Reflections on Volume

Big volume without further upside equals distribution
Big volume without further downside equals accumulation

Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study

Friday, July 16, 2010

CIMB issues first Callable Bull Certificates in Malaysia

CIMB Bank Bhd has issued the first four Callable Bull Certificates (CBLC) in the country, on AirAsia Bhd, Gamuda Bhd, Genting Bhd and Berjaya Corp Bhd.

The certificates, which were recently incorporated in Bursa Malaysia's listing requirements, will start trading today.

While Call Bear/Bull Certificates (CBBC) are an established form of investment in mature financial markets such as Hong Kong and in Europe, it is relatively unknown in Southeast Asia.

"CBBC is a new investment vehicle, which gives fresh option to the equities market and brings greater depth to the structured warrants market," Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff said at the launch of the certificates in Kuala Lumpur yesterday.

CIMB Bank plans to issue about four CBBCs a month progressively.

While CBLC bears similarities to call warrants, its main features are a Mandatory Call Event (MCE) and the fact that settlement is only done in cash.

A MCE is the issuers' right to call the CBBC, which leads to the suspension of the CBBC, should it reach the call price, prior to the expire date of the certificates.

For CBLCs, the call price is either at or above the exercise price of the underlying instrument.

If the call price or level is equal to the exercise price, investors will not receive any cash amount. If the call price/level is different from the exercise price, cash settlement will be done based on an established formula.

The call prices of AirAsia CBLC, Gamuda CBLC, Genting CLBC and BCorp CBLC are RM1.05, RM2.70, RM6.15 and RM1.06.

More than 50 per cent of the total structured warrants currently listed on Bursa Malaysia are issued by CIMB Bank.


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