On the Edge Financial:
- OSK clarifies on DRB-Hicom shares Written by Financial Daily
Thursday, 28 July 2011 11:15
KUALA LUMPUR: OSK Investment Bank Bhd said it is not involved in the substantial decline in DRB-Hicom Bhd’s share price on Monday.
The investment bank’s clarification came amid market talk that the unusual sharp drop in DRB-Hicom’s share price in the final minutes of trading on the day was linked to the conglomerate’s call warrants. OSK Investment Bank is the issuer of the call warrants (DRBHCOM-CE CW).
“We, the bank, would like to clarify that we were not involved nor did we have any prior knowledge as to the purported ‘trade error’ reported in the article,” OSK Investment Bank said yesterday in a statement in response to a report by The Edge Financial Daily.
On Monday, DRB-Hicom shares fell 14% or 33 sen to close at RM1.95, making the counter the biggest loser on the local bourse.
The sharp decline in the stock’s price occurred within 10 minutes prior to the close of trading and involved about three million DRB-Hicom shares transacted at RM1.95. Prior to this, at 4.48pm, the stock had changed hands at RM2.28.
The call warrants were issued on Feb 2, 2011, at 17 sen each, and are due to expire next Monday. They have a strike price of RM1.95.
According to the investment bank, the first valuation date for the DRBHCOM-CE CW was on July 25. There are five valuation dates and the settlement price which is used to determine the maturity cash settlement amount is the average of the closing prices of DRB-Hicom shares for the five valuation dates.
As the closing price of the shares on Monday was RM1.95, OSK said there might “be a direct implication on the determination of the settlement price of the call warrant”.
Yesterday, the warrants ended unchanged at 12 sen while DRB-Hicom shares added one sen to close at RM2.25.Since the warrants’ listing on Feb 8, they have traded between a high of 29.5 sen on April 8 and a low of 11.5 sen on March 2.
During the last six months, DRB-Hicom shares had traded between a high of RM2.48 on April 6 and a low of RM1.73 on March 3.
This article appeared in The Edge Financial Daily, July 28, 2011
So OSK says it is not involved.
Well no matter what's said, this trading error or fat fingers just so happened on the very first valuation date used to calculate DRBHCOM-CE settlement price.
No matter what happens after this fat fingers day or 25 Jul 2011, with the first valuation date price of 1.95, the DRBHCOM is screwed.
Yes, it's dead for those 'investors' who had bet on DRBHCOM-CE prior to 25 Jul 2011.
Think about it....
Just one fat finger day and the game is over for the call warrant.
Well OSK claims it has nothing to do with this trading error.
Let's have faith and believe them.
Ok... no problem.
So what's next?
The fat fingers day has killed the warrant. DRBHCOM-CE is dead and no matter what OSK will benefit from this fat fingers day.
Now since OSK claims it has nothing to do with it, so why can't OSK show good faith to the market and strike out that valuation day? Yes remove 25 Jul as a valuation day. Replace it with the previous day (22 Jul) as the the first valuation day.
After all it's a trading error and after all OSK says it's not involved.
How about it OSK?
Comeon... show us some faith.
Be a gentleman and do the right thing.
I hope this is not asking too much. How can OSK win in this call warrant and everyone else lose?
I hope this is not a lousy suggestion from me. :/