itscritical departments to preempt as much as possible risks in any one of its locations
CORPORATE ACTIONS
More information can be found at the following link wwweuronextcomenfor-investorsmarket-qualityresilience-during-volatility ESMA published a statement on publication deadlines on 27 March 2020 httpswwwesmaeuropaeusitesdefaultfileslibraryesma31-67-742_public_statement_on_publication_deadlines_under_the_tdpdf
9
DIVIDEND POLICIES AND EQUITY DERIVATIVES (16)Understand the impact of dividends on derivatives
How the postponement of AGMs and dividend policies can impact the pricing of yourderivativesDerivatives classes may have been introduced on your companyrsquos shares A derivative listingon Euronext involves a number of benefits including but not limited to enhancing interestand liquidity in a companyrsquos share and as various studies have shown a possible stabilisingeffect on the underlying share price during the day
In the unprecedented context brought on by COVID-19 several European national competentauthorities are considering exceptional measures such as allowing the postponement ofAGMs for issuers or reviewing public funding in light of dividend policies These measures canimpact your dividend policy and subsequently the pricing of your derivatives You can readthe best practices to maximise the smooth pricing of derivatives onhttpsconnecteuronextcomensupportderivatives-markets
To protect investors it is important that you avoid announcing any high impact corporateactions with price-sensitive consequences on or just before an expiry Friday Nor it ispreferable to change a dividend date so that it moves from before a certain expiry Friday toafter that expiry Friday This has an immediate impact on the pricing of the derivativesbecause dividends are an important part of the formation of option prices The price of aderivative (options and futures) is based on the following
bull Underlying share pricebull Volatilitybull Interest ratebull Dividendbull Lifetime of the contract
What are the expiry dates for options in 2020Options expire several times a year The standard expiry date is the third Friday of the expirymonth (calendar month) unless the third Friday is a public holiday and the exchange is closedin which case it is the third Thursday List of all upcoming expiry dates for year 2020
April 17042020 May 15052020 June 19062020July 17072020
August 21082020 September 18092020
October 16102020 November 20112020 December 18122020
Ordinary of extraordinary Wording mattersIt is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinaryif in current environmentbull Its payment is postponed later in 2020bull It is reducedbull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
EXPIRY DATES AND EXTRAORDINARY DIVIDENDSKEY TAKEAWAYS ON DIVIDEND POLICIES
10
How is the price of an option calculated
Market Makers are the lubricant of our options markets they have agreed to a contract tocontinuous put prices into the market at which others may trade with them in this wayproviding liquidity to our markets When doing so Market Makers (MMs) generally do not dothis based on a directional view of the market but based on a risk neutral pricing model
In other words the Market Maker calculates the prices of the options based on a pricing model(for Equity Options that would normally be the Cox Ross amp Rubinstein model or a variant thereof) A number of parameters are used to calculate option prices in such models including
Current price of the underlying shares
Current interest rates
Expected volatility during the lifetime of the option
Expected dividend payments during the lifetime of the option
In this document we concentrate on the impact of the last one the expected dividends
Why are dividends important for the price of an option
If a share pays out a dividend the share price will at that point in time drop by the dividendamount The date on which the share trades ex-dividend is the crucial moment there If a sharetrades at euro70 on a certain day (day 1) and the next day (day 2) the share trades ex-dividend withthe dividend amount being euro150 the model assumes the share price on the ex-dividend datewill be euro6850 Reasoning behind this if I can buy a share at euro70 on day 1 on day 2 I will receiveeuro150 dividend so effectively my share will be worth only euro6850 on day 2
So the pricing model anticipates a theoretical drop in the share price on the ex-dividend dateequal to the dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (26)
HOW DO YOU PRICE AN OPTION
What is the impact on option holders around dividend
Dividends are paid to shareholders not to option holders
What happens to the option when a dividend is paid on the underlying shares
The answer is not necessarily the same for all options but letrsquos look at a put option first If thereis an option like this one the right to sell the underlying shares at euro75 (eg an August 75 Putoption) And the example is the same as above According to the pricing model there will be adrop in the share price on the ex-date of euro150 and if the share price was euro70 before the ex-date it will (theoretically) be euro6850 on the ex-date The option which gives the holder the rightto sell the shares at euro75 has now become more valuable if I have the right to sell the shares ateuro75 with the share price at euro6850 the option has an intrinsic value of euro650 (75 ndash 6850) whereit had an intrinsic value of euro500 the day before (75 ndash 70)
So for put options there is a pricing effect around dividends
time
shar
e pr
ice
Dividend
Understand the impact of dividends on derivatives
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
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COMPLIANCE
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ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
4
Major indices constituentsrsquo over and under performers
Source Factset Euronext as of 3 April 2020
EURONEXT BLUE CHIPS PERFORMANCE
INDEX OVER AND UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)ROYAL DUTCH SHELLA
167 -3418 366 1197 108ADYEN 6912 -544 -1030 -1181 109
TAKEAWAY 726 -1170 565 642 058 AEGON 21 -4861 -968 -1053 099
AHOLD DEL 224 065 543 444 108UNIBAIL-RODAMCO-WE 452 -6785 -1230 -783 120
UNILEVER DR 443 -1362 -124 114 096 ING GROEP NV 46 -5677 -338 -746 143
DSM KON 1043 -1016 077 048 071 RANDSTAD NV 289 -4686 -1007 -692 109
AEX
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company Name Last
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
PUBLICIS GROUPE SA
272 -3271 398 1642 122 SAFRAN 630 -5423 -2139 -2580 124
VIVENDI 194 -2486 -064 671 103 AIRBUS 495 -6206 -1657 -1875 160
CARREFOUR 151 094 468 619 075SOCIETE GENERALE
128 -5873 -1660 -1708 134
AIR LIQUIDE 1152 -872 -124 231 091 CAPGEMINI 675 -3800 -1231 -1344 078
MICHELIN 779 -2862 -392 183 095 VINCI 638 -3552 -1533 -1255 106
CA
C40
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
SONAE CAPITAL 04 -4356 599 870 171BCOMPORTUGUES
01 -5607 -1307 -1530 158
SEMAPA 80 -4206 258 474 104 NOVABASESGPS 25 -155 -487 -929 120
SONAE 06 -3385 212 442 117 PHAROL 01 -3635 -704 -785 140
GALP ENERGIA-NOM
104 -3047 -034 381 123 IBERSOLSGPS 46 -4250 -336 -631 243
ALTRI SGPS 36 -3581 066 329 067CTT CORREIOS PORT
22 -3072 -324 -316 117O
SLO
OB
X IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
BEL
20 IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company Name Last
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)ORIGIN ENT PLC 24 -3571 1937 2193 070 GLANBIA PLC 77 -2481 -2183 -1836 198DALATA HOTEL GP
26 -4990 445 1781 098 IRISH RES PROP 11 -3283 -1246 -1359 189
APPLEGREEN PLC 24 -5679 1101 1635 393 AIB GROUP PLC 09 -7122 -1252 -1157 114TOTAL PRODUCE PLC
09 -3706 588 651 297BANK OF IRELAND GP
16 -6712 -690 -1049 148
FLUTTER ENTERTAIN
794 -2418 -403 635 154KERRY GROUP PLC
925 -1679 -1212 -1007 125
ISEQ
IND
EX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
DNO 04 -5825 6558 8054 253 FRONTLINE 73 -3865 -1790 -2354 268
BW OFFSHORE LIMITED
20 -6108 2785 5297 145NORWEGIAN AIR SHUTTLE
07 -7801 -819 -810 083
AKER BP 136 -4613 1701 3341 196 BW LPG 26 -6027 -715 -514 104
TGS-NOPEC GEOPHYSICAL COMPANY
122 -4796 1901 2810 123 NORSK HYDRO 18 -3683 -884 -465 091
SUBSEA 7 50 -4569 1506 2533 125TOMRA SYSTEMS
249 172 -281 -122 073
PSI
20 IN
DEX
WEEKLY OVER PERFORMERS WEEKLY UNDER PERFORMERS
Company NameLast
Price euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)Company Name
Last Price
euro
YTD Perf
MTD Perf
WTD Perf
Volume 1W 3M
Average (x)
TELENET GROUP 308 -2312 1224 807 091 ING GROEP NV 46 -5677 -338 -746 143
UMICORE 330 -2389 361 746 063 GBL 674 -2822 -584 -404 098
UCB 801 1298 139 606 085 BPOST 62 -3971 -342 -378 052
AHOLD DEL 224 065 543 444 108 ELIA 928 1732 415 -353 080
COLRUYT 506 895 278 314 124ACKERMANS VHAAREN 1147 -1790 -337 -280 073
5
-
5
10
15
20
25
30
Jan-19 May-19 Sep-19 Jan-20
Traded value in billions EUR
Source Euronext Optiq data (Amsterdam Brussels Dublin Lisbon and Paris) amp Oslo Bors Millennium data for Oslo markets as of 3 April 2020 Figures exclude trading volumes from Oslo markets
EURONEXT TRADING VALUES AND VOLUMES In the past week lower levels of volatility resulted in lower turnover
TRADED VALUE 2019 FY TO 2020 YTD
TRADED VALUE RECENT EVOLUTION BY EURONEXT LOCATION
28-Feb 241bn
9-Mar 236bn 20-Mar 247bn
2019 average78bn
TRADED VALUE ACROSS EURONEXT MARKETS
PeriodComp C and Euronext
Growth (eurobn)Comp B (eurobn) Comp A (eurobn)
Week 14 052 067 4360
Week 13 038 087 5512
Mar-20 164 533 31118
Feb-20 194 397 19844
Jan-20 128 300 15348
Q1 2020 460 1199 64495
Q1 2019 237 748 42371
TRADED VALUE ACROSS EURONEXT MARKETS
- 20 40 60 80
100 120
Week1
2020
Week2
2020
Week3
2020
Week4
2020
Week5
2020
Week6
2020
Week7
2020
Week8
2020
Week9
2020
Week10
2020
Week11
2020
Week12
2020
Week13
2020
Week14
2020
Traded value in billions EURParis
Oslo
Lisbon
Dublin
Brussels
Amsterdam
-
5
10
15
20
25
2019-01-02
2019-05-13
2019-09-16
2020-01-23
Traded Value in billions EUR
Compartment A
-
100
200
300
400
500
600
2019-01-02
2019-05-13
2019-09-16
2020-01-23
Traded Value in millions EUR
Euronext Growth Compartment C Compartment B
-
5
10
15
20
25
30
2-Jan 1-Feb 2-Mar 1-Apr
Traded value in billions EUR
6
21
21
4
1
5
3
10
J A N F E B M A R
Paris
Olso
Lisbon
Dublin
Amsterdam
12
3
14
Source Euronext as of 3 April 2020 Corporate bond issuances 2020 YTD excluding listings from financial and public issuers
DCM ACTIVITY ON EURONEXT MARKETS
EXAMPLES OF CORPORATE BONDS ISSUANCES 2020 YTD NUMBER OF CORPORATE BONDS ISSUANCES BY EURONEXT LOCATION
Issuer NameDate of
IssuanceMarket Location
Amount Issued (eurom)
SALVADOR CAETANO AUTO SGPS SA 310320 Euronext Access Lisbon 25
NORGES GRUPPEN ASA 300320 Oslo Bors Oslo 29
ENGIE 270320 Euronext Paris 1000
MMB SCF 250320 Euronext Paris 120
UNILEVER NV 250320 Euronext Amsterdam 1000
DANONE 170320 Euronext Paris 800
SCHNEIDER ELECTRIC SE 110320 Euronext Paris 800
KORIAN 100320 Euronext Access Paris 400
TEREGA SAS 270220 Euronext Paris 400
CRH-CSE DE REFINANCT HABITAT 070220 Euronext Paris 1250
THALES 290120 Euronext Paris 500
NEOPOST SA 230120 Euronext Paris 325
TURKIYE IS BANKASI AS 22012020 Euronext Dublin 679
SFL CORPORATION LTD 21012020 Oslo Bors Oslo 59
ARKEMA 210120 Euronext Paris 300
AIR FRANCE KLM 160120 Euronext Paris 750
MOTA-ENGIL SGPS SA 150120 Euronext Access Lisbon 50
SECIL-COMPANHIA GERAL DE CAL E CIMENTO SA
150120 Euronext Access Lisbon 60
Euronext fixed-income listing activity
Jan-20 Feb-20 Mar-20
Oslo
7 Source Thomson Reuters Lipper with 1-month figures until 31 March 2020 and 1-week figures until 1 April 2020 Includes Mutual Funds and ETFs All equities listed on Euronext markets including Oslo equities
