tq derivatives rulebook

8/3/2019 Tq Derivatives Rulebook

http://slidepdf.com/reader/full/tq-derivatives-rulebook 1/183

EDX LONDON LIMITED

TURQUOISEDERIVATIVES

RULE BOOK V e r s i o n 1 . 1I s s u e d 2 6 S e p t e m b e r 2 0 1 1



RULE BOOK

3

Contents Page

PART.1 GENERAL 10 1.1 Introduction 10 1.2 Definitions 10 1.3 Relationship with Members 18 1.4 Membership Criteria 19 1.5 Trading Capacity of Members 20 1.6 Accounts 21 1.7 Transactions and Contracts 22 1.8 Confidentiality 23 1.9 Disciplinary Procedures 23 1.10 Appeals 24 1.11 Administrative Matters 24 1.12 Dissemination of Market Information 24 1.13 Technical Regulations 25 1.14 Copyright and Intellectual Property 26 1.15 Limits of Liability 27 1.16 Emergency Provisions 27 1.17 Amendments to these Rules 28 1.18 Governing Law 29 PART 2 LISTING AND TRADING OF LISTED PRODUCTS 30 2.1 Trading Principles 30 2.2 Platform Listing 30 2.3 Listing of New Listed Products 31 2.4 Designation of Listed Series 31 2.5 Market Making: General 31 2.6 Orders 32 2.7 Placing, Cancellation and Variation of Orders 32 2.8 Order Types 33 2.9 The Marketplace Service 34 2.10 Placing of Orders with the Marketplace Service 35 2.11 Indications of Interest 35



RULE BOOK

4

2.12 Instructions to Marketplace Service 35 2.13 Rules for Non-Standardised Contracts 36 2.14 Give-Ups 38 2.15 Deleted 39 2.16 Cancellation of Incorrect Transactions 39 2.17 Market Supervision 43 2.18 Position Limits 43 2.19 Prohibition of Market Manipulation 44 2.20 Trading Hours 44 2.21 Emergency Closure or Suspension of Trading 44 2.22 Information Concerning Listed Series 45 2.23 Eligible U.S. Investors 45 PART 3 CLEARING AND SETTLEMENT 47 3.1 Introduction 47 3.2 Registration and Requests for Registration of Off-Exchange Transactions 47 3.3 Protests 50 3.4 Re-registration 51 3.5 Exercise of Options Contracts 52 3.6 Fees and Cash Settlement Obligations 53 PART 4.1 FUTURES AND OPTIONS CONTRACTS BASED ON INTERNATIONAL ORDER BOOK

DEPOSITARY RECEIPTS (IOB DRs) 55

4.1.1 International Order Book Depositary Receipt (IOB DR) 55 4.1.2 Interpretation 55 4.1.3 Contract Specifications 58 4.1.3.1 Contract Specifications: Standardised Futures on an International Order Book Depositary

Receipt (“IOB DR”) 58 4.1.3.2 Contract Specifications: Standardised Options on an International Order Book Depositary

Receipt (“IOB DR") 59 4.1.4 Listing of New Series 60 4.1.5 Request for Listing of New Series 61 4.1.6 Designation of Expiration Month 61 4.1.7

Payment of Fees 62

4.1.8 Market Making Obligations 62



RULE BOOK

5

4.1.9 Market Maker Fees 64 4.1.10 Market Making: Sanctions 65 4.1.11 Orders 66 4.1.12 Registration of Off-Exchange Transactions 66 4.1.13 Requests for Re-Registration 67 4.1.14 Cancellation of Incorrect Transactions 67 4.1.15 Daily Cash Settlement 68 4.1.16 Settlement and Delivery of IOB DR Contracts 68 4.1.17 IOB DRs: Expiration Settlement Procedures 69 4.1.18 Options: Exercise 70 4.1.19 Standard Exercise of IOB DR 71 4.1.20.1 Recalculation Rules for IOB DR 71 4.1.20.2 General Principles Applicable to Recalculation of IOB Depositary Receipt Contracts 72 4.1.20.3 Recalculation Methods 74 4.1.20.4 Corporate Actions 75 PART 4.1.A FUTURES CONTRACTS BASED ON INTERNATIONAL ORDER BOOK DEPOSITARY

RECEIPT DIVIDENDS (“IOB DR DIVIDEND FUTURES”) AND LATE DIVIDEND FUTURESON INTERNATIONAL ORDER BOOK DEPOSITARY RECEIPT (“LATE IOB DR DIVIDENDFUTURES”) 81

APPENDIX 1 TO PART 4.1 - Adjustment Method - Fair Value 90 PART 4.2 FUTURES AND OPTIONS CONTRACTS BASED ON THE FTSE RUSSIA IOB INDEX 92 4.2.1 Introductory 92 4.2.2 Interpretation 92 4.2.3 Contract Specifications 95 4.2.3.1 Contract Specifications: Standardised FTSE Russia IOB Index Futures 95 4.2.3.2 Contract Specifications: Standardised FTSE Russia IOB Index Options 96 4.2.4 Listing of New Series 97 4.2.5 Designation of Expiration Months 97 4.2.6 Payment of Fees 98 4.2.7 Market Making Obligations, Market Making Fees, Market Making Sanctions 98 4.2.8 Orders 98 4.2.9 Registration of off-exchange transactions 98 4.2.10 Requests for Re-Registration 99 4.2.11 Cancellation of Incorrect Transactions 100



RULE BOOK

6

4.2.12 Expiration Settlement Price 100 4.2.13 Expiration and Settlement – FTSE Russia IOB Index Futures Contracts 100 4.2.14 Daily Cash Settlement : FTSE Russia IOB Index Futures Contracts 101 4.2.15 Closing Transactions: FTSE Russia IOB Index Futures Contracts 102 4.2.16 FTSE Russia IOB Index Futures Contracts: Expiration Settlement 102 4.2.17 Options: Exercise 103 4.2.18 Options: Standard Exercise 103 PART 4.5 FUTURES AND OPTIONS CONTRACTS BASED ON NORWEGIAN STOCK 105 4.5.1 Norwegian Stock - Introductory 105 4.5.2 Interpretation 105 4.5.3 Contract Specifications 107 4.5.3.1 Contract Specifications: Standardised Norwegian Stock Futures 107 4.5.3.2 Contract Specifications: Standardised Norwegian Stock Options 108 4.5.4 Listing of New Futures and Options Contracts 109 4.5.5 Designation of Expiration Month 110 4.5.6 Payment of Fees and Premium 111 4.5.7 Market Making Obligations 111 4.5.7A Market Making Fees 113 4.5.8 Market Making: Sanctions 114 4.5.9 Orders 115 4.5.10 Registration of off-exchange transactions 115 4.5.11 Requests for Re-Registration 116 4.5.12 Cancellation of Incorrect Transactions 116 4.5.12A Norwegian Stock Contracts: Daily Cash Settlement 116 4.5.13 Settlement and Delivery of Norwegian Stock Contracts 117 4.5.14 Norwegian Stock Futures: Settlement Procedures 118 4.5.15 Exercise of Norwegian Stock Options 119 4.5.16 Standard Exercise of Norwegian Stock Options 120 4.5.17 Recalculation of Norwegian Stock Contracts 120 Addendum to Rule 4.5.17 121 PART 4.6

FUTURES AND OPTIONS CONTRACTS BASED ON THE OBX INDEX 132

4.6.1 Introductory 132



RULE BOOK

7

4.6.2 Interpretation 132 4.6.3 Contract Specifications 134 4.6.3.1 Contract Specifications: Standardised OBX Futures 134 4.6.3.2 Contract Specifications: Standardised OBX Options 135 4.6.3.3 Deleted 136 4.6.4 Listing of New OBX Contracts 136 4.6.5 Deleted 136 4.6.6 Designation of Expiration Months 136 4.6.7 Payment of Fees 137 4.6.8 Market Making Obligations, Market Making Fees, Market Making Sanctions 137 4.6.9 Deleted 138 4.6.10 Orders 138 4.6.11 Registration of off-exchange transactions 138 4.6.12 Requests for Re-Registration 139 4.6.13 Cancellation of Incorrect Transactions 140 4.6.14 Daily Cash Settlement 140 4.6.15 Closing Transactions 141 4.6.16 OBX Futures Contracts: Expiration Settlement 141 4.6.17 Options: Exercise 143 4.6.18 Options: Standard Exercise 143 4.6.19 OBX Composition and Related Matters 144 Addendum to Rule 4.6.19 144 PART 4.7 FUTURES AND OPTION CONTRACTS BASED ON THE FTSE 100 INDEX

145 4.7.1 Introductory 145

4.7.2 Interpretation 145

4.7.3 Standardised FTSE 100 Index Futures Contract Specifications 148

4.7.4 Standardised FTSE 100 Index Futures Contract Specifications 150

4.7.5 Changing of the Listing or Expiration Day of a Series15050

4.7.6 Designation of Expiration Months15050

4.7.7 Payment of Fees15050



RULE BOOK

8

4.7.8 Orders15050

4.7.9. Registration fo off-exchange transactions15150

4.7.10 Rules for Non-Standardised Contracts (tailor made Contracts)15250

4.7.11 Market Making 152

4.7.12 Expiration Settlement Price1521

4.7.13 Statements 151

4.7.14 Index Futures Contracts: Expiration and Settlement 152

4.7.15 Index Futures Contracts: Daily Cash Settlement 152

4.7.16 Index Futures Contracts: Closing Transactions 152

4.7.17 Index Options Contracts: Exercise 153

PART 5 DEFAULT RULES1544

5.1 Definitions and Interpretation1544

5.2 Application1544

5.3 Events of Default

1555 5.4 Declaration of Member or Designated Non-Member to be a Defaulter

1566 5.5 Default Proceedings in respect of a Defaulter

1566 5.6 Default by a Member or Designated Non-Member who is not declared a Defaulter