FUNDS FLOWS IN EUROPE
INFLOWS AND OUTFLOWS EVOLUTION IN EU-27 ZONE BY ASSET CLASS FLOWS ON EURONEXT EQUITIES BY INDUSTRIES
Inflows and outflows on European equities
Asset Class Flows 1Y (eurobn) Flows 1M (eurobn) Flows 1W (eurobn)
Bond 26007 -13531 -387
Money Market 5094 -10975 -7724
Other -2034 -1792 -266
Mixed Assets -3737 -3691 -125
Equity -7794 -5121 787
Funds Flows in billions EUR
-20000 -15000 -10000 -5000 000 5000 10000 15000 20000 25000 30000
Flows 1Y(in euroB)
Flows 1M(in euroB)
Flows 1W(in euroB)
Equity Mixed Assets Other Money Market Bond
-15
-10
-05
00
05
10
15
12M YTD 1M
8
Does Euronext intend or do the regulators intend to extend the deadline for publishingaccounts (Growth and Access)In accordance with Chapter 4 of the Euronext Growth Market Rules companies admitted onAccess (Paris Brussels Lisbon) and Growth (Paris and Lisbon) are required to publish anannual report including audited annual financial statements and consolidated financialstatements if applicable and an annual management report This publication must be madewithin four months of the end of your financial year
For companies with a fiscal year ending 31 December 2019 the publication (on the companywebsite) must be effective no later than 30 April 2020
Euronext will monitor the communications made (publication of financial statements orannouncement of postponement) after the 30 April 2020 deadline As part of its controlsEuronext will follow the recommendations of ESMA and the national regulators (eg FSMAAMF) the reminder to non-compliant issuers will be postponed for a period of two monthsbeyond the deadline for annual financial reports for a financial year ending between 31December and 31 March
What if my company is unable to publish its annual financial accounts by end of April due toCOVID-19In the current exceptional circumstances and in anticipation of the difficulties encountered bysome companies issuers that are unable to publish their financial reports within the deadlinesmust notify Euronext (for Euronext Access and Euronext Growth) or the competent regulator(for the regulated markets and Euronext Growth Brussels) and inform the market (in advance)by indicating the reasons for the delay and an expected publication date
FINANCIAL REPORTING
CORPORATE ACTIONS AND FINANCIAL REPORTINGEuronext is committed to ensure business continuity
During the confinement period will Euronext be able to manage corporate eventsEuronextrsquos teams are fully mobilised to ensure the continuity of market activities under thebest possible conditions Most of Euronextrsquos teams are working remotely whilst operating afully functional infrastructure Currently all corporate events are proceeding normally
What if my company has already announced a cash distribution and needs to cancel itFor any corporate event (creation update cancellation) please contact Euronexts CorporateActions Department (corporateactionsfreuronextcom) and your main contact at Euronextas soon as possible and no later than two trading days prior to the corporate event
A cash distribution has already been announced but I need to move the payment date to alater date What is the procedureThe payment date is not covered by Euronextrsquos rules As a market operator Euronext does notplay any particular role but has to be informed and inform the market no later than twotrading days prior to the event You can contact your paying agent and CSD that will assist youon this matter
Does Euronext have in place a plan or strategy for pandemic planning and has it beenreviewed in the context of COVID-19Yes Euronext has a pandemic plan in place The pandemic plan and business continuity planshave been leveraged with respect to COVID-19 Reinforced actions include daily monitoring ofgovernment guidance to enable agile decision-making Euronextrsquos federal and decentralisedmodel supports the arrangements put in place and avoids high concentration of any of itscritical departments to preempt as much as possible risks in any one of its locations
CORPORATE ACTIONS
More information can be found at the following link wwweuronextcomenfor-investorsmarket-qualityresilience-during-volatility ESMA published a statement on publication deadlines on 27 March 2020 httpswwwesmaeuropaeusitesdefaultfileslibraryesma31-67-742_public_statement_on_publication_deadlines_under_the_tdpdf
9
DIVIDEND POLICIES AND EQUITY DERIVATIVES (16)Understand the impact of dividends on derivatives
How the postponement of AGMs and dividend policies can impact the pricing of yourderivativesDerivatives classes may have been introduced on your companyrsquos shares A derivative listingon Euronext involves a number of benefits including but not limited to enhancing interestand liquidity in a companyrsquos share and as various studies have shown a possible stabilisingeffect on the underlying share price during the day
In the unprecedented context brought on by COVID-19 several European national competentauthorities are considering exceptional measures such as allowing the postponement ofAGMs for issuers or reviewing public funding in light of dividend policies These measures canimpact your dividend policy and subsequently the pricing of your derivatives You can readthe best practices to maximise the smooth pricing of derivatives onhttpsconnecteuronextcomensupportderivatives-markets
To protect investors it is important that you avoid announcing any high impact corporateactions with price-sensitive consequences on or just before an expiry Friday Nor it ispreferable to change a dividend date so that it moves from before a certain expiry Friday toafter that expiry Friday This has an immediate impact on the pricing of the derivativesbecause dividends are an important part of the formation of option prices The price of aderivative (options and futures) is based on the following
bull Underlying share pricebull Volatilitybull Interest ratebull Dividendbull Lifetime of the contract
What are the expiry dates for options in 2020Options expire several times a year The standard expiry date is the third Friday of the expirymonth (calendar month) unless the third Friday is a public holiday and the exchange is closedin which case it is the third Thursday List of all upcoming expiry dates for year 2020
April 17042020 May 15052020 June 19062020July 17072020
August 21082020 September 18092020
October 16102020 November 20112020 December 18122020
Ordinary of extraordinary Wording mattersIt is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinaryif in current environmentbull Its payment is postponed later in 2020bull It is reducedbull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
EXPIRY DATES AND EXTRAORDINARY DIVIDENDSKEY TAKEAWAYS ON DIVIDEND POLICIES
10
How is the price of an option calculated
Market Makers are the lubricant of our options markets they have agreed to a contract tocontinuous put prices into the market at which others may trade with them in this wayproviding liquidity to our markets When doing so Market Makers (MMs) generally do not dothis based on a directional view of the market but based on a risk neutral pricing model
In other words the Market Maker calculates the prices of the options based on a pricing model(for Equity Options that would normally be the Cox Ross amp Rubinstein model or a variant thereof) A number of parameters are used to calculate option prices in such models including
Current price of the underlying shares
Current interest rates
Expected volatility during the lifetime of the option
Expected dividend payments during the lifetime of the option
In this document we concentrate on the impact of the last one the expected dividends
Why are dividends important for the price of an option
If a share pays out a dividend the share price will at that point in time drop by the dividendamount The date on which the share trades ex-dividend is the crucial moment there If a sharetrades at euro70 on a certain day (day 1) and the next day (day 2) the share trades ex-dividend withthe dividend amount being euro150 the model assumes the share price on the ex-dividend datewill be euro6850 Reasoning behind this if I can buy a share at euro70 on day 1 on day 2 I will receiveeuro150 dividend so effectively my share will be worth only euro6850 on day 2
So the pricing model anticipates a theoretical drop in the share price on the ex-dividend dateequal to the dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (26)
HOW DO YOU PRICE AN OPTION
What is the impact on option holders around dividend
Dividends are paid to shareholders not to option holders
What happens to the option when a dividend is paid on the underlying shares
The answer is not necessarily the same for all options but letrsquos look at a put option first If thereis an option like this one the right to sell the underlying shares at euro75 (eg an August 75 Putoption) And the example is the same as above According to the pricing model there will be adrop in the share price on the ex-date of euro150 and if the share price was euro70 before the ex-date it will (theoretically) be euro6850 on the ex-date The option which gives the holder the rightto sell the shares at euro75 has now become more valuable if I have the right to sell the shares ateuro75 with the share price at euro6850 the option has an intrinsic value of euro650 (75 ndash 6850) whereit had an intrinsic value of euro500 the day before (75 ndash 70)
So for put options there is a pricing effect around dividends
time
shar
e pr
ice
Dividend
Understand the impact of dividends on derivatives
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
5
-
5
10
15
20
25
30
Jan-19 May-19 Sep-19 Jan-20
Traded value in billions EUR
Source Euronext Optiq data (Amsterdam Brussels Dublin Lisbon and Paris) amp Oslo Bors Millennium data for Oslo markets as of 3 April 2020 Figures exclude trading volumes from Oslo markets
EURONEXT TRADING VALUES AND VOLUMES In the past week lower levels of volatility resulted in lower turnover
TRADED VALUE 2019 FY TO 2020 YTD
TRADED VALUE RECENT EVOLUTION BY EURONEXT LOCATION
28-Feb 241bn
9-Mar 236bn 20-Mar 247bn
2019 average78bn
TRADED VALUE ACROSS EURONEXT MARKETS
PeriodComp C and Euronext
Growth (eurobn)Comp B (eurobn) Comp A (eurobn)
Week 14 052 067 4360
Week 13 038 087 5512
Mar-20 164 533 31118
Feb-20 194 397 19844
Jan-20 128 300 15348
Q1 2020 460 1199 64495
Q1 2019 237 748 42371
TRADED VALUE ACROSS EURONEXT MARKETS
- 20 40 60 80
100 120
Week1
2020
Week2
2020
Week3
2020
Week4
2020
Week5
2020
Week6
2020
Week7
2020
Week8
2020
Week9
2020
Week10
2020
Week11
2020
Week12
2020
Week13
2020
Week14
2020
Traded value in billions EURParis
Oslo
Lisbon
Dublin
Brussels
Amsterdam
-
5
10
15
20
25
2019-01-02
2019-05-13
2019-09-16
2020-01-23
Traded Value in billions EUR
Compartment A
-
100
200
300
400
500
600
2019-01-02
2019-05-13
2019-09-16
2020-01-23
Traded Value in millions EUR
Euronext Growth Compartment C Compartment B
-
5
10
15
20
25
30
2-Jan 1-Feb 2-Mar 1-Apr
Traded value in billions EUR
6
21
21
4
1
5
3
10
J A N F E B M A R
Paris
Olso
Lisbon
Dublin
Amsterdam
12
3
14
Source Euronext as of 3 April 2020 Corporate bond issuances 2020 YTD excluding listings from financial and public issuers
DCM ACTIVITY ON EURONEXT MARKETS
EXAMPLES OF CORPORATE BONDS ISSUANCES 2020 YTD NUMBER OF CORPORATE BONDS ISSUANCES BY EURONEXT LOCATION
Issuer NameDate of
IssuanceMarket Location
Amount Issued (eurom)
SALVADOR CAETANO AUTO SGPS SA 310320 Euronext Access Lisbon 25
NORGES GRUPPEN ASA 300320 Oslo Bors Oslo 29