1577 5.7 Defaulter also declared to be in default by the Designated Clearing House

1577 5.8 Termination of Futures and Options Transactions

1577 5.9 Exercise of Options

1588 5.10 Non-fulfilment of Delivery

1588 5.11 Sale of Stock, or Deliverable Instruments

1599 5.12 Other Actions

1599 5.13 Prohibition on Further Trading

1599



RULE BOOK

9

5.14 Settlement of Open Contracts1599

5.15 Procedures16060

5.16 Delegation of Functions16060

5.17 Costs16060

5.18 Co-operation with Other Bodies16161

PART COR I INTRODUCTION 162

COR 1.1 Introduction and Status of Cleared Only Contracts1622

COR 1.2 Definitions1633

PART COR 2 TRADE MATCHING1655

COR 2.1 Trade Reports Concerning Cleared Only Contracts1655

COR 2.2 Registration of Cleared Only Contracts1666

COR 2.3 Requests for Re-Registration1677

COR 2.4 Deleted 1688

COR 2.5 Delivery and Settlement of Cleared Only Contracts - General1688

COR 2.6 Fees: General1699

PART COR 3 CLEARED ONLY CONTRACTS BASED ON THE INTERNATIONAL ORDER BOOKDEPOSITARY RECEIPT (“IOB DR”) AND THE FTSE RUSSIA IOB INDEX 1700

COR 3.1

Contract Specifications17070 COR 3.1.1 Contract Specifications: Cleared Only Contracts-IOB DR Futures

17070 COR 3.1.2 Contract Specifications: Cleared Only Contracts-IOB DR Options

17171 COR 3.1.3 Contract Specifications: Cleared Only Contracts-FTSE Russia IOB Index Futures

1722 COR 3.1.4 Contract Specifications: Cleared Only Contracts-FTSE Russia IOB Index Options

1722 COR 3.2 Settlement and Delivery of Cleared Only IOB DR Contracts: General and Application of

Rules in Part 4.11733



RULE BOOK

10

COR 3.3 Settlement of Cleared Only FTSE Russia IOB Index Contracts: General and Application ofRules in Part 4.21744

PART COR 4 Deleted

PART COR 5 Deleted

PART COR 6 CLEARED ONLY CONTRACTS BASED ON NORWEGIAN STOCK AND THE OBX INDEX

1766 COR 6.1.1 Contract Specifications: Cleared Only Contracts - Norwegian Stock Futures

1766 COR 6.1.2 Contract Specifications: Cleared Only Contracts-Norwegian Stock Options

1777 COR 6.1.3 Contract Specifications: Cleared Only Contracts-OBX Index Futures

1799 COR 6.1.4 Contract Specifications: Cleared Only Contracts-OBX Index Options

1800 COR 6.2 Settlement and Delivery of Cleared Only Norwegian Stock Contracts: General and

Application of Rules in Part 4.51811

COR 6.3 Settlement of Cleared Only OBX Index Contracts: General and Application of Rules in Part4.61822 Fee Schedule Deleted 183



RULE BOOK

11

PART.1 GENERAL

1.1 Introduction

1.1.1 Turquoise Global Holdings Limited (“Turquoise”) is a Multilateral Trading Facility authorisedand regulated by the Financial Services Authority and has made arrangements for clearingservices for Listed Products and clearing services in relation to Cleared Only Contracts to beprovided by LCH.Clearnet Limited (“LCH”) acting as the Designated Clearing House forTurquoise Derivatives. LCH is a Recognised Clearing House in the United Kingdom pursuantto the Financial Services and Markets Act 2000 (the “Act”).

References in these Rules to “Turquoise Derivatives” or “Tuquoise” shall be construed asreferences to TGHL.

1.1.2 Turquoise provides a combined marketplace in relation to Commonly Traded Products withOslo Børs ASA (“Oslo Børs”) owned by Oslo Børs VPS Holding ASA. Oslo Børs isrecognised as an exchange incorporated as a public limited liability company under the laws ofNorway, which is used by its members, amongst other things, for trading of securities andsecurities derivatives.

1.1.3 These Rules prescribe the terms on which Turquoise provides trading facilities to its Membersand the arrangements made by Turquoise in conjunction with the Designated Clearing Housein relation to the clearing and settlement of Contracts entered into under these Rules.

The Rules governing the reporting of transactions in Cleared Only Contracts are set out in theRules for Cleared Only Contacts at Part COR of these Rules.

In the event that there is any conflict between these Rules and any other statement whetherwritten or oral made by Turquoiseat any time, the terms of these Rules shall prevail.

1.1.4 Members are entitled to participate in the trading and clearing of equity derivative and otherinstruments provided for in these Rules and in the reporting to Turquoiseof contracts enteredinto on a bilateral basis for registration pursuant to the Rules for Cleared Only Contracts.

1.1.5 The trading services provided by Turquoiseare provided by it in its capacity as an MTF subject

to the supervision of the Financial Services Authority (FSA) and to the requirements of FSAhandbook relating to Mulitilateral Trading Facilities.

1.2 Definitions

1.2.1 Unless the contrary intention appears, the following terms used in these Rules shall have themeanings given below:

“Account” means:

(i) an account held by a General Clearing Member at the Designated Clearing House inwhich Futures and Options transactions entered into whether on own account or onbehalf of a Client or a customer by such General Clearing Member or by a Member

for whom the General Clearing Member acts as such pursuant to the Clearing HouseRegulations may be registered; or

(ii) an account held by a Clearing Member at the Designated Clearing House in whichFutures and Options transactions entered into by such Clearing Member whether onown account or on behalf of a Client pursuant to the Clearing House Regulations maybe registered;

“Account Holder” in relation to an Account, means the General Clearing Member or theClearing Member in whose name the Account is held at the Designated Clearing House;

“American Style Option” means an Option which the Holder may exercise at any time duringthe Term;

“Associated Clearing House” means any body acting as the provider of clearing services toan Associated Exchange;



RULE BOOK

12

“Balance Contract” means the arrangements established between the Designated ClearingHouse and Oslo Børs governing the administration and settlement of contracts resulting fromTransactions effected by a member of Turquoise and a member of an Associated Exchange;

“BCS” means Borsa Italiana Technology Clearing Station which is used by Members toaccess Turquoise‟s clearing services;

“BTS” means Borsa Italiana Technology trading station which is used by Members to accessTurquoise‟s trading services;

“Broker” means a Member which has entered into the Membership Agreement and whichmay enter into Transactions on behalf of Clients in accordance with these Rules;

“Call Option” means:

(i) in relation to an Index Option, a Contract under which the Holder of the Option has theright, against the obligation to pay the Premium to the Writer, to buy the value of theContract Index at the Strike Price on the Expiration Date for such Contract and theWriter has the obligation to sell the value of the Contract Index at the Strike Price onthe Expiration Date for such Contract to the Holder against the right to receivepayment of the Premium; and

(ii) in relation to a Stock Option, a Contract under which the Holder of the Option has theright, against the obligation to pay the Premium to the Writer, to buy the UnderlyingStock from the Writer at the Strike Price on the Exercise Date for the Contract and theWriter has the obligation to sell the Underlying Stock at the Strike Price on theExercise Date for the Contract to the Holder against the right to receive payment ofthe Premium;

“CC&G” means la Cassa di Compensazione e Garanzia S.p.A. Further information can befound at http://www.ccg.it;

“Clearing Capacity” means the status conferred by the Designated Clearing House on aMember enabling it to act as a General Clearing Member or a Clearing Member as the casemay be;

“Clearing House Regulations” means the General Regulations, Default Rules andProcedures of the Designated Clearing House as amended from time to time;

“Clearing Member” means a member of the Designated Clearing House including a GeneralClearing Member as the context may require;

“Clearing Services Agreement” means the agreement between Turquoise and LCH;

“Client” means a person for whom a Broker acts in relation to the effecting and settlement oftransactions at Turquoise pursuant to these Rules;

“Closing” means the process whereby on registration of a Closing Transaction, the rights andobligations of the Account Holder in question in respect of the Opening Transaction and theClosing Transaction are extinguished;

“Closing Transaction” means, in relation to an Option held by the Member, an OptionsContract in the same Series written by the Member and, in relation to an Option written by theMember, means an Options Contract in the same Series bought by the Member;

“Collateral” means one or more of the forms of security accepted by the Designated ClearingHouse for such purposes;

“Collateral Balance” means the value of the Collateral provided to the Designated ClearingHouse in respect of transactions under these Rules by a Clearing Member or a GeneralClearing Member at any time, such value to be calculated in accordance with the ClearingHouse Regulations;

“Collateral Deficiency” means the amount if any by which a Member's Margin Requirementat any time exceeds its Collateral Balance;

“Collateral Surplus” means the amount if any by which the value of the Collateral provided tothe Designated Clearing House by a Clearing Member or a General Clearing Member at anytime exceeds such party's Margin Requirement at such time;



RULE BOOK

13

“Combination” means an Order the terms of which stipulate that two or more Orders indifferent Series shall be executed simultaneously with other Orders forming part of theCombination;

“Commonly Traded Product” means a Product which is eligible for trading by Members andmembers of Oslo Børs as specified more particularly in Turquoise‟s Contract Specifications;

“Compliance and Regulatory Committee” means a sub-committee of the Board withoversight of the compliance function and with responsibility for, amongst other things, thedisciplinary process;

“Contract Base” means the Contract Index or Underlying Stock on which a Listed Product isbased;

“Contract Index” means the Index designated as such by Turquoiseon which the IndexOption or Index Future in question is based;

“Contract Series” means Futures Series and Option Series collectively and “Series” shall beconstrued accordingly;

“Contract Specification” in relation to a Contract means the detailed information set out at

the section of Part 4 of these Rules applicable to the Contract in question setting out thestandard terms of such Contract, as varied from time to time;

“Co-Operation Agreement” means the agreement between Turquoiseand Oslo Børs wihregards to the access to a combined Order Book;

“Counterparty” means the Member or Associated Clearing House which is the opposite partyto the Designated Clearing House in its capacity as a central counterparty to a RegisteredContract and “Counterparties” shall be construed accordingly;

“Day Account” means the Account on which Transactions effected by a Member areregistered initially prior to final allocation to the Account of the Member or of its GeneralClearing Member where appropriate for clearing and settlement;

“Default Rules” means the rules set out in Part 5 hereof;

“Designated Clearing House” means LCH.Clearnet Limited, a Recognised Clearing House,as the provider of clearing services to Turquoisein respect of Listed Instruments and ClearedOnly Contracts;

“European Style Option” means an Option which may only be exercised by the Holder on theExpiration Date for such Contract;

“Exercise” in relation to an Options Contract, means the process of settlement applicable tosuch Contract to be effected pursuant to an Exercise Order given by the Holder of the Optionor on Standard Exercise thereof in accordance with these Rules;

“Exercise Date” in relation to an Options Contract, means the day on which Exercise iseffected whether by submission of an Exercise Order or on Standard Exercise;

“Exercise Fee” means the fee payable to Turquoiseby the Holder of an Options Contract onits Exercise;

“Exercise Index Value” in relation to an Index Option, means the value given in the Option'sdesignation;

“Exercise Order” means the request submitted to Turquoiseby the Holder of an Option thatsuch Option be exercised;

“Exercise Settlement Day” means the day on which the obligations of the parties to anOptions Contract following its Exercise are due for settlement as specified in the ContractSpecification for the Product in question;

“Exercise Settlement Statement” means the Settlement Statement issued by

Turquoisefollowing Exercise of an Options Contract showing the rights and obligations of theCounterparties following the Expiration of the Contract;



RULE BOOK

14

“Expiration” in relation to a Series means the process whereby trading in such Series isterminated on the Expiration Date for such Series and the rights and obligations of Members inrespect of outstanding Contracts in such Series are settled in accordance with the provisionsgoverning settlement of such Contracts set out in these Rules;

“Expiration Date” in relation to a standardised Contract, means the day designated as suchby Turquoise as the day on which such Contracts will expire and, in relation to a Non-

Standardised Contract, means the day agreed upon by the Parties as the day on which suchContract will expire;

“Expiration Month” in relation to a standardised Contract, means the month designated byTurquoiseas the month in which such Contract will expire and in relation to a Non-StandardisedContract, means the month agreed upon by the Parties as the month in which such Contractwill expire;

“Expiration Settlement” means the procedures for final settlement of a Contract on Expirationprovided for in these Rules and the Clearing House Regulations;

“Expiration Settlement Day” in relation to a Series, means the day on which final settlementof Contracts in such Series which have proceeded to Expiration Settlement are to beperformed;

“Expiration Settlement Statement” means the Settlement Statement issued byTurquoisefollowing Expiration of a Futures Contract showing the rights and obligations of theCounterparties following the Expiration of the Contract;

“Expiration Year” in relation to a standardised Contract means the year designated byTurquoiseas the year in which such Contract will expire and in relation to a Non-StandardisedContract, means the year agreed upon by the Parties as the year in which such Contract willexpire;

“FSA” means the Financial Services Authority;

“Fast Market” means significant market movements in respect of a Contract Base;

“Fee” means the amount due and payable by a Member in relation to services provided byTurquoisein accordance with these Rules and “Fees” shall be construed accordingly;

“First Listing Day” means the first day on which Contracts in a particular Series will beaccepted for registration by Turquoise;

“Futures Class” means Futures Contracts based on the same Underlying Stock or ContractIndex as the case may be;

“Futures Contract” means a standardised Futures Contract or a Non-Standardised FuturesContract which is registered by Turquoisein the Account of the Member and “Future” and“Futures” shall be construed accordingly. Unless otherwise specifically stated, a FuturesContract includes such a Contract whether written by Turquoiseor by the Member. FuturesContracts are subject to daily Cash Settlement;

“Futures Contract Price” in relation to a Futures Contract, means the price agreed upon by

the Parties to such Contract on concluding the Transaction in question to be used indetermining the rights and obligations of the Parties on Cash Settlement of an Index Future oron Physical Settlement of a Stock Future as the case may be;

“Futures Contract Value” in relation to an Index Futures Contract means the FuturesContract Price for such Contract multiplied by the Index Multiplier and in relation to a StockFutures Contract means the Futures Contract Price for such Contract multiplied by the numberof shares of the Underlying Stock represented by such Contract;

“Futures Only Market Maker” means a Member which has agreed to act as such in respectof one or more Listed Product.

“Futures Series” means Futures Contracts having the same Expiration Month and ExpirationYear;

“GCM Agreement” means the NCM-GCM-LCH Agreement in the form prescribed by theDesignated Clearing House governing the relationship between the Designated ClearingHouse, a General Clearing Member and a Non-Clearing Member in respect of Registered



RULE BOOK

15

Contracts and Cleared Only Contracts to be entered into by such parties in accordance withthe Clearing House Regulations;

“General Clearing Member” means a Member which is a member of the Designated ClearingHouse and which has entered into the GCM Agreement prescribed by the Designated Clearing

House for such purposes for the time being, thereby agreeing to act in the capacity of General

Clearing Member for the Member in question;

“General Clearing Member Account” means an Account maintained by the DesignatedClearing House for the purposes of registering Contracts on behalf of Non-Clearing Membersfor which the General Clearing Member acts as such as provided for more particularly in theClearing House Regulations;

“Held Option” means:

(i) in relation to a Call Option, a Contract the Holder of which has the right to buy theContract Base at the Strike Price on Exercise of the Option in accordance with theseRules;

(ii) in relation to a Put Option, a Contract the Holder of which has the right to sell theContract Base at the Strike Price on Exercise of the Option in accordance with these

Rules;

“High Speed Vendor Feed” (HSVF)” means Turquoise‟s electronic public market datainformation dissemination system;

“HSVF Subscriber Agreement” means the agreement governing the right to subscribe toreceive or display TurquoiseMarket Data using HSVF;

“Holder” in relation to an Options Contract, means the Member entitled to exercise the Optionin accordance with its terms;

“Index Contracts” means Index Futures and Index Options collectively;

“Index Future” means a Futures Contract based on any of the Stock Indexes referred to inPart 4;

“Index Multiplier” in relation to a Contract Index, means the amount specified as such in theContract Specification for Products based on the Index in question;

“Index Option” means an Options Contract based on any of the Stock Indexes referred to inPart 4;

“Index Provider” means the party for the time being acting as provider of the Contract Indexin accordance with the provisions of the section of Part 4 applicable to the Contract Index;

“Index Value” means the value of the Contract Index at any time calculated in accordancewith the provisions of the section of Part 4 applicable to such Contract Index;

“Indication of Interest” means a non-binding indication of interest in a transaction given to

the Marketplace Service by a Member;

“Information List” means the list published by Turquoiseshowing the type of informationwhich is available to Members and third parties and the means of dissemination of suchinformation;

“Lifetime” in relation to a Contract means the period from the First Listing Day to theExpiration Date inclusive;

“Listed Product” means an Product which is listed by Turquoise and which may be traded bymeans of its facilities, the terms of which are specified more particularly in the ContractSpecification for the Product in question set out at Part 4 to these Rules and “Product” shallbe construed accordingly;

“Listed Series” means Futures Series and Options Series collectively and “Series” shall be

construed accordingly;

“Listings Schedule” means the schedule published by Turquoise showing Listed Productsand Listed Series for the time being;



RULE BOOK

16

“London Bank Day” means a day other than a Saturday or a Sunday on which banksgenerally are open for business in London;

“Margin Requirement” in relation to an Account of a Member, means the requirement asdetermined by the Designated Clearing House to provide security for the fulfilment of theobligations of the Member arising from Contracts registered in such Account;

“Market Information” means information relating to Listed Products which is published byTurquoise as described in Rule 1.12;

“Market Maker” means a Member which has entered into the Market Maker Agreement;

“Market Maker Account” means an Account of the type described in Rule 1.6.1;

“Market Maker Agreement” means the standard form agreement entered into between aMarket Maker and Turquoise whereby the Market Maker agrees to act as such in relation tocertain specified products;

“Market Maker Document” means the document, as amended from time to time, whichcontains further details in respect of Market Makers obligations, and applicable sanctions. Thisdocument shall be read in conjunction with the Market Maker Agreement and the Turquoise

Derivatives Rules and is available at www.tradeturquoise.com;