ENGIE 270320 Euronext Paris 1000
MMB SCF 250320 Euronext Paris 120
UNILEVER NV 250320 Euronext Amsterdam 1000
DANONE 170320 Euronext Paris 800
SCHNEIDER ELECTRIC SE 110320 Euronext Paris 800
KORIAN 100320 Euronext Access Paris 400
TEREGA SAS 270220 Euronext Paris 400
CRH-CSE DE REFINANCT HABITAT 070220 Euronext Paris 1250
THALES 290120 Euronext Paris 500
NEOPOST SA 230120 Euronext Paris 325
TURKIYE IS BANKASI AS 22012020 Euronext Dublin 679
SFL CORPORATION LTD 21012020 Oslo Bors Oslo 59
ARKEMA 210120 Euronext Paris 300
AIR FRANCE KLM 160120 Euronext Paris 750
MOTA-ENGIL SGPS SA 150120 Euronext Access Lisbon 50
SECIL-COMPANHIA GERAL DE CAL E CIMENTO SA
150120 Euronext Access Lisbon 60
Euronext fixed-income listing activity
Jan-20 Feb-20 Mar-20
Oslo
7 Source Thomson Reuters Lipper with 1-month figures until 31 March 2020 and 1-week figures until 1 April 2020 Includes Mutual Funds and ETFs All equities listed on Euronext markets including Oslo equities
FUNDS FLOWS IN EUROPE
INFLOWS AND OUTFLOWS EVOLUTION IN EU-27 ZONE BY ASSET CLASS FLOWS ON EURONEXT EQUITIES BY INDUSTRIES
Inflows and outflows on European equities
Asset Class Flows 1Y (eurobn) Flows 1M (eurobn) Flows 1W (eurobn)
Bond 26007 -13531 -387
Money Market 5094 -10975 -7724
Other -2034 -1792 -266
Mixed Assets -3737 -3691 -125
Equity -7794 -5121 787
Funds Flows in billions EUR
-20000 -15000 -10000 -5000 000 5000 10000 15000 20000 25000 30000
Flows 1Y(in euroB)
Flows 1M(in euroB)
Flows 1W(in euroB)
Equity Mixed Assets Other Money Market Bond
-15
-10
-05
00
05
10
15
12M YTD 1M
8
Does Euronext intend or do the regulators intend to extend the deadline for publishingaccounts (Growth and Access)In accordance with Chapter 4 of the Euronext Growth Market Rules companies admitted onAccess (Paris Brussels Lisbon) and Growth (Paris and Lisbon) are required to publish anannual report including audited annual financial statements and consolidated financialstatements if applicable and an annual management report This publication must be madewithin four months of the end of your financial year
For companies with a fiscal year ending 31 December 2019 the publication (on the companywebsite) must be effective no later than 30 April 2020
Euronext will monitor the communications made (publication of financial statements orannouncement of postponement) after the 30 April 2020 deadline As part of its controlsEuronext will follow the recommendations of ESMA and the national regulators (eg FSMAAMF) the reminder to non-compliant issuers will be postponed for a period of two monthsbeyond the deadline for annual financial reports for a financial year ending between 31December and 31 March
What if my company is unable to publish its annual financial accounts by end of April due toCOVID-19In the current exceptional circumstances and in anticipation of the difficulties encountered bysome companies issuers that are unable to publish their financial reports within the deadlinesmust notify Euronext (for Euronext Access and Euronext Growth) or the competent regulator(for the regulated markets and Euronext Growth Brussels) and inform the market (in advance)by indicating the reasons for the delay and an expected publication date
FINANCIAL REPORTING
CORPORATE ACTIONS AND FINANCIAL REPORTINGEuronext is committed to ensure business continuity
During the confinement period will Euronext be able to manage corporate eventsEuronextrsquos teams are fully mobilised to ensure the continuity of market activities under thebest possible conditions Most of Euronextrsquos teams are working remotely whilst operating afully functional infrastructure Currently all corporate events are proceeding normally
What if my company has already announced a cash distribution and needs to cancel itFor any corporate event (creation update cancellation) please contact Euronexts CorporateActions Department (corporateactionsfreuronextcom) and your main contact at Euronextas soon as possible and no later than two trading days prior to the corporate event
A cash distribution has already been announced but I need to move the payment date to alater date What is the procedureThe payment date is not covered by Euronextrsquos rules As a market operator Euronext does notplay any particular role but has to be informed and inform the market no later than twotrading days prior to the event You can contact your paying agent and CSD that will assist youon this matter
Does Euronext have in place a plan or strategy for pandemic planning and has it beenreviewed in the context of COVID-19Yes Euronext has a pandemic plan in place The pandemic plan and business continuity planshave been leveraged with respect to COVID-19 Reinforced actions include daily monitoring ofgovernment guidance to enable agile decision-making Euronextrsquos federal and decentralisedmodel supports the arrangements put in place and avoids high concentration of any of itscritical departments to preempt as much as possible risks in any one of its locations
CORPORATE ACTIONS
More information can be found at the following link wwweuronextcomenfor-investorsmarket-qualityresilience-during-volatility ESMA published a statement on publication deadlines on 27 March 2020 httpswwwesmaeuropaeusitesdefaultfileslibraryesma31-67-742_public_statement_on_publication_deadlines_under_the_tdpdf
9
DIVIDEND POLICIES AND EQUITY DERIVATIVES (16)Understand the impact of dividends on derivatives
How the postponement of AGMs and dividend policies can impact the pricing of yourderivativesDerivatives classes may have been introduced on your companyrsquos shares A derivative listingon Euronext involves a number of benefits including but not limited to enhancing interestand liquidity in a companyrsquos share and as various studies have shown a possible stabilisingeffect on the underlying share price during the day
In the unprecedented context brought on by COVID-19 several European national competentauthorities are considering exceptional measures such as allowing the postponement ofAGMs for issuers or reviewing public funding in light of dividend policies These measures canimpact your dividend policy and subsequently the pricing of your derivatives You can readthe best practices to maximise the smooth pricing of derivatives onhttpsconnecteuronextcomensupportderivatives-markets
To protect investors it is important that you avoid announcing any high impact corporateactions with price-sensitive consequences on or just before an expiry Friday Nor it ispreferable to change a dividend date so that it moves from before a certain expiry Friday toafter that expiry Friday This has an immediate impact on the pricing of the derivativesbecause dividends are an important part of the formation of option prices The price of aderivative (options and futures) is based on the following
bull Underlying share pricebull Volatilitybull Interest ratebull Dividendbull Lifetime of the contract
What are the expiry dates for options in 2020Options expire several times a year The standard expiry date is the third Friday of the expirymonth (calendar month) unless the third Friday is a public holiday and the exchange is closedin which case it is the third Thursday List of all upcoming expiry dates for year 2020
April 17042020 May 15052020 June 19062020July 17072020
August 21082020 September 18092020
October 16102020 November 20112020 December 18122020
Ordinary of extraordinary Wording mattersIt is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinaryif in current environmentbull Its payment is postponed later in 2020bull It is reducedbull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
EXPIRY DATES AND EXTRAORDINARY DIVIDENDSKEY TAKEAWAYS ON DIVIDEND POLICIES
10
How is the price of an option calculated
Market Makers are the lubricant of our options markets they have agreed to a contract tocontinuous put prices into the market at which others may trade with them in this wayproviding liquidity to our markets When doing so Market Makers (MMs) generally do not dothis based on a directional view of the market but based on a risk neutral pricing model
In other words the Market Maker calculates the prices of the options based on a pricing model(for Equity Options that would normally be the Cox Ross amp Rubinstein model or a variant thereof) A number of parameters are used to calculate option prices in such models including
Current price of the underlying shares
Current interest rates
Expected volatility during the lifetime of the option
Expected dividend payments during the lifetime of the option
In this document we concentrate on the impact of the last one the expected dividends
Why are dividends important for the price of an option
If a share pays out a dividend the share price will at that point in time drop by the dividendamount The date on which the share trades ex-dividend is the crucial moment there If a sharetrades at euro70 on a certain day (day 1) and the next day (day 2) the share trades ex-dividend withthe dividend amount being euro150 the model assumes the share price on the ex-dividend datewill be euro6850 Reasoning behind this if I can buy a share at euro70 on day 1 on day 2 I will receiveeuro150 dividend so effectively my share will be worth only euro6850 on day 2
So the pricing model anticipates a theoretical drop in the share price on the ex-dividend dateequal to the dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (26)
HOW DO YOU PRICE AN OPTION
What is the impact on option holders around dividend
Dividends are paid to shareholders not to option holders
What happens to the option when a dividend is paid on the underlying shares
The answer is not necessarily the same for all options but letrsquos look at a put option first If thereis an option like this one the right to sell the underlying shares at euro75 (eg an August 75 Putoption) And the example is the same as above According to the pricing model there will be adrop in the share price on the ex-date of euro150 and if the share price was euro70 before the ex-date it will (theoretically) be euro6850 on the ex-date The option which gives the holder the rightto sell the shares at euro75 has now become more valuable if I have the right to sell the shares ateuro75 with the share price at euro6850 the option has an intrinsic value of euro650 (75 ndash 6850) whereit had an intrinsic value of euro500 the day before (75 ndash 70)
So for put options there is a pricing effect around dividends
time
shar
e pr
ice
Dividend
Understand the impact of dividends on derivatives
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
6
21
21
4
1
5
3
10
J A N F E B M A R
Paris
Olso
Lisbon
Dublin
Amsterdam
12
3
14
Source Euronext as of 3 April 2020 Corporate bond issuances 2020 YTD excluding listings from financial and public issuers
DCM ACTIVITY ON EURONEXT MARKETS
EXAMPLES OF CORPORATE BONDS ISSUANCES 2020 YTD NUMBER OF CORPORATE BONDS ISSUANCES BY EURONEXT LOCATION
Issuer NameDate of
IssuanceMarket Location
Amount Issued (eurom)
SALVADOR CAETANO AUTO SGPS SA 310320 Euronext Access Lisbon 25
NORGES GRUPPEN ASA 300320 Oslo Bors Oslo 29
ENGIE 270320 Euronext Paris 1000
MMB SCF 250320 Euronext Paris 120
UNILEVER NV 250320 Euronext Amsterdam 1000
DANONE 170320 Euronext Paris 800
SCHNEIDER ELECTRIC SE 110320 Euronext Paris 800
KORIAN 100320 Euronext Access Paris 400
TEREGA SAS 270220 Euronext Paris 400
CRH-CSE DE REFINANCT HABITAT 070220 Euronext Paris 1250
THALES 290120 Euronext Paris 500
NEOPOST SA 230120 Euronext Paris 325
TURKIYE IS BANKASI AS 22012020 Euronext Dublin 679
SFL CORPORATION LTD 21012020 Oslo Bors Oslo 59
ARKEMA 210120 Euronext Paris 300