“Market Order” means an Order placed by a Member subject to a requirement that it must beaccepted immediately or withdrawn;

“Marketplace Service” means the marketplace service provided by Turquoiseto Members asdescribed more particularly in Part 2 of these Rules and the abbreviation “MPS” shall beconstrued accordingly;

“Member” means a party which has entered into the Membership Agreement with Turquoise;

“Membership Agreement” means the standard form agreement entered into between aMember and Turquoisegoverning that party's position as a Member at Appendix B;

“Membership Criteria” means the requirements applied by Turquoiseset out at Rule 1.4which need to be satisfied by applicants for membership in the category in question;

“Most Liquid Series” means, in the case of a Stock Contract, the Series which is closest tothe price of the Underlying Stock and in the case of an Index Contract, the Series which isclosest to the value of the Contract Index;

“Non-Clearing Member” means a Member which is a member of the Designated ClearingHouse other than a Clearing Member and which is a party to a GCM Agreement;

“Non-standardised Combination” means a Combination other than a StandardisedCombination;

“Non-Standardised contract” means a Stock or Index Contract executed or reported toTurquoisefor registration in accordance with Rule 2.13;

“Opening Transaction” means in relation to an Options Contract, a transaction in a Seriesother than a Closing Transaction;

“Options Class” means Options based on the same Underlying Stock or Contract Index asthe case may be;

“Options Contract” means a Call Option and a Put Option collectively and “Option” shall beconstrued accordingly;

“Options Series” means a series of Contracts based on an Listed Product of the same Typehaving the same Expiration Month and Year and the same Strike Price;

“Options Type” means either a Call Option or a Put Option as the case may be and “Type” shall be construed accordingly;

“Order” means an unconditional offer by a Member to buy or sell Products in a Listed Series;



RULE BOOK

17

“Orderbook” in relation to a Listed Product, means the record of current Orders for suchProduct;

“Orderbook Order” means an Order placed by a Member subject to a condition that it bewithdrawn at the normal close of trading for the Product in question on the day it is entered orat the time specified by the Member on placing the Order;

“Oslo Børs” means Oslo Børs ASA owned by Oslo Børs VPS Holding ASA;

“Parameter Value List” means the list published by the Designated Clearing House showingthe parameter values used in the calculation of the Margin Requirements of Members;

“Penalty Fee” means the fee payable to Turquoiseby a Member in the circumstancesprescribed in these Rules where the Member has failed to perform its obligations under suchRules at the time or in the manner required therein;

“Physical Settlement” in relation to a Futures or an Options Contract means the process ofsettlement of such Contract to be performed by the delivery of the underlying security;

“Position Limits” means the limits applied from time to time by Turquoisewhether generally orin relation to a particular Member imposing limits on the number of Contracts of any type whichmay be executed by a Member;

“Premium” means the consideration due to the seller for entering into an Options Contract asagreed by the Holder and the Writer of the Contract on entering into it;

“Premium Settlement Day” means the day on which the Premium for an Options Contract isto be paid;

“Prescribed Spread” in relation to an Options Contract or a Futures Contract means therange within which bid and offer prices must be provided by Market Makers in such Contracts;

“Proprietary Account” means an Account of the type described in Rule 1.6.1 in whichtransactions entered into by a Member on its own account, and only such transactions, are tobe registered;

“Protest” means a request submitted by a Member to Turquoiserequesting the cancellation oramendment of an incorrect Registration or the Registration of a Transaction which had beenomitted, or a request for an amendment of an incorrectly executed or non-executed Exercise orCash Settlement;

“Put Option” means:

(i) in relation to an Index Option, a Contract under which the Holder has the right on itsExpiration Date to sell the value of the Contract Index to the Writer at its Strike Priceagainst the obligation to pay the Premium and the Writer has the obligation to buy thevalue of the Contract Index from the Holder at its Strike Price on its Expiration Date inconsideration for the payment of the Premium; and

(ii) in relation to a Stock Option, a Contract under which the Holder has the right onExercise of the Option to sell the Underlying Stock to the Writer at its Strike Price

against the right to receive the Premium and the Writer has the obligation to buy theUnderlying Stock from the Holder at its Strike Price on its Expiration Date inconsideration for the payment of the Premium;

“Recognised Clearing House” means an organisation recognised as such pursuant to theAct;

“Registered Contract” means a Futures Contract or an Options Contract registered in anAccount following the execution of a Transaction entered into by means of Turquoise's facilitiesor the acceptance by it of a Request for Registration of a transaction in a Listed Producteffected off exchange in accordance with these Rules and “Contract” shall be construedaccordingly;

“Registered Counterparty” means the Account Holder or Associated Clearing House whichis registered as the opposite party to a Registered Contract to the Designated Clearing House

following execution of a Transaction or registration of a Contract in accordance with theseRules;



RULE BOOK

18

“Registrable Contract” means a contract which is eligible for registration in a ClearingAccount in accordance with these Rules;

“Registration” means the process of recording Transactions and transactions in ListedProducts which have been effected off exchange, registration of which has been requested inthe manner provided for in these Rules, in the Account at the Designated Clearing Housespecified by that Member or in the appropriate Account of its General Clearing Member in

accordance the Clearing House Regulations;

“Registration Day” in relation to a Contract, means the day on which such Contract isregistered by the Designated Clearing House in accordance with these Rules;

“Request for Re-registration” means a request submitted by a Clearing Member to theDesignated Clearing House seeking the Re-registration of one or more Registered Contracts;

“Re-registration” means the process of transferring a Registered Contract from one Accountto another Account pursuant to a Request for Re-registration submitted in accordance withthese Rules;

“Re-registration Fee” means the fee payable on Re-registration of a Contract pursuant toRule 3.5;

“Rules” means these rules, including the Rules for Cleared Only Contracts at Part COR andthe documents appearing in the Appendices as amended from time to time;

“Rules for Cleared Only Contracts” means the Rules at Part COR of these Rules and theAppendices to Part COR, as amended from time to time;

“Settlement” in relation to a Futures Contract or an Options Contract means the proceduresfor Cash Settlement and or Physical Settlement applicable to the Contract in question set out inthe relevant section of Part 4 to these Rules and in the Clearing House Regulations on theExpiration or Exercise of such Contract;

“Settlement Day” in relation to a Contract, means the day on which the settlement obligationsof such Contract are to be performed;

“Settlement Statement” means the note showing the details of the settlement amounts due toor payable by a Member following settlement;

“Settlement Value” means the value used by Turquoise for the purposes of determining theExpiration Settlement Amount for a Contract;

“Standard Exercise” means the procedures governing the exercise of in-the-money OptionsContracts prescribed in Part 4 of these Rules;

“Standardised Combination” means a Combination of a type which Turquoise designates assuch for the time being;

“Stored Order” means an Order relating to a standardised Listed Product which is stored inTurquoise's electronic orderbook in accordance with these Rules;

“Strike Price” in relation to an Options Contract, means the price agreed upon by the partieson entering into the Transaction in question to be used in determining the rights and obligationsof the Parties on Cash Settlement of an Index Option or on Physical Settlement of a StockOption as the case may be;

“Suspension of Trading” means a trading suspension on Turquoise or of any underlyingprimary markets;

“Trading Capacity” means the status conferred by Turquoise allowing a Member to trade onTurquoise in the capacity of a Broker, Proprietary Trader or Market Maker as the case may be;

“Trading Counterparties” means, in relation to a Transaction effected onTurquoise, the partywhose offer to buy or to sell a Contract is accepted and the Member by whom such offer isaccepted;

“Trading Day” in relation to a Listed Product means any day on which Turquoise is open fortrading such Product;



RULE BOOK

19

“Transaction” means an agreement for the sale or purchase of an Listed Product betweenMembers of Turquoise or between a Member of Turquoise and a member of Oslo Børsconcluded by means of the facilities provided by Turquoise for the trading of such Instrumentsin accordance with these Rules;

“Turquoise Management” means the management of Turquoise Global Holdings Limited;

“Turquoise Market Data” means the market information originating from Turquoise‟s tradingand clearing operation facilities such as quotes, orders, trades and volumes;

“Turquoise Information Licence Agreement” means the agreement governing the right todisseminate Turquoise‟s Market Data.

“Writer” in relation to an Options Contract, means the Member whose Contract is liable to beexercised in accordance with its terms;

“Written Option” means:

(i) in relation to a Call Option, a Contract the Writer of which is obliged to sell theContract Base at the Strike Price on Exercise of the Option in accordance with theseRules;

(ii) in relation to a Put Option, a Contract the Writer of which is obliged to buy theContract Base at the Strike Price on Exercise of the Option in accordance with theseRules.

1.2.2 Save where these Rules state expressly to the contrary, all references to time herein arereferences to London time.

1.3 Relationship with Members

1.3.1 Turquoise is committed to providing trading services of the highest quality to its Members andto ensuring that the markets in Listed Products meet the standards set by the FSA.

1.3.2 To this end Turquoise aims to:

(i) set rules and standards for its Members which ensure the provision by it of a fairmarket in which listed products can be properly priced;

(ii) grant membership only to suitably qualified bodies of good standing and operateappropriate internal procedures for the supervision of the activities of its Members andtake enforcement action as necessary to ensure that the conduct of Members is of therequired standard;

(iii) grant membership only to bodies having sufficient resources and to monitor thecontinuing compliance with these requirements by Members to minimise the risk ofdefault by a Member and to minimise the impact on the market should a default occur;and

(iv) monitor and assess trading on the platform, the activities of Members, the quality of its

markets and to enforce compliance with these Rules by utilising its technology andother means.

1.3.3 Turquoise believes that the quality of its Members and their standard of conduct is offundamental importance to its standing as an MTF and is firmly committed to the fair andproper enforcement of these Rules. Disciplinary procedures and the sanctions available toTurquoise against Members in respect of breaches of these Rules are set out in Rule 1.9below.

1.3.4 All Members shall comply fully with these Rules.

1.3.5 A Member shall inform Turquoise immediately of any failure by the Member to comply with theRules.

1.3.6 The Member shall inform Turquoise immediately of any change in the Member‟s status as a

Clearing Member or General Clearing Member or of any arrangements made by it with aGeneral Clearing Member.



RULE BOOK

20

1.3.7 The Member shall inform Turquoise immediately of any change in the financial position of theMember which might cause it to fail to satisfy the financial criteria applicable to it or whichotherwise might have an adverse effect on its ability to perform its obligations to Turquoise.

1.3.8 The Member shall inform Turquoise immediately of the occurrence of any event which affects itsregulatory capacity required for its activities as a Member.

1.3.9 The Member shall report any dispute with any third party relating to a transaction in a ListedProduct to Turquoise at the earliest opportunity.

1.3.10 The Member shall inform Turquoise in writing of any change in its name, principal place ofbusiness or principal shareholders, directors or officers and of any change in the list of personsauthorised to effect transactions at Turquoise. Wherever possible, such notice shall be givenprior to the occurrence of the event in question.

1.3.11 The Member shall allow Turquoise access to its premises and relevant records and shall co-operate fully in connection with any investigation which Turquoise considers needs to beundertaken into any aspect of the conduct of the Member arising from its activities as a memberof Turquoise or any suspected breach by such Member of these Rules. Turquoise will generallygive the Member advance notice of its intended investigation.

1.3.12 Deleted

1.3.13 Turquoise may use the services of the FSA or any other appropriate regulatory organisation inany investigation undertaken by it under these Rules.

1.3.14 Turquoise shall treat any information provided to it by a Member in accordance with these Rulesas confidential but may pass any such information or any information which it obtains under aninvestigation under these Rules to the FSA, a recognised clearing house, any other body havingresponsibility for the regulation of financial services business in the United Kingdom, Oslo Børsor to any overseas body having responsibility for the regulation of financial services business ina jurisdiction connected with the Member involved in the investigation. Save where it is requiredto do so by operation of law or by virtue of an order of a court of competent jurisdiction or tocomply with its obligations to provide information to any governmental or multinationalorganisation or agency, Turquoise shall not disclose any such information or any informationcoming into its possession as a result of such investigation to any other person without theexpress authorisation of the Member in question.

1.3.15 Turquoise may exclude a Member from trading Listed Products or suspend its right to submitreports pursuant to the Rules for Cleared Only Contracts or place such other restrictions on theactivities of the Member as Turquoise considers necessary following any change in thecircumstances of the Member of the type described in this Rule 1.3.

1.4 Membership Criteria

1.4.1 Members are required to satisfy the Membership criteria applied by Turquoise appropriate tothe capacity in which they intend to act at Turquoise.

1.4.2 The Applicant must be an EEA regulated investment firm or credit institution (as defined underMiFID); or

1.4.3 The Applicant must show that it is fit and proper; and

1.4.4 Turquoise Management must be satisfied that the Applicant has or will have sufficientlycompleted conformance testing prior to conducting business on Turquoise; and

1.4.5 Turquoise Management must also be satisfied that the Applicant has adequate organisationalarrangements and a sufficient level of trading ability and competence and other relevantsystems and controls; and

1.4.6 The Applicant must be a clearing member of a central counterparty approved by TurquoiseManagement or have made satisfactory arrangements with an entity that is in order toguarantee the clearing of any transactions executed on Turquoise.

The rules and procedures governing admission to membership of the Designated Clearing

House in the respective capacities of Clearing Member and General Clearing Member areprovided in the Clearing House Regulations. The financial criteria applied by the DesignatedClearing House for such purposes for the time being are:



RULE BOOK

21

(i) A General Clearing Member must have net current assets in excess of £2 million andfully paid-up share capital or other non-distributable reserves of £1 million.

(ii) A Clearing Member must have net current assets in excess of £1 million and fullypaid-up share capital or other non-distributable reserves of £500,000.

(iii) A Non-Clearing Member is not subject to any specific financial criteria.

1.4.7 In accordance with Rule 1.4.6, a Member shall maintain the necessary clearing arrangements,either directly or with a General Clearing Member acting on its behalf, and in particular isrequired:

(i) to maintain one or more accounts at a bank approved by the Designated ClearingHouse to ensure the timely settlement of all transactions;

(ii) to complete such documents as may be required by the Designated Clearing House,and applicable Central Securities Depository or other agent involved in the Settlementand Delivery of Stock on Expiration or Exercise of Stock Futures and Options in theforms prescribed by the Designated Clearing House;

(iii) to satisfy Turquoise that arrangements are in place for the provision by the Member or

its General Clearing Member of Collateral as and when required in accordance withthese Rules; and

(iv) to establish PPS arrangements in accordance with Rule 1.11.1.

1.4.8 Deleted

1.4.9 There is no restriction on the number of Members of Turquoise.

1.4.10 Deleted

1.5 Trading Capacity of Members

1.5.1 General

1.5.1.1 Members may effect transactions on the MTF in one of three capacities:

(i) Broker;(ii) Market Maker; or(iii) Proprietary Trader.

1.5.1.2 Where a Member has the necessary regulatory authorisation, it may act in more than one ofthe above capacities.

1.5.1.3 Further provisions relating to the Trading Capacity of Brokers at Turquoise are set out at Rule1.5.2.

1.5.1.4 Further provisions relating to the Trading Capacity of Market Makers at Turquoise are set out

at Rule 1.5.3.

1.5.1.5 Further provisions relating to the Trading Capacity of Proprietary Traders are set out at Rule1.5.4.

1.5.2 Brokers

1.5.2.1 A Member which wishes to act as a Broker at Turquoise shall satisfy Turquoise that it has theregulatory authorisation to act in this capacity.

1.5.2.2 A Broker may enter into transactions at Turquoise either on a proprietary basis or on behalf ofa Client.

1.5.2.3 Brokers shall ensure that transactions which they enter into at Turquoise are allocated to thecorrect Account in accordance with Rule 1.6 and the Clearing House Regulations.

1.5.2.4 All transactions entered into by a Broker on a proprietary basis shall be registered in theBroker's Proprietary Account. Transactions entered into by a Broker on behalf of a Client shallnot be registered in this Account.



RULE BOOK

22

1.5.2.5 Transactions entered into by a Broker on behalf of a Client shall be registered in one of theAccounts for the registration of such transactions described in Rule 1.6 and the Clearing HouseRegulations.

1.5.3 Market Makers

1.5.3.1 A Member which wishes to act as a Market Maker in one or more Listed Products shall satisfyTurquoise that it has the necessary regulatory authorisation and technical capability to act insuch capacity.

1.5.3.2 A Member which satisfies Turquoise in these respects shall enter into the Market MakerAgreement with Turquoise and shall specify the Listed Products in which it intends to act as aMarket Maker and the market making capacity in which it intends to act in respect of each suchProduct.

1.5.3.3 All transactions entered into by a Market Maker in the capacity of Market Maker shall beregistered in a Market Maker Account.

1.5.3.4 Transactions in Listed Products entered into by a Market Maker otherwise than in the capacityof Market Maker shall not be registered in its Market Maker Account.

1.5.4 Proprietary Traders

1.5.4.1 A Member which wishes to act as a Proprietary Trader shall satisfy Turquoise that it has thenecessary regulatory authorisation to act in this capacity.

1.5.4.2 A Proprietary Trader shall not effect transactions on behalf of customers. All transactionsentered into by a Proprietary Trader shall be registered in the Proprietary Trader's ProprietaryAccount.

1.6 Accounts

1.6.1 Subject to Rule 1.4.8 a Member shall only be entitled to participate in trading at Turquoise if itis either a Clearing Member, a General Clearing Member or is a Non-Clearing Member whichhas entered into a GCM Agreement with a General Clearing Member and the Designated

Clearing House.

1.6.2 A Member (other than a Member which has arranged for transactions in Listed Productsentered into by it to be cleared by a General Clearing Member) shall open one or moreClearing Accounts at the Designated Clearing House for the Registration of Transactionseffected by the Member. A Member which intends to act as a Market Maker shall open one ormore accounts for Registration of Contracts entered into by it in the capacity of Market Makerspecified for such purposes in the Clearing House Regulations.

A Member which intends to enter into transactions on its own account and a Proprietary Tradershall open an Account (Proprietary Transactions) for Registration of Contracts entered into by iton such basis specified for such purposes in the Clearing House Regulations.

A Member which intends to act as a Broker shall open one or more of the Accounts specifiedfor such purposes in the Clearing House Regulations.

1.6.3 A Member shall open a Day Account. All Transactions in Listed Products effected by a Memberwill be registered initially in the appropriate Day Account save where the Member specifies theAccount in which the transaction is to be registered at the time of execution. Members shallconfirm to Turquoise the type of Clearing Account in which a Contract is to be registered withinthirty minutes of the time at which the transaction was registered in the Day Account.