AIR FRANCE KLM 160120 Euronext Paris 750
MOTA-ENGIL SGPS SA 150120 Euronext Access Lisbon 50
SECIL-COMPANHIA GERAL DE CAL E CIMENTO SA
150120 Euronext Access Lisbon 60
Euronext fixed-income listing activity
Jan-20 Feb-20 Mar-20
Oslo
7 Source Thomson Reuters Lipper with 1-month figures until 31 March 2020 and 1-week figures until 1 April 2020 Includes Mutual Funds and ETFs All equities listed on Euronext markets including Oslo equities
FUNDS FLOWS IN EUROPE
INFLOWS AND OUTFLOWS EVOLUTION IN EU-27 ZONE BY ASSET CLASS FLOWS ON EURONEXT EQUITIES BY INDUSTRIES
Inflows and outflows on European equities
Asset Class Flows 1Y (eurobn) Flows 1M (eurobn) Flows 1W (eurobn)
Bond 26007 -13531 -387
Money Market 5094 -10975 -7724
Other -2034 -1792 -266
Mixed Assets -3737 -3691 -125
Equity -7794 -5121 787
Funds Flows in billions EUR
-20000 -15000 -10000 -5000 000 5000 10000 15000 20000 25000 30000
Flows 1Y(in euroB)
Flows 1M(in euroB)
Flows 1W(in euroB)
Equity Mixed Assets Other Money Market Bond
-15
-10
-05
00
05
10
15
12M YTD 1M
8
Does Euronext intend or do the regulators intend to extend the deadline for publishingaccounts (Growth and Access)In accordance with Chapter 4 of the Euronext Growth Market Rules companies admitted onAccess (Paris Brussels Lisbon) and Growth (Paris and Lisbon) are required to publish anannual report including audited annual financial statements and consolidated financialstatements if applicable and an annual management report This publication must be madewithin four months of the end of your financial year
For companies with a fiscal year ending 31 December 2019 the publication (on the companywebsite) must be effective no later than 30 April 2020
Euronext will monitor the communications made (publication of financial statements orannouncement of postponement) after the 30 April 2020 deadline As part of its controlsEuronext will follow the recommendations of ESMA and the national regulators (eg FSMAAMF) the reminder to non-compliant issuers will be postponed for a period of two monthsbeyond the deadline for annual financial reports for a financial year ending between 31December and 31 March
What if my company is unable to publish its annual financial accounts by end of April due toCOVID-19In the current exceptional circumstances and in anticipation of the difficulties encountered bysome companies issuers that are unable to publish their financial reports within the deadlinesmust notify Euronext (for Euronext Access and Euronext Growth) or the competent regulator(for the regulated markets and Euronext Growth Brussels) and inform the market (in advance)by indicating the reasons for the delay and an expected publication date
FINANCIAL REPORTING
CORPORATE ACTIONS AND FINANCIAL REPORTINGEuronext is committed to ensure business continuity
During the confinement period will Euronext be able to manage corporate eventsEuronextrsquos teams are fully mobilised to ensure the continuity of market activities under thebest possible conditions Most of Euronextrsquos teams are working remotely whilst operating afully functional infrastructure Currently all corporate events are proceeding normally
What if my company has already announced a cash distribution and needs to cancel itFor any corporate event (creation update cancellation) please contact Euronexts CorporateActions Department (corporateactionsfreuronextcom) and your main contact at Euronextas soon as possible and no later than two trading days prior to the corporate event
A cash distribution has already been announced but I need to move the payment date to alater date What is the procedureThe payment date is not covered by Euronextrsquos rules As a market operator Euronext does notplay any particular role but has to be informed and inform the market no later than twotrading days prior to the event You can contact your paying agent and CSD that will assist youon this matter
Does Euronext have in place a plan or strategy for pandemic planning and has it beenreviewed in the context of COVID-19Yes Euronext has a pandemic plan in place The pandemic plan and business continuity planshave been leveraged with respect to COVID-19 Reinforced actions include daily monitoring ofgovernment guidance to enable agile decision-making Euronextrsquos federal and decentralisedmodel supports the arrangements put in place and avoids high concentration of any of itscritical departments to preempt as much as possible risks in any one of its locations
CORPORATE ACTIONS
More information can be found at the following link wwweuronextcomenfor-investorsmarket-qualityresilience-during-volatility ESMA published a statement on publication deadlines on 27 March 2020 httpswwwesmaeuropaeusitesdefaultfileslibraryesma31-67-742_public_statement_on_publication_deadlines_under_the_tdpdf
9
DIVIDEND POLICIES AND EQUITY DERIVATIVES (16)Understand the impact of dividends on derivatives
How the postponement of AGMs and dividend policies can impact the pricing of yourderivativesDerivatives classes may have been introduced on your companyrsquos shares A derivative listingon Euronext involves a number of benefits including but not limited to enhancing interestand liquidity in a companyrsquos share and as various studies have shown a possible stabilisingeffect on the underlying share price during the day
In the unprecedented context brought on by COVID-19 several European national competentauthorities are considering exceptional measures such as allowing the postponement ofAGMs for issuers or reviewing public funding in light of dividend policies These measures canimpact your dividend policy and subsequently the pricing of your derivatives You can readthe best practices to maximise the smooth pricing of derivatives onhttpsconnecteuronextcomensupportderivatives-markets
To protect investors it is important that you avoid announcing any high impact corporateactions with price-sensitive consequences on or just before an expiry Friday Nor it ispreferable to change a dividend date so that it moves from before a certain expiry Friday toafter that expiry Friday This has an immediate impact on the pricing of the derivativesbecause dividends are an important part of the formation of option prices The price of aderivative (options and futures) is based on the following
bull Underlying share pricebull Volatilitybull Interest ratebull Dividendbull Lifetime of the contract
What are the expiry dates for options in 2020Options expire several times a year The standard expiry date is the third Friday of the expirymonth (calendar month) unless the third Friday is a public holiday and the exchange is closedin which case it is the third Thursday List of all upcoming expiry dates for year 2020
April 17042020 May 15052020 June 19062020July 17072020
August 21082020 September 18092020
October 16102020 November 20112020 December 18122020
Ordinary of extraordinary Wording mattersIt is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinaryif in current environmentbull Its payment is postponed later in 2020bull It is reducedbull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
EXPIRY DATES AND EXTRAORDINARY DIVIDENDSKEY TAKEAWAYS ON DIVIDEND POLICIES
10
How is the price of an option calculated
Market Makers are the lubricant of our options markets they have agreed to a contract tocontinuous put prices into the market at which others may trade with them in this wayproviding liquidity to our markets When doing so Market Makers (MMs) generally do not dothis based on a directional view of the market but based on a risk neutral pricing model
In other words the Market Maker calculates the prices of the options based on a pricing model(for Equity Options that would normally be the Cox Ross amp Rubinstein model or a variant thereof) A number of parameters are used to calculate option prices in such models including
Current price of the underlying shares
Current interest rates
Expected volatility during the lifetime of the option
Expected dividend payments during the lifetime of the option
In this document we concentrate on the impact of the last one the expected dividends
Why are dividends important for the price of an option
If a share pays out a dividend the share price will at that point in time drop by the dividendamount The date on which the share trades ex-dividend is the crucial moment there If a sharetrades at euro70 on a certain day (day 1) and the next day (day 2) the share trades ex-dividend withthe dividend amount being euro150 the model assumes the share price on the ex-dividend datewill be euro6850 Reasoning behind this if I can buy a share at euro70 on day 1 on day 2 I will receiveeuro150 dividend so effectively my share will be worth only euro6850 on day 2
So the pricing model anticipates a theoretical drop in the share price on the ex-dividend dateequal to the dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (26)
HOW DO YOU PRICE AN OPTION
What is the impact on option holders around dividend
Dividends are paid to shareholders not to option holders
What happens to the option when a dividend is paid on the underlying shares
The answer is not necessarily the same for all options but letrsquos look at a put option first If thereis an option like this one the right to sell the underlying shares at euro75 (eg an August 75 Putoption) And the example is the same as above According to the pricing model there will be adrop in the share price on the ex-date of euro150 and if the share price was euro70 before the ex-date it will (theoretically) be euro6850 on the ex-date The option which gives the holder the rightto sell the shares at euro75 has now become more valuable if I have the right to sell the shares ateuro75 with the share price at euro6850 the option has an intrinsic value of euro650 (75 ndash 6850) whereit had an intrinsic value of euro500 the day before (75 ndash 70)
So for put options there is a pricing effect around dividends
time
shar
e pr
ice
Dividend
Understand the impact of dividends on derivatives
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
7 Source Thomson Reuters Lipper with 1-month figures until 31 March 2020 and 1-week figures until 1 April 2020 Includes Mutual Funds and ETFs All equities listed on Euronext markets including Oslo equities
FUNDS FLOWS IN EUROPE
INFLOWS AND OUTFLOWS EVOLUTION IN EU-27 ZONE BY ASSET CLASS FLOWS ON EURONEXT EQUITIES BY INDUSTRIES
Inflows and outflows on European equities
Asset Class Flows 1Y (eurobn) Flows 1M (eurobn) Flows 1W (eurobn)
Bond 26007 -13531 -387
Money Market 5094 -10975 -7724
Other -2034 -1792 -266
Mixed Assets -3737 -3691 -125
Equity -7794 -5121 787
Funds Flows in billions EUR
-20000 -15000 -10000 -5000 000 5000 10000 15000 20000 25000 30000
Flows 1Y(in euroB)
Flows 1M(in euroB)
Flows 1W(in euroB)
Equity Mixed Assets Other Money Market Bond
-15
-10
-05
00
05
10
15
12M YTD 1M
8
Does Euronext intend or do the regulators intend to extend the deadline for publishingaccounts (Growth and Access)In accordance with Chapter 4 of the Euronext Growth Market Rules companies admitted onAccess (Paris Brussels Lisbon) and Growth (Paris and Lisbon) are required to publish anannual report including audited annual financial statements and consolidated financialstatements if applicable and an annual management report This publication must be madewithin four months of the end of your financial year
For companies with a fiscal year ending 31 December 2019 the publication (on the companywebsite) must be effective no later than 30 April 2020
Euronext will monitor the communications made (publication of financial statements orannouncement of postponement) after the 30 April 2020 deadline As part of its controlsEuronext will follow the recommendations of ESMA and the national regulators (eg FSMAAMF) the reminder to non-compliant issuers will be postponed for a period of two monthsbeyond the deadline for annual financial reports for a financial year ending between 31December and 31 March
What if my company is unable to publish its annual financial accounts by end of April due toCOVID-19In the current exceptional circumstances and in anticipation of the difficulties encountered bysome companies issuers that are unable to publish their financial reports within the deadlinesmust notify Euronext (for Euronext Access and Euronext Growth) or the competent regulator(for the regulated markets and Euronext Growth Brussels) and inform the market (in advance)by indicating the reasons for the delay and an expected publication date
FINANCIAL REPORTING
CORPORATE ACTIONS AND FINANCIAL REPORTINGEuronext is committed to ensure business continuity
During the confinement period will Euronext be able to manage corporate eventsEuronextrsquos teams are fully mobilised to ensure the continuity of market activities under thebest possible conditions Most of Euronextrsquos teams are working remotely whilst operating afully functional infrastructure Currently all corporate events are proceeding normally
What if my company has already announced a cash distribution and needs to cancel itFor any corporate event (creation update cancellation) please contact Euronexts CorporateActions Department (corporateactionsfreuronextcom) and your main contact at Euronextas soon as possible and no later than two trading days prior to the corporate event
A cash distribution has already been announced but I need to move the payment date to alater date What is the procedureThe payment date is not covered by Euronextrsquos rules As a market operator Euronext does notplay any particular role but has to be informed and inform the market no later than twotrading days prior to the event You can contact your paying agent and CSD that will assist youon this matter
Does Euronext have in place a plan or strategy for pandemic planning and has it beenreviewed in the context of COVID-19Yes Euronext has a pandemic plan in place The pandemic plan and business continuity planshave been leveraged with respect to COVID-19 Reinforced actions include daily monitoring ofgovernment guidance to enable agile decision-making Euronextrsquos federal and decentralisedmodel supports the arrangements put in place and avoids high concentration of any of itscritical departments to preempt as much as possible risks in any one of its locations
CORPORATE ACTIONS
More information can be found at the following link wwweuronextcomenfor-investorsmarket-qualityresilience-during-volatility ESMA published a statement on publication deadlines on 27 March 2020 httpswwwesmaeuropaeusitesdefaultfileslibraryesma31-67-742_public_statement_on_publication_deadlines_under_the_tdpdf
9
DIVIDEND POLICIES AND EQUITY DERIVATIVES (16)Understand the impact of dividends on derivatives
How the postponement of AGMs and dividend policies can impact the pricing of yourderivativesDerivatives classes may have been introduced on your companyrsquos shares A derivative listingon Euronext involves a number of benefits including but not limited to enhancing interestand liquidity in a companyrsquos share and as various studies have shown a possible stabilisingeffect on the underlying share price during the day
In the unprecedented context brought on by COVID-19 several European national competentauthorities are considering exceptional measures such as allowing the postponement ofAGMs for issuers or reviewing public funding in light of dividend policies These measures canimpact your dividend policy and subsequently the pricing of your derivatives You can readthe best practices to maximise the smooth pricing of derivatives onhttpsconnecteuronextcomensupportderivatives-markets
To protect investors it is important that you avoid announcing any high impact corporateactions with price-sensitive consequences on or just before an expiry Friday Nor it ispreferable to change a dividend date so that it moves from before a certain expiry Friday toafter that expiry Friday This has an immediate impact on the pricing of the derivativesbecause dividends are an important part of the formation of option prices The price of aderivative (options and futures) is based on the following
bull Underlying share pricebull Volatilitybull Interest ratebull Dividendbull Lifetime of the contract
What are the expiry dates for options in 2020Options expire several times a year The standard expiry date is the third Friday of the expirymonth (calendar month) unless the third Friday is a public holiday and the exchange is closedin which case it is the third Thursday List of all upcoming expiry dates for year 2020
April 17042020 May 15052020 June 19062020July 17072020
August 21082020 September 18092020
October 16102020 November 20112020 December 18122020
Ordinary of extraordinary Wording mattersIt is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinaryif in current environmentbull Its payment is postponed later in 2020bull It is reducedbull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
EXPIRY DATES AND EXTRAORDINARY DIVIDENDSKEY TAKEAWAYS ON DIVIDEND POLICIES
10
How is the price of an option calculated
Market Makers are the lubricant of our options markets they have agreed to a contract tocontinuous put prices into the market at which others may trade with them in this wayproviding liquidity to our markets When doing so Market Makers (MMs) generally do not dothis based on a directional view of the market but based on a risk neutral pricing model
In other words the Market Maker calculates the prices of the options based on a pricing model(for Equity Options that would normally be the Cox Ross amp Rubinstein model or a variant thereof) A number of parameters are used to calculate option prices in such models including
Current price of the underlying shares
Current interest rates
Expected volatility during the lifetime of the option
Expected dividend payments during the lifetime of the option
In this document we concentrate on the impact of the last one the expected dividends
Why are dividends important for the price of an option
If a share pays out a dividend the share price will at that point in time drop by the dividendamount The date on which the share trades ex-dividend is the crucial moment there If a sharetrades at euro70 on a certain day (day 1) and the next day (day 2) the share trades ex-dividend withthe dividend amount being euro150 the model assumes the share price on the ex-dividend datewill be euro6850 Reasoning behind this if I can buy a share at euro70 on day 1 on day 2 I will receiveeuro150 dividend so effectively my share will be worth only euro6850 on day 2
So the pricing model anticipates a theoretical drop in the share price on the ex-dividend dateequal to the dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (26)
HOW DO YOU PRICE AN OPTION
What is the impact on option holders around dividend
Dividends are paid to shareholders not to option holders
What happens to the option when a dividend is paid on the underlying shares
The answer is not necessarily the same for all options but letrsquos look at a put option first If thereis an option like this one the right to sell the underlying shares at euro75 (eg an August 75 Putoption) And the example is the same as above According to the pricing model there will be adrop in the share price on the ex-date of euro150 and if the share price was euro70 before the ex-date it will (theoretically) be euro6850 on the ex-date The option which gives the holder the rightto sell the shares at euro75 has now become more valuable if I have the right to sell the shares ateuro75 with the share price at euro6850 the option has an intrinsic value of euro650 (75 ndash 6850) whereit had an intrinsic value of euro500 the day before (75 ndash 70)
So for put options there is a pricing effect around dividends
time
shar
e pr
ice
Dividend
Understand the impact of dividends on derivatives
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
8
Does Euronext intend or do the regulators intend to extend the deadline for publishingaccounts (Growth and Access)In accordance with Chapter 4 of the Euronext Growth Market Rules companies admitted onAccess (Paris Brussels Lisbon) and Growth (Paris and Lisbon) are required to publish anannual report including audited annual financial statements and consolidated financialstatements if applicable and an annual management report This publication must be madewithin four months of the end of your financial year
For companies with a fiscal year ending 31 December 2019 the publication (on the companywebsite) must be effective no later than 30 April 2020
Euronext will monitor the communications made (publication of financial statements orannouncement of postponement) after the 30 April 2020 deadline As part of its controlsEuronext will follow the recommendations of ESMA and the national regulators (eg FSMAAMF) the reminder to non-compliant issuers will be postponed for a period of two monthsbeyond the deadline for annual financial reports for a financial year ending between 31December and 31 March
What if my company is unable to publish its annual financial accounts by end of April due toCOVID-19In the current exceptional circumstances and in anticipation of the difficulties encountered bysome companies issuers that are unable to publish their financial reports within the deadlinesmust notify Euronext (for Euronext Access and Euronext Growth) or the competent regulator(for the regulated markets and Euronext Growth Brussels) and inform the market (in advance)by indicating the reasons for the delay and an expected publication date
FINANCIAL REPORTING
CORPORATE ACTIONS AND FINANCIAL REPORTINGEuronext is committed to ensure business continuity
During the confinement period will Euronext be able to manage corporate eventsEuronextrsquos teams are fully mobilised to ensure the continuity of market activities under thebest possible conditions Most of Euronextrsquos teams are working remotely whilst operating afully functional infrastructure Currently all corporate events are proceeding normally
What if my company has already announced a cash distribution and needs to cancel itFor any corporate event (creation update cancellation) please contact Euronexts CorporateActions Department (corporateactionsfreuronextcom) and your main contact at Euronextas soon as possible and no later than two trading days prior to the corporate event
A cash distribution has already been announced but I need to move the payment date to alater date What is the procedureThe payment date is not covered by Euronextrsquos rules As a market operator Euronext does notplay any particular role but has to be informed and inform the market no later than twotrading days prior to the event You can contact your paying agent and CSD that will assist youon this matter
Does Euronext have in place a plan or strategy for pandemic planning and has it beenreviewed in the context of COVID-19Yes Euronext has a pandemic plan in place The pandemic plan and business continuity planshave been leveraged with respect to COVID-19 Reinforced actions include daily monitoring ofgovernment guidance to enable agile decision-making Euronextrsquos federal and decentralisedmodel supports the arrangements put in place and avoids high concentration of any of itscritical departments to preempt as much as possible risks in any one of its locations