1.6.4 The types of account available within Turquoise‟s clearing system for use by Members aredescribed in the table below which also provides details of the related account at theDesignated Clearing House to be used for registration of positions recorded in the relevantaccount. There is no limit to the number of accounts that can be held by a Member.

Turquoise accounts are set up and administered by Turquoise‟s Market Operations.



RULE BOOK

23

NB: Members should note that all NCM business will be designated at LCH as Client business of the GCM.

1.7 Transactions and Contracts

1.7.1 The terms of Listed Products are specified in the Contract Specification for the Product inquestion at Part 4 of these Rules.

1.7.2 Where an Transaction is executed in accordance with these Rules or Turquoise accepts aRequest for Registration of a transaction relating to an Listed Product which has beensubmitted in accordance with the section of Part 4 to these Rules applicable to such Product,the Member or Members involved in such transaction shall enter into a Contract with theDesignated Clearing House on the terms of the Contract Specification for the Listed Productand, with regard to the size of the transaction, its price and Series (where applicable), inaccordance with the terms agreed on execution of the Transaction in question.

Such Contract shall be registered immediately in the Account or Accounts in the clearingsystem of the Designated Clearing House specified by the Member or Members involved in theTransaction and shall be binding on such parties from the time of such Registration.

1.7.3 An application for Re-registration of a Contract in an Listed Product shall take effect from thetime at which Turquoise confirms to the Designated Clearing House that such application hasbeen accepted and the Designated Clearing House amends the particulars recorded in itsclearing system in accordance with such request for Re-Registration and registers theContracts in the appropriate Accounts in accordance with its terms.

An incorrectly registered Contract may be cancelled or corrected provided that a valid Protestis made to Turquoise in accordance with Rule 3.4. In the absence of any such Protest, anincorrectly registered Contract will remain in full force and effect and will bind the RegisteredCounterparties to such Contract.

1.7.4 Following Registration of a Contract in the clearing system of the Designated Clearing Housepursuant to the Clearing House Regulations, the Buyer and the Seller of the Contract have therights and obligations incident to such Contract as specified in Part 4 for the duration of theContract.

1.7.5 Registration of Contracts in a Client Account is effected on a gross basis. A Broker whichoperates a Client Account shall ensure that the positions registered in such Account accuratelyreflect the balance of the open interest for the Clients whose positions are registered on theAccount at all times. To this end, a Broker which operates a Client Account shall informTurquoise as soon as practicable following the Registration of a Contract in such Account as towhether the Contract in question represents an Opening Transaction or a Closing Transactionand of the effect that such Registration will have on the open interest on the Account (the“required information”). Such information may be given either in writing to the ClearingDepartment at Turquoise or by way of the electronic connection. Where the required

information is provided to Turquoise before the relevant deadline prescribed below, anynecessary adjustment to the information recorded in the Client Account required in accordance

AccountType

AccountName

DesignatedClearingHouse

Account(House or

Client)

Description

Positionsallowed (if not,default positionaccount must

be defined)

Positions held onnet or gross basis

MMMarket Maker

AccountHouse For Market Maker Trades. Yes Net

HAProprietary

AccountHouse Proprietary trades only. Yes Net

OICProprietary

AccountClient

For the proprietary trades ofa NCM.

Yes Net

CAClearingAccount

Client

A position account only. Thetrading account to which thisaccount is connected mustbe pre-defined by themember (used by Turquoiemembers for cross-borderaccounts only).

Yes Net



RULE BOOK

24

with the Broker‟s instructions will be made by Turquoise. The relevant deadline for a noticegiven in writing is 10.00 am on the Business Day following the day on which the Contract wasinitially registered in the Account and, for a notice given by the electronic connection, 12 noonon that day. If a Member fails to provide Turquoise with the required information before therelevant deadline, the Member shall be responsible for taking the necessary action to correctthe balance on the Account in question by executing the relevant number and type oftransactions required in the circumstances.

1.8 Confidentiality

1.8.1 As between Members, trading in Listed Products carried out by way of Turquoise's electronictrading system or the Marketplace Service is conducted on an anonymous basis. Similarly, theidentity of a Client or a customer for whom a Broker effects a Transaction is not disclosed toMembers.

1.8.2 Turquoise presents the electronic orderbook and information related to transactions executed bymeans of its facilities and accepted for Registration in accordance with these Rules to memberson an anonymous basis so that the identity of a party which has placed an Order or which is aparty to a Registered Contract is not disclosed to other Members.

1.8.3 In normal circumstances, the identity of a Client for whom a Broker effects a transaction underthe rules of Turquoise is not known by Turquoise.

1.8.4 Where Turquoise considers it necessary to protect its interests or the quality of the market inany Listed Product or in the circumstances specifically provided for in these Rules it may requirethe Member to provide information relating to the Client or customer in question.

1.9 Disciplinary Procedures

1.9.1 Turquoise Management may take disciplinary action against a Member in respect of any act oromission that may amount to a breach of these Rules.

1.9.2 Turquoise Management may suspend or restrict a Member‟s activities on Turquoise on aninterim basis when a matter is under investigation.

1.9.3 Members shall co-operate with Turquoise Management in its investigation into a suspectedbreach of these Rules.

1.9.4 In enforcing these Rules, Turquoise Management will have regard to the need to maintain afair and orderly market in the interests of Members.

1.9.5 Turquoise Management will have absolute discretion to impose sanctions on a Member for abreach of the Rules including:

(i) temporary suspension;

(ii) termination of participation;

(iii) levying a fine up to £20 000;

(iv) issuing a cease and desist letter;

(v) issuing a censure;

(vi) issuing a no action letter;

(vii) an order directing restitution to any injured person; and

(viii) publication of the details of the breach and the identity of the Member.

1.9.6 Turquoise Management may impose a combination of the sanctions listed in rule 7.2.1 on aMember for a breach of the Rules.

1.9.7 The discretion of Turquoise Management to impose sanctions will extend to negotiating asettlement with a Member regarding an alleged breach of these Rules, the terms of which mayinclude imposing a sanction, or combination of sanctions, listed in Rule 1.9.5.



RULE BOOK

25

1.10 Appeals

1.10.1 A Member may appeal a decision made by Turquoise Management under these Rules withinten (10) working days of having received written notice of the decision.

1.10.2 There is no right of appeal in relation to interim decisions.

1.10.3 A notice of intention to appeal must be submitted in writing to Turquoise Management withinten (10) working days of the Member being notified in writing of the findings of any investigationof an alleged breach of the Rules. Turquoise Management will then refer any such appeal tothe Compliance and Regulatory Committee.

1.10.4 A Member will, within twenty (20) working days of giving notification of any appeal under rule1.10.1, provide the Compliance and Regulatory Committee with a written submission outliningthe grounds for the appeal.

1.10.5 The Compliance and Regulatory Committee will consider requests for an extension to thetimeframe allowed under 1.10.3.

1.10.6 Appeals will be heard and decided by the Compliance and Regulatory Committee.

1.10.7 The Compliance and Regulatory Committee is comprised of a Chairman, appointed by theBoard, and a minimum of two other members, appointed by the Board, who are all independentof the Board and who are suitably qualified to hold the position of members of the Complianceand Regulatory Committee.

1.10.8 The Compliance and Regulatory Committee will hand down a decision within twenty (20)working days of hearing the appeal.

1.10.9 The Compliance and Regulatory Committee may order any party to an appeal to pay costs asit thinks appropriate, including but not limited to, administration costs and reasonable costsincurred in the investigation, preparation and presentation of the appeal.

1.10.10 The Compliance and Regulatory Committee can uphold, quash or amend the original decisionthat is the subject of the appeal.

1.10.11 Decisions of the Compliance and Regulatory Committee in relation to appeals will be final.

1.11 Administrative Matters

1.11.1 The Designated Clearing House has established a Protected Payments System (“PPS”) foruse in connection with the settlement of payment obligations of Members to Turquoise.Members, other than Members who have made arrangements for the settlement of suchobligations to be performed by a General Clearing Member, must maintain arrangements witha PPS Bank for such purposes. Further provisions concerning the PPS System and settlementand delivery generally are set out in the Clearing House Regulations.

1.12 Dissemination of Market Information

General

1.12.1 Turquoise disseminates public market information originating from the services provided byTurquoise pursuant to these Rules or from third parties in accordance with the provisions setforth in this Rule.

1.12.2 Turquoise publicly disseminates information for each Listed Product during the Trading Hoursfor such Product. With regard to Listed Products which are quoted in co-operation with OsloBørs, the disseminated information includes, unless otherwise stated, information from allrelevant sources.

1.12.3 Turquoise publicly disseminates clearing information relating to Listed Products during times atwhich the clearing system is open regarding volumes and, where applicable, registration prices.

Where such information relates to a Product provided in conjunction with Oslo Børs or anAssociated Clearing House, the disseminated information includes, unless otherwise stated,information from all sources.



RULE BOOK

26

1.12.4 Turquoise may at any time make such changes in the contents, scope and composition of theMarket Information which it deems suitable or necessary.

Media

1.12.5 Market information is disseminated in electronic form immediately.

1.12.6 Turquoise disseminates public market information through the following media:

(i) Immediately by electronic connection to Turquoise‟s High Speed Vendor Feed(HSVF) and, in applicable cases, by telephone;

(ii) immediately or following a certain delay through public information distributionsystems (electronic or non-electronic media) of third party vendors, a list of which isavailable from Turquoise.