CORPORATE ACTIONS
More information can be found at the following link wwweuronextcomenfor-investorsmarket-qualityresilience-during-volatility ESMA published a statement on publication deadlines on 27 March 2020 httpswwwesmaeuropaeusitesdefaultfileslibraryesma31-67-742_public_statement_on_publication_deadlines_under_the_tdpdf
9
DIVIDEND POLICIES AND EQUITY DERIVATIVES (16)Understand the impact of dividends on derivatives
How the postponement of AGMs and dividend policies can impact the pricing of yourderivativesDerivatives classes may have been introduced on your companyrsquos shares A derivative listingon Euronext involves a number of benefits including but not limited to enhancing interestand liquidity in a companyrsquos share and as various studies have shown a possible stabilisingeffect on the underlying share price during the day
In the unprecedented context brought on by COVID-19 several European national competentauthorities are considering exceptional measures such as allowing the postponement ofAGMs for issuers or reviewing public funding in light of dividend policies These measures canimpact your dividend policy and subsequently the pricing of your derivatives You can readthe best practices to maximise the smooth pricing of derivatives onhttpsconnecteuronextcomensupportderivatives-markets
To protect investors it is important that you avoid announcing any high impact corporateactions with price-sensitive consequences on or just before an expiry Friday Nor it ispreferable to change a dividend date so that it moves from before a certain expiry Friday toafter that expiry Friday This has an immediate impact on the pricing of the derivativesbecause dividends are an important part of the formation of option prices The price of aderivative (options and futures) is based on the following
bull Underlying share pricebull Volatilitybull Interest ratebull Dividendbull Lifetime of the contract
What are the expiry dates for options in 2020Options expire several times a year The standard expiry date is the third Friday of the expirymonth (calendar month) unless the third Friday is a public holiday and the exchange is closedin which case it is the third Thursday List of all upcoming expiry dates for year 2020
April 17042020 May 15052020 June 19062020July 17072020
August 21082020 September 18092020
October 16102020 November 20112020 December 18122020
Ordinary of extraordinary Wording mattersIt is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinaryif in current environmentbull Its payment is postponed later in 2020bull It is reducedbull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
EXPIRY DATES AND EXTRAORDINARY DIVIDENDSKEY TAKEAWAYS ON DIVIDEND POLICIES
10
How is the price of an option calculated
Market Makers are the lubricant of our options markets they have agreed to a contract tocontinuous put prices into the market at which others may trade with them in this wayproviding liquidity to our markets When doing so Market Makers (MMs) generally do not dothis based on a directional view of the market but based on a risk neutral pricing model
In other words the Market Maker calculates the prices of the options based on a pricing model(for Equity Options that would normally be the Cox Ross amp Rubinstein model or a variant thereof) A number of parameters are used to calculate option prices in such models including
Current price of the underlying shares
Current interest rates
Expected volatility during the lifetime of the option
Expected dividend payments during the lifetime of the option
In this document we concentrate on the impact of the last one the expected dividends
Why are dividends important for the price of an option
If a share pays out a dividend the share price will at that point in time drop by the dividendamount The date on which the share trades ex-dividend is the crucial moment there If a sharetrades at euro70 on a certain day (day 1) and the next day (day 2) the share trades ex-dividend withthe dividend amount being euro150 the model assumes the share price on the ex-dividend datewill be euro6850 Reasoning behind this if I can buy a share at euro70 on day 1 on day 2 I will receiveeuro150 dividend so effectively my share will be worth only euro6850 on day 2
So the pricing model anticipates a theoretical drop in the share price on the ex-dividend dateequal to the dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (26)
HOW DO YOU PRICE AN OPTION
What is the impact on option holders around dividend
Dividends are paid to shareholders not to option holders
What happens to the option when a dividend is paid on the underlying shares
The answer is not necessarily the same for all options but letrsquos look at a put option first If thereis an option like this one the right to sell the underlying shares at euro75 (eg an August 75 Putoption) And the example is the same as above According to the pricing model there will be adrop in the share price on the ex-date of euro150 and if the share price was euro70 before the ex-date it will (theoretically) be euro6850 on the ex-date The option which gives the holder the rightto sell the shares at euro75 has now become more valuable if I have the right to sell the shares ateuro75 with the share price at euro6850 the option has an intrinsic value of euro650 (75 ndash 6850) whereit had an intrinsic value of euro500 the day before (75 ndash 70)
So for put options there is a pricing effect around dividends
time
shar
e pr
ice
Dividend
Understand the impact of dividends on derivatives
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
9
DIVIDEND POLICIES AND EQUITY DERIVATIVES (16)Understand the impact of dividends on derivatives
How the postponement of AGMs and dividend policies can impact the pricing of yourderivativesDerivatives classes may have been introduced on your companyrsquos shares A derivative listingon Euronext involves a number of benefits including but not limited to enhancing interestand liquidity in a companyrsquos share and as various studies have shown a possible stabilisingeffect on the underlying share price during the day
In the unprecedented context brought on by COVID-19 several European national competentauthorities are considering exceptional measures such as allowing the postponement ofAGMs for issuers or reviewing public funding in light of dividend policies These measures canimpact your dividend policy and subsequently the pricing of your derivatives You can readthe best practices to maximise the smooth pricing of derivatives onhttpsconnecteuronextcomensupportderivatives-markets
To protect investors it is important that you avoid announcing any high impact corporateactions with price-sensitive consequences on or just before an expiry Friday Nor it ispreferable to change a dividend date so that it moves from before a certain expiry Friday toafter that expiry Friday This has an immediate impact on the pricing of the derivativesbecause dividends are an important part of the formation of option prices The price of aderivative (options and futures) is based on the following
bull Underlying share pricebull Volatilitybull Interest ratebull Dividendbull Lifetime of the contract
What are the expiry dates for options in 2020Options expire several times a year The standard expiry date is the third Friday of the expirymonth (calendar month) unless the third Friday is a public holiday and the exchange is closedin which case it is the third Thursday List of all upcoming expiry dates for year 2020
April 17042020 May 15052020 June 19062020July 17072020
August 21082020 September 18092020
October 16102020 November 20112020 December 18122020
Ordinary of extraordinary Wording mattersIt is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinaryif in current environmentbull Its payment is postponed later in 2020bull It is reducedbull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
EXPIRY DATES AND EXTRAORDINARY DIVIDENDSKEY TAKEAWAYS ON DIVIDEND POLICIES
10
How is the price of an option calculated
Market Makers are the lubricant of our options markets they have agreed to a contract tocontinuous put prices into the market at which others may trade with them in this wayproviding liquidity to our markets When doing so Market Makers (MMs) generally do not dothis based on a directional view of the market but based on a risk neutral pricing model
In other words the Market Maker calculates the prices of the options based on a pricing model(for Equity Options that would normally be the Cox Ross amp Rubinstein model or a variant thereof) A number of parameters are used to calculate option prices in such models including
Current price of the underlying shares
Current interest rates
Expected volatility during the lifetime of the option
Expected dividend payments during the lifetime of the option
In this document we concentrate on the impact of the last one the expected dividends
Why are dividends important for the price of an option
If a share pays out a dividend the share price will at that point in time drop by the dividendamount The date on which the share trades ex-dividend is the crucial moment there If a sharetrades at euro70 on a certain day (day 1) and the next day (day 2) the share trades ex-dividend withthe dividend amount being euro150 the model assumes the share price on the ex-dividend datewill be euro6850 Reasoning behind this if I can buy a share at euro70 on day 1 on day 2 I will receiveeuro150 dividend so effectively my share will be worth only euro6850 on day 2
So the pricing model anticipates a theoretical drop in the share price on the ex-dividend dateequal to the dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (26)
HOW DO YOU PRICE AN OPTION
What is the impact on option holders around dividend
Dividends are paid to shareholders not to option holders
What happens to the option when a dividend is paid on the underlying shares
The answer is not necessarily the same for all options but letrsquos look at a put option first If thereis an option like this one the right to sell the underlying shares at euro75 (eg an August 75 Putoption) And the example is the same as above According to the pricing model there will be adrop in the share price on the ex-date of euro150 and if the share price was euro70 before the ex-date it will (theoretically) be euro6850 on the ex-date The option which gives the holder the rightto sell the shares at euro75 has now become more valuable if I have the right to sell the shares ateuro75 with the share price at euro6850 the option has an intrinsic value of euro650 (75 ndash 6850) whereit had an intrinsic value of euro500 the day before (75 ndash 70)
So for put options there is a pricing effect around dividends
time
shar
e pr
ice
Dividend
Understand the impact of dividends on derivatives
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
10
How is the price of an option calculated
Market Makers are the lubricant of our options markets they have agreed to a contract tocontinuous put prices into the market at which others may trade with them in this wayproviding liquidity to our markets When doing so Market Makers (MMs) generally do not dothis based on a directional view of the market but based on a risk neutral pricing model
In other words the Market Maker calculates the prices of the options based on a pricing model(for Equity Options that would normally be the Cox Ross amp Rubinstein model or a variant thereof) A number of parameters are used to calculate option prices in such models including