Subscription

1.12.7 Members or other third parties wishing to directly subscribe to HSVF must enter into theTurquoise Information License Agreement and adhere to the relevant terms and conditions setforth within the agreement.

License

1.12.8 Members or other third parties wishing to redistribute Turquoise Market Data must first enterinto the relevant Turquoise Information License Agreement and adhere to the terms andconditions set out within the agreement.

1.12.9 The following market information is covered by the right of use granted herein:

(i) market information originating from Turquoise's trading and clearing operations;and

(ii) market or other information received from third parties.

1.12.10 Copyright and other intellectual property rights to market information which Turquoisedisseminates shall vest in Turquoise or the rightsholders Turquoise represents.

1.13 Technical Regulations

1.13.1 Members which wish to maintain an electronic trading connection to Turquoise shall enter intothe relevant access, connectivity and software licence agreements as amended from time totime and connectivity agreement (referred to in this Rule 1.13 to “Agreement”) enabling accessto Turquoise Markets and shall comply with this Rule. Breach of any provision of theseAgreements shall constitute a breach of these Rules. Members should contact Turquoise for alist of all market access connectivity providers and for all relevant information on these

solutions. Fees in respect of Market access are payable by Members in the amount and at thetime specified in Appendix A.

1.13.2 Equipment and computer programs which are required for the purposes of the electronicconnection to Turquoise's trading and clearing systems are specified the technicaldocumentation. Turquoise reserves the right to prohibit the connection of equipment or the useof programs which have not been specified by Turquoise and to carry out such tests of the saidequipment or programs at the expense of the Member as Turquoise considers necessary.

The costs of equipment supplied by third parties and the installation and maintenance thereofshall be paid by the Member.

Turquoise reserves the right to set requirements as well as demand information regarding suchcomputer program‟s construction and functionality from Members or computer programsuppliers. Turquoise reserves the right to conduct tests of the computer program based on the

requirements stipulated by Turquoise from time to time and information that has been obtained(certification). Additional certification can, when deemed necessary by Turquoise, be requestedby Turquoise.



RULE BOOK

27

1.13.3 Where a Member installs software supplied by the relevant providers, it shall ensure that suchsoftware is the latest version in force together with system program software in the latestversion specified by the relevant providers.

The Member shall ensure that technical contact persons and system contact persons arepresent at its premises throughout the period starting one hour before trading commences atTurquoise and ending one hour after the close of trading on any day on which Turquoise is

open for trading in Listed Products.

Turquoise may restrict the number of electronic connections per Member to the extent that it issatisfied that such action is required in order to maintain the proper functioning of its tradingand clearing operations.

1.13.4 Turquoise may take immediate action to impose restrictions on the use of such connection tosuspend or to terminate a Member's electronic connection if it is satisfied that the manner inwhich such connection has been used by the member justifies such action in the interests ofprotecting the proper functioning of Turquoise's trading and clearing operations.

1.13.5 Turquoise may inspect the electronic equipment used by a Member for the purposes of itstrading, clearing and market data connection to Turquoise at all times during normal businesshours.

1.13.6 The Member shall comply with all security instructions given by Turquoise and the relevantproviders in relation to the use of the Member's electronic trading connection. The Membershall take such other steps as are reasonably required to prevent unauthorised access toTurquoise's trading, clearing and market data systems. The Member shall allow Turquoiseaccess to its premises for such purposes. Save in exceptional circumstances, Turquoise shallgive the Member prior notice of its intended inspection.

1.13.7 The Member shall be liable for all instructions regarding the placing, variation or cancellation oforders given by way of the Member's electronic connection and for all transactions executed inconsequence thereof and for all matters reported to Turquoise by means of such electronicconnection and shall be bound by the terms of any Registered Contract entered into by theDesignated Clearing House with such Member pursuant thereto whether or not suchinstructions or reports are submitted by a person authorised to use the electronic connection ofthe Member.

1.13.8 Electronic connections to Turquoise can be achieved through Extranex, VPN, other externalnetwork and service providers. Members shall contact Turquoise for further information on howto connect to Turquoise‟s markets.

1.13.9 Turquoise provides the possibility to programme Members‟ systems to Turquoise‟s trading andclearing services.

(a) The trading application programmer‟s interface (API) are

(1) SOLA Automated Input Language (SAIL)(2) Fix 4.2

(b) The clearing API is CC&G BCS API.

1.13.10 Turquoise provides Members with trading and clearing user applications

(1) BTS (Trading application)(2) BCS (Clearing application)

1.14 Copyright and Intellectual Property

1.14.1 Copyright and all other intellectual property rights in these Rules and all other documentation orsoftware produced by Turquoise relating to the trading of Listed Products and MarketInformation disseminated to Members under these Rules is vested in Turquoise.

”Turquoise” is a trade mark vested in Turquoise.

The Member shall not reproduce, use or sanction the reproduction or use of any such material

or any part thereof other than for purposes necessarily connected with such operations withoutthe prior express consent in writing of Turquoise.

1.14.2 Deleted



RULE BOOK

28

1.14.3 “FTSE®” and “FTSE Russia IOB Index”, (“Index”) are trade and service marks of the LondonStock Exchange Plc and the Financial Times Limited and are used by FTSE InternationalLimited (“FTSE”) under licence.

Members shall not use the said trade and service mark other than for purposes reasonablyconnected with trading and clearing of Listed Products or other products or services provided

by Turquoise in the absence of express written consent to the contrary by Turquoise.

Options and Futures based on the FTSE Russia IOB Index, , are not in any way sponsored,endorsed, sold or promoted by FTSE International Limited (“FTSE”) and neither FTSE nor or any licensors of FTSE make any warranty or representation whatsoever, express or implied asto the results to be obtained from the use of theses Derivatives Contracts.

1.14.4 The OBX Index is a trade and service marks of Oslo Børs and is used by Turquoise underlicence.

Members shall not use the said trade and service mark other than for purposes reasonablyconnected with trading and clearing of Listed Products or other products or services providedby Turquoise in the absence of express written consent to the contrary by Turquoise.

1.15 Limits of Liability

1.15.1 Turquoise shall not be liable to any Member, Client, customer or other party for any loss ordamage which may result directly or indirectly from any legislative enactment in the UnitedKingdom or in any overseas jurisdiction, any action taken by any governmental department orcognate agency in the United Kingdom or in any overseas jurisdiction, any action taken by theCommission of the European Community or any agency or division thereof, from any act ofwar, terrorist activity, power failure, fire, water damage, embargo, strike, blockade, boycott orlockout or other similar action or circumstance irrespective of whether Turquoise is involveddirectly therein.

1.15.2 Turquoise shall not be liable to any Member, Client, customer or other party for any loss ordamage which may result directly or indirectly from any technical problem affecting orinterfering with the provision by Turquoise of its electronic trading system, Marketplace Service

or clearing and information systems or affecting the Member's electronic trading connection orclearing connection to Turquoise in the absence of gross negligence on the part of Turquoise.

1.15.3 Turquoise shall not be liable to any Member, Client, customer or other party in anycircumstances for any claim for economic loss, loss of profit or loss of opportunity for profit,loss of data, or for indirect, incidental or consequential loss or damage.

1.15.4 If any of the circumstances described in Rule 1.15.1 occurs which prevents Turquoiseperforming any obligation under these Rules at the prescribed time in whole or in part, the timefor performance of such obligation shall be suspended for as long as the said circumstancesobtain. In these circumstances, Turquoise shall not be liable to pay interest on any sum whichis paid at a later time than would otherwise have been the case.

1.15.5 In the absence of gross negligence, Turquoise shall not be liable to compensate the Member,Client, customer or any other party for any loss or damage arising other than in circumstances

in which liability is expressly admitted in this Rule.

1.15.6 Without prejudice to the generality of the foregoing provisions of this Rule:

(i) the liability of Turquoise to recipients of Market Information is further limited in themanner provided for in Rule 1.12.3;

(ii) the liability to Members using an electronic connection to the exchange is furtherlimited in the manner provided for in the relevant access and connectivity agreementenabling access to Turquoise Markets.

(iii) the liability of the Index Owner, Index Provider and Index Calculator for the FTSERussia IOB Index is subject to the provisions of the rules governing these indices asdetermined by FTSE.

1.16 Emergency Provisions

1.16.1 Where Turquoise considers that circumstances exist which have an adverse effect on thetrading services provided by Turquoise or the related clearing services provided by the



RULE BOOK

29

Designated Clearing House or which affect the quality of the market in any Listed Product,Turquoise may take such action as it at its sole discretion deems necessary.

The forms of action which Turquoise may take under this Rule include, but shall not be limitedto, the following:

(i) suspending or restricting the trading services of Turquoise or any part thereof;

(ii) suspending or restricting trading in one or more Listed Products;

(iii) amending these Rules including the terms of any Listed Product or

(iv) suspend or restrict the reporting of transactions in one or more instruments pursuantto Part 3 of these Rules or the Rules for Cleared Only Contracts

(v) requesting the Designated Clearing House to take any action in relation to its clearingservices as is required in the circumstances, including, without limitation, amendingthe terms of Registered Contracts.

1.16.2 Where the Designated Clearing House suspends the provision of its clearing services toTurquoise, Turquoise may:

(i) suspend or restrict the trading services of Turquoise or any part thereof;

(ii) suspend or restrict trading in one or more Listed Products;

(iii) amend these Rules including the terms of any Listed Product; or

(iv) take such other action as is considered appropriate in the circumstances.