Current price of the underlying shares
Current interest rates
Expected volatility during the lifetime of the option
Expected dividend payments during the lifetime of the option
In this document we concentrate on the impact of the last one the expected dividends
Why are dividends important for the price of an option
If a share pays out a dividend the share price will at that point in time drop by the dividendamount The date on which the share trades ex-dividend is the crucial moment there If a sharetrades at euro70 on a certain day (day 1) and the next day (day 2) the share trades ex-dividend withthe dividend amount being euro150 the model assumes the share price on the ex-dividend datewill be euro6850 Reasoning behind this if I can buy a share at euro70 on day 1 on day 2 I will receiveeuro150 dividend so effectively my share will be worth only euro6850 on day 2
So the pricing model anticipates a theoretical drop in the share price on the ex-dividend dateequal to the dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (26)
HOW DO YOU PRICE AN OPTION
What is the impact on option holders around dividend
Dividends are paid to shareholders not to option holders
What happens to the option when a dividend is paid on the underlying shares
The answer is not necessarily the same for all options but letrsquos look at a put option first If thereis an option like this one the right to sell the underlying shares at euro75 (eg an August 75 Putoption) And the example is the same as above According to the pricing model there will be adrop in the share price on the ex-date of euro150 and if the share price was euro70 before the ex-date it will (theoretically) be euro6850 on the ex-date The option which gives the holder the rightto sell the shares at euro75 has now become more valuable if I have the right to sell the shares ateuro75 with the share price at euro6850 the option has an intrinsic value of euro650 (75 ndash 6850) whereit had an intrinsic value of euro500 the day before (75 ndash 70)
So for put options there is a pricing effect around dividends
time
shar
e pr
ice
Dividend
Understand the impact of dividends on derivatives
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
11
And for call options
If there was a call option that gives the right to buy the shares at euro65 (eg an August 65 call)and the same dividend event happens as before this is the picture before the ex-date with ashare price of euro70 the option will have an intrinsic value of euro5 (70-65) In other words theoption will be worth at least euro5 Reasoning if I would be able to get (buy) the option for euro000and exercise it immediately (getting the shares for euro65) and sell those shares again in themarket for the market price (euro70) I would have an instant profit of euro500 This determines thatin this case the price of the option would be at least euro500 Next to that the price of the optionmay contain time value
If now the share trades ex-dividend of euro150 on the next day the pricing model assumes theshare price will drop to euro6850 There will be impact on the intrinsic value of the August 65 Calloption The intrinsic value will in that situation only be euro350 (6850 ndash 65) So due to the fact thatthe shares trade ex-dividend of euro150 the price of the option drops euro150 in value So for calloptions just as for put options there is a pricing effect around dividend
(In real life someone owning such a call option prior to the ex-dividend may want to exercisehis option before the ex-dividend data This way he will collect the dividend)
How does this impact the pricing of options
Anyone calculating the price of an option including MMs needs to take into account dividendsas stipulated above
There are 2 dimensions of dividends that are important when pricing options
The ex-dividend date
The dividend amount
DIVIDEND POLICIES AND EQUITY DERIVATIVES (36)
HOW DO YOU PRICE AN OPTION
Both of these are basically unknown to everyone yet they should be assessed in order toproperly price an option In general when looking at ex-dividend dates we know that basicallythe ex-dividend date will be the day after the AGM And most companies have a steady policyfor the dates of their AGMs So predicting the AGM date and therefore predicting the ex-dividend dates is generally not overly complex
For the dividend amounts it is a bit harder
There are three sources of information that help the MM to anticipate forthcoming dividends
The past (what are the dividends paid out in past years)
The present (what is the current situation of the company)
The future (what dividends are forecasted by independent forecasters)
Based on all of that the MM needs to predict the dividends And as we have options in ourmarkets with lifetimes up to 5 years Market Makers need predict all dividends for the next 5years
The dividends that impact the pricing of options the most are the dividends that are closest tothe current date In the next slide we will share some examples of the pricing of options withdividends that are within a few months away of the current date
Understand the impact of dividends on derivatives
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
12
Example 1 prices with no dividend involved
DIVIDEND POLICIES AND EQUITY DERIVATIVES (46)
CASE STUDY
time
expirynow
Div = euro000The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
There are no dividends foreseen during the lifetime of the option (between now and august) the prices of the options are (with given interest rates and volatilities)
August 65 Call euro691
August 65 Put euro189
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 1 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro612
August 65 Put euro236
time
expirynow
Div = euro150
Example 2 prices with dividend of euro150
Example 3 prices with dividend of euro150
Example 4 prices with dividend of euro050
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro150 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro656
August 65 Put euro236
The share price now is euro70 and we are looking at two options which expire in 4 months time
August 65 Call
August 65 Put
A dividend of euro050 is anticipated during the lifetime of the option 3 month from now the prices of the options are (with given interest rates and volatilities)
August 65 Call euro675
August 65 Put euro204
time
expirynow
Div = euro050
time
expirynow
Div = euro150
Understand the impact of dividends on derivatives
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
13
A summary of the option prices from the above scenarios
Call price Dividend amount Dividend date Put
Example 1 euro691 -- -- euro189
Example 2 euro612 euro150 1 month away euro236
Example 3 euro656 euro150 3 months away euro236
Example 4 euro675 euro050 3 months away euro204
The largest pricing effect is seen in the call options
Where are we today
As explained before MMs use the predictable AGM dates as forecasted ex-dividend datesGenerally speaking a lot of companies have their AGMs planned for the time frame ldquoMarchuntil Junerdquo With options basically expiring on the third Fridays of April and May and June theexact timing of the AGM becomes pretty important for pricing options
If an AGM was planned to take place in April before the April expiry (third Friday) and wouldmove into the first week of May that would have large impact on the pricing of April optionsMMs would have priced in the dividend into April options but with the mover of the AGM toafter the April expiry there would no longer be a dividend during the lifetime of the Apriloptions
DIVIDEND POLICIES AND EQUITY DERIVATIVES (56)
COVID-19 AND DERIVATIVES
Similarly it would impact he pricing of other options in particular the options with a relativelyshort time to expiry as demonstrated in the earlier examples If the dividend in the exampleswas predicted to be euro150 in one month time the 4-month call option would have a price ofeuro612 (ex2) If then the AGM was moved several months away to end up after the expiry of theoption the price of the option would be euro691 (ex1)
Market Makers quote options in the market based on the theoretical prices they calculate andwith a certain spread There are maximum spreads which the MM must live up to If in thisexample the maximum spread would be euro050 that would create the following markets forthese examples
Call price Bid price Ask price Dividend amount Dividend date
Example 1 euro691 euro666 euro716 -- --
Example 2 euro612 euro587 euro637 euro150 1 month away
As demonstrated above the bid and ask prices under the different scenarios are such that thebid price of ex1 is higher than the ask price of ex2
In general one could argue that the proper predictions of dividend amounts and dividend datesare part of the daily business of Market Makers However if there is general uncertainty in themarket in relation to AGM dates and dividends especially if such uncertainties would be comingfrom rules or laws these additional uncertainties would unduly impair the proper functioning ofthe market Basically uncertainty creates additional risk andor may cause Market Makers to beno longer able to provide prices which in turn would impair the proper functioning of themarkets
Understand the impact of dividends on derivatives
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
14
Special dividends and option pricing
When companies pay out special dividends these are generally unpredictable (eg related tospecial financial results in the company) Euronext (like other trading venues) has special rulesand procedures in place to cater for such special dividends (and other corporate actions that arenot in line with every day operation of the underlying company)
In such cases trading venues make adjustments to the specifications of the options in order tocompensate for such unpredictable events
Suppose a company pays out a normal dividend every year of about euro150 in early June Thesedividends as explained before are included in the calculation of option prices And asdemonstrated above they will impact the resulting prices of options If now at the AGM thecompany decides to pay out an additional special dividend of say euro250 per share this willimpact the prices of options As there was no way anyone could have anticipated this Euronextcompensates for such unpredictable events
Compensations are made by slightly adjusting the contract specifications (strike price andcontract size of the options) in such a way that the economic value of the options before thespecial dividend and after the special dividend are identical From an options-economicperspective special dividends have no impact at all on holders of options They are economicnon-events
DIVIDEND POLICIES AND EQUITY DERIVATIVES (66)
ORDINARY VS EXTRAORDINARY DIVIDENDS
Could such corporate actions adjustments be made to cater for postponing of AGMs
Apart from what our corporate actions policy says a corporate actions adjustment needs anevent The ldquonot paying out of a dividendrdquo is not an event so it would not be very straightforward to make such adjustments And if the AGM was postponed and a dividend would bepaid out say in 4 monthsrsquo time (instead of in 3 weeksrsquo time) how would we wantneed to look atthat dividend in the light of predictability and adjustments
It is important that issuers use the right terminology when qualifying their dividends in theircommunications The wordings ldquoSpecial Extra or Extraordinaryrdquo should only be used whenappropriate as only non-ordinary dividends lead to a derivatives contract adjustment byEuronext An ordinary dividend for the year 2019 should not be requalified as Extraordinary ifin current environment
bull Its payment is postponed later in 2020
bull It is reduced
bull It is paid out from reserves and not results
In doubt do not hesitate to liaise with Euronext as individual cases may be more specific
Understand the impact of dividends on derivatives
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
15 More information can be found at the following link wwweuronextcomennewstrading-safeguards-euronext-markets
TRADING SAFEGUARDS ON EURONEXT MARKETS
Euronextrsquos general philosophy is not to halt trading except in extreme circumstances To achieve this Euronext does not rely on circuit-breakers alone but on a full set of trading safeguardsOver the years Euronext has developed a complete set of mechanisms that go beyond market protection and are designed to prevent situations of disorderly markets and detect unusual eventsAll the market protection mechanisms are discussed and validated with local regulators ensuring that Euronext is constantly improving the safety net across all its regulated markets
EURONEXT DYNAMIC AND STATIC COLLARSEURONEXT MARKET SURVEILLANCE METHODOLOGY
Dynamic collars Are based on the dynamic referenceprice which is taken from the lasttraded price and is amended with eachnew trade throughout the trading dayThis safeguard threshold automaticallyhalts trading on a stock if its pricereaches +minus5 price variation (or +-3if the stock is part of a flagship index)on the dynamic collar reference price
Static collarsAre based on the static reference pricewhich is taken from the opening priceof the security if it has traded on thesame day or the last reference pricefrom the previous trading day Thissafeguard threshold automatically haltstrading on a stock if its price reaches+minus10 price variation (or +-8 if thestock is part of a flagship index) on thestatic collar reference price
PreventionMarket protection mechanisms includebull the capacity to reject aberrant orders (unusually large in size or in unitsprice) before
they enter the marketbull the capacity to halt instruments subject to single orders that might disrupt the marketbull the capacity to prevent significant price variations (dynamic or static collars)
DetectionA comprehensive set of algorithm-powered alerts that are triggered by Euronextrsquosmonitoring systems and handled in near real-time by analysts from the Cash Market teamensures fair and orderly markets as well as investigation and resolution where needed
Reservation periodsDynamic and static collars constitute the first and second layers of Euronextrsquos circuit-breakermechanism respectively The reference price is used to calculate both collars The referenceprice changes throughout the trading day after each trade with the last traded pricebecoming the new referenceReservation periods limit the impact of any unexpected sharp price movements whilst givingthe market ample time to review orders and investment decisions before trading resumes
PRODUCTDYNAMIC COLLARS
STATIC COLLARS
Thresholds
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
+- 3 +- 8
ThresholdsOther Equities
+- 5 +- 10
Minimum Trading Halt duration
All securities that are traded on a continuous basis
3 minutes 3 minutes
Minimum Trading Halt duration consecutive trading halt in same direction
All AEX BEL 20 CAC 40 ISEQ 20 and PSI 20 constituents
3 minutes 10 minutes
Euronext rsquos market protection and detection mechanisms
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
16
This update is provided by Euronext based on local evolutions and changes as of 3 April 2020 More information and the most recent updates can be found on the websites of local governments and regulators httpswwwafmnlenprofessionalsnieuws2020mrtesma-wil-soepele-regels-verslaggeving-2019 httpswwwosloborsnoob_engOslo-BoersRegulationsInformation-and-newsInformation-regarding-publication-of-the-annual-report-for-the-fiscal-year-2019
MOST RECENT LEGAL AND REGULATORY MEASURES
ANNUAL GENERAL MEETINGS ANNUAL ACCOUNTS SHORT SELLING
BELGIUM
bull Law soften the proxy form modalities and remote votingprocedure authorize companies to postpone AGMs by 4months or have AGMs by webcast (ongoing discussions)
bull Regulator the FSMA published a statement on 2603indicating that a new legislation allowing companies topostpone or broadcast their AGMs is currently in progress
bull Approval extension of the deadline for approvingaccounts by 4 months
bull Publication extension of the deadline forpublishing annual accounts by 4 months
bull On 1703 the FSMA announced a short selling banfor one month (1703 ndash 1704)
FRANCE
bull Law ordinance published on 2603 allowing closed sessionand virtual AGMs and extending deadline by 3 monthsuntil 3006 for the organization of AGMs
bull Regulator the AMF encourages issuers to broadcastAGMs in real time
bull Approval deadline for approving accountsextended by 3 months (ordinance from 2603)
bull Publication deadline for publishing annualaccounts remains unchanged (3004)
bull On 1703 the AMF announced a short selling banfor one month (1803 ndash 1604)
IRELAND
bull Law no specific measure but as under The Companies Actin Ireland companies have to hold their AGMs 15 monthsafter the previous one
bull Regulator no specific recommendation from CBI
No specific measure for the Regulated Markets butplanning to align Euronext Growth Dublin with AIMLondon for an extension by 3 months
No specific measure
THE NETHERLANDSbull Law no specific measure only in-person AGMs allowedbull Regulator no specific recommendation from the AFM
In line with the ESMA statement the AFM decided tofollow the recommendation and apply the deadline lessstrictly for issuers
No specific measure
NORWAY
bull Law exemption given by the government on 2703 tofacilitate proxy voting and to authorize companies to haveAGMs by webcast until the end of the Corona Act (2704)
bull Regulator no specific recommendation from the FSA
In line with the ESMA recommendation Oslo Borsinformed companies listed on regulated markets aboutdeadlines for financial reporting
No specific measure
PORTUGAL
bull Law ordinance published on 1303 allowing AGMs to bepostponed until 3006
bull Regulator the CMVM encourages issuers to consider bothelectronic vote and webcasting
No specific measureNo specific measure but the CMVM has adopted theposition of ESMA to increase reporting
Update from governments and regulators in the context of COVID -19
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
17
WEBINAR FOR ISSUERS ON PORTFOLIO MANAGEMENTHow portfolio managers operate in response to COVID -19
English15 April 2020 ndash 3pm
REGISTER
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
18
EURONEXT CORPORATE SERVICESAccess a full set of solutions
600+Listed companies already working with Euronext Corporate Services totalling 2500+ clients
80Professionals to help listed companies make the most out of capital markets
15+Number of countries where EuronextCorporate Services serves clients
OUR EXPERTISE
COMPLIANCE
Automate insider lists and
ensure MAR compliance
INVESTOR RELATIONS
Better understand and
engage with investors at the
right time
GOVERNANCE
Secure and optimise your
governance digitally
COMMUNICATION
Improve your
visibility and
communication
Managing digital communication e-governance and investor relations in difficult times all while remaining compliant are
just some of the challenges brought about by the current circumstances
Euronext Corporate Services has a suite of solutions which can help you address these challenges and help you navigate
this adverse environment digitally and efficiently
CONTACT US
corporateserviceseuronextcom
corporateserviceseuronextcom
More information can be found at the following link corporateserviceseuronextcom
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
19
COMMUNICATION
Market leader in webinars and webcasts services for financials results
internal communication marketing and external communication
Host your companyrsquos AGM virtually from anywhere and communicate with all
investors and stakeholders simultaneously in an engaging and transparent way
GOVERNANCE
The board portal to organise and run board meetings more efficiently
Enhance collaboration and streamline decision-making processes even remotely
Schedule meetings and share agendas or documents in a secured environment On
any device anywhere
EMBRACE EFFICIENCY IN TIMES OF CHANGE
INVESTOR RELATIONS
Optimise your investor relations team workflow and efficiently
manage relationships with institutional investors
Get ahead of the curve and prepare for a post-COVID-19 world with
our Advisory and IR Solutions
Our Post-Listing Advisory team can provide market intelligence and
decision-making analytics and support with crafting an effective
equity story
Shareholder Analysis helps to identify and monitor your shareholder
base and benchmark with your industry
IRManager is an intuitive investor CRM and targeting platform
Manage operational efficiency during COVID -19
COMPLIANCE
Automate the management of inside information and insider lists
In light of the recent development with COVID-19 ESMA has issued new guidelines
for market disclosure and financial reporting Ensure that you remain compliant
with the European ldquoMarket Abuse Regulationrdquo (MAR) and save time with our fully
automated platform
More information can be found at the following link corporateserviceseuronextcom
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
20
CONTACT DETAILSYour main contacts at Euronext
EXPERTLINE
myquestioneuronextcom
CORPORATE ACTIONS
corporateactionsfreuronextcom
BELGIUM
bvandenhoveeuronextcom
FRANCE
abaetenseuronextcom
IRELAND
oogormaneuronextcom
NORWAY
eirikhoibyauslandosloborsno
PORTUGAL
ffrancoeuronextcom
THE NETHERLANDS
rvanvlerkeneuronextcom
You can reach specific teams for any question related to your
daily activity and corporate actionsYou can reach your dedicated representative for any question
related to the particular situation in your country
Benoicirct van den Hove Head of Listing Belgium
Guillaume Morelli Head of SMEs France
Rene van Vlerken Head of Listing Netherlands
Filipa Franco Head of Listing Portugal
Alain Baetens Head of Large Caps France
Eirik Hoslashiby Ausland
Head of Listing Norway
Orla OrsquoGorman Head of Listing Ireland
gmorellieuronextcom
This presentation is for information purposes only and is not a recommendation to engage in investment activities The information and materials contained in this presentation are providedlsquoas isrsquo and Euronext does not warrant the accuracy adequacy or completeness of the information and materials and expressly disclaims liability for any errors or omissions This presentation isnot intended to be and shall not constitute in any way a binding or legal agreement or impose any legal obligation on Euronext This presentation and any contents thereof as well as anyprior or subsequent information exchanged with Euronext in relation to the subject matter of this presentation are confidential and are for the sole attention of the intended recipient Allproprietary rights and interest in or connected with this publication shall vest in Euronext No part of it may be redistributed or reproduced without the prior written permission of EuronextEuronext refers to Euronext NV and its affiliates Information regarding trademarks and intellectual property rights of Euronext is located at httpswwweuronextcomterms-usecopy 2020 Euronext NV ndash All rights reserved
clecaeuronextcom
Camille Leca Head of Listing France