1.16.3 Any Order placed in the Orderbook after trading in the Listed Product to which such Orderrelates or trading generally has been suspended under this Rule or any Order which breachesany restriction on trading in the relevant Product and any transaction in an Listed Productwhich is executed after trading in such Product has been suspended in the circumstancesprovided for in this Rule 1.16 or which would breach any restriction applicable to trading in theProduct in question shall be null and void.

1.16.4 In taking action under this Rule, Turquoise will have regard to the interests of Membersgenerally in the circumstances and will act in an impartial manner.

Where Turquoise has taken any action pursuant to this Rule, it shall notify Members of suchfact at the earliest opportunity. Members shall inform any Client or customer which might beaffected by such action of the measures taken by Turquoise.

1.17 Amendments to these Rules

1.17.1 Turquoise may amend these Rules by notice in writing to Members. The amendment to theRules shall take effect at the time specified in such notice. Such amendments shall in theabsence of an express statement to the contrary apply to Contracts registered before theamendment in question comes into effect.

1.17.2 Where Turquoise considers that the amendment to the Rules is of regulatory importance or willaffect the terms of previously Registered Contracts, it shall use its best endeavours to consultwith Members before making the amendment. Turquoise shall not be subject to any obligationto consult with Members in relation to any proposed amendment where it is satisfied that theamendment is required as a result of legislation, the decision of a court or any action taken orregulation issued by a regulatory body or governmental body which affects Turquoise.

1.17.3 Deleted

1.17.4 Brokers shall take reasonable steps to advise their Clients and customers of amendments tothese Rules as they consider appropriate and shall have regard to any guidance issued byTurquoise in this respect.



RULE BOOK

30

1.18 Governing Law

1.18.1 Except where these Rules provide expressly to the contrary, the Rules shall be construed andapplied in accordance with English law.

1.18.2 Except where these Rules provide expressly to the contrary, any dispute between a Member andTurquoise concerning these Rules or any transaction effected pursuant to these Rules shall be

resolved in the manner provided for in the Membership Agreement.



RULE BOOK

31

PART 2 LISTING AND TRADING OF LISTED PRODUCTS

2.1 Trading Principles

2.1.1 Members shall co-operate fully with Turquoise in the promotion of high standards of fair dealingand integrity in the trading of Listed Products.

2.1.2 Members shall comply fully with these Rules in trading Listed Products and with any guidancewhich Turquoise may issue from time to time concerning the application of these Rules andtrading at Turquoise generally.

2.1.3 Turquoise provides Members with two methods of trading in standardised Listed Products:

(i) the electronic trading system; and(ii) the Marketplace Service.

Members should note that transactions in Non-Standardised Contracts may only be effected byway of the Marketplace Service in accordance with the provisions of Rule2.13.

2.1.4 The two trading methods are complementary. The characteristics of these methods and theprocedures to be followed by members in placing, varying or cancelling Orders relating tostandardised Products are set out in Rules2.6 to2.12. The following Orders may only beplaced, varied or cancelled by using the Marketplace Service:

(i) Non-Standardised Combinations; and(ii) Interest Orders.

2.1.5 As between Members, trading at Turquoise is conducted on an anonymous basis. The identityof a Member which has placed an Order or executed a transaction at Turquoise is notdisclosed to other Members save in circumstances where such disclosure is specificallyprovided for in these Rules.

2.2 Platform Listing

2.2.1 Turquoise provides trading facilities to its Members for trading in standardised and Non-Standardised Contracts based on Listed Products.

2.2.2 The Contract Specifications for standardised Contracts based on Listed Products and all rulesand procedures relating specifically to trading, clearing and settlement of Contracts based onsuch Products are set out in the section of Part 4 applicable to the Product in question. TheSeries in which trading in a standardised Contract based on a Listed Product may be effectedat any time are shown in Turquoise‟s Listings Schedule for the time being. The informationgiven by Turquoise on the listing of new Series is effected in accordance with the section ofPart 4 applicable to the Product in question.

2.2.3 The Listings Schedule is provided to Members by Turquoise by electronic transmission. Noticeof the listing of new Series for standardised Contracts is provided to Members by electronictransmission.

2.2.4 Turquoise‟s procedures for the listing of Series for trading in a standardised Contract based ona Listed Product vary according to the Product. These procedures are set out in relation toeach such Product in the appropriate section of Part 4. Turquoise may list new Seriesotherwise than in the circumstances prescribed in its procedures applicable to the Product inquestion provided that it is satisfied that such action should be taken in the interests of themarket in the Product in question.

2.2.5 Turquoise may decide at any time to cease to list one or more Listed Series if it is satisfied thatthe requirements of a proper market in such Product are no longer satisfied or any othercircumstances exist which it considers require such action. In such circumstances, Turquoisemay also change the Expiration Date for the Series in question in conjunction with theDesignated Clearing House.

2.2.6 Information regarding the Series which are currently listed for trading is shown on theQuotation List for the time being.



RULE BOOK

32

2.3 Listing of New Listed Products

2.3.1 On introducing a new Listed Product, Turquoise shall give notice to Members of the date onwhich trading in such Products will commence and other relevant information.

2.3.2 On introducing a new Listed Product, Turquoise will inform Members of the Futures and

Options Series in which trading in standardised Contracts based on such Product will takeplace.

2.3.3 Turquoise will publish the Contract Specification for the new Listed Product prior to the start oftrading in such Products.

2.4 Designation of Listed Series

2.4.1 On listing a new Series for a standardised Contract based on a Listed Product, Turquoise willdesignate the Series so as to identify the following matters:

(i) the Underlying Stock(ii) the Strike Price (if an Option Contract)(iii) the Expiration Month(iv) the Expiration Year(v) whether the Series is a Call Option, a Put Option or a Futures Contract.

2.4.2 Listed Series are listed by Turquoise in accordance with Rule 2.3 and the terms of the relevantContract Specification for the Product in question at Part 4.

2.4.3 Listed Series are standardised contracts the terms of which are set out in the ContractSpecifications for the Product in question at Part 4.

2.4.4 On entering into a transaction in a standardised Listed Series, Members are free to determinethe price. All other terms for the Contract will be those prescribed in the relevant ContractSpecification and Series Designation for the Listed Series in question.

On entering into a transaction in a Non-Standardised Contract, Members shall determine the

price and the variable elements of the Contract. All other terms for the Non-StandardisedContract will be those prescribed in the relevant Contract Specification for the correspondingstandardised Contract.

2.4.5 The Strike Price for an Options Contract based on a Listed Series appears immediately afterthe designation of the Expiration Month.

2.5 Market Making: General

2.5.1 All Market Makers are required to maintain an electronic connection to Turquoise and toprovide quotes in the Products that are available for market making and in which they haveagreed to act as such by such means.

2.5.2 A Market Maker shall enter into a Market Maker Agreement with Turquoise specifying the

Products in which it agrees to act as such and the capacity in which it will act in respect of eachProduct.

2.5.3 A Market Maker may act in such capacity as is specified in the section of Part 4 and/or theMarket Making Document applicable to the Product in question.

2.5.4 A Market Maker which fails to perform its obligations as such will be subject to the sanctionsprovided for in the section of Part 4 and/or the Market Making Document applicable to theProduct in question.

2.5.5 A Market Maker which performs its obligations as such to the satisfaction of Turquoise shallpay fees in relation to transactions effected by it in its capacity as such in the Product inquestion as specified more particularly in Part 4 and/or the Market Making Document.

2.5.6 A Market Maker may arrange with Turquoise for more than one Market Maker Account to beopened in its name by submitting a request to that effect and providing the followinginformation in writing to Turquoise:

(i) the number of Market Maker Accounts it wishes to operate;



RULE BOOK

33

(ii) the individuals authorised by it to enter orders in each such Account;(iii) for each such Account, the Products in which market making obligations will be

performed; and(iv) for each such Account, whether the fees payable are to be determined by reference to

the annual discount scheme or monthly discount scheme applicable to the Product inquestion.

Any such arrangements shall be subject to the approval of Turquoise. Where any sucharrangement is established, each transaction executed by the Market Maker shall be registeredin the Market Maker Account specified by the Market Maker as the Account in whichtransactions executed by the relevant authorised traders are to be registered and themeasurement of the performance of the applicable market making obligations and thedetermination of the fees payable in relation to such activity shall be made solely by referenceto the orders entered and contracts registered in the Account in question.

2.6 Orders

2.6.1 On placing an Order (whether by means of the electronic trading system or the MarketplaceService) a Member offers to buy or to sell the Products in the Listed Series in accordance withthe terms specified in the Order. Such offer remains open for acceptance unless and until theOrder is varied or cancelled by the Member.

2.6.2 Where a Member has placed an Order with the Marketplace Service to buy or to sell anProduct in an Listed Series, the Marketplace Service will enter such Order in the Orderbook.The Member in question thereby offers to buy or to sell (as the case may be) the specifiedProducts at the displayed price. Such offer remains open for acceptance unless and until it isaccepted by any such party or is varied or cancelled by the Marketplace Service on theinstructions of the Member.

2.6.3 Orders placed by a Member in accordance with Rules 2.6.1 and 2.6.2 may be accepted byMembers or members of Oslo Børs in the case of Products which are traded in a CombinedMarketplace. Where an offer is accepted in this way, Turquoise shall register the resultingContract in the Account of the Member or Members which are parties to the transaction inaccordance with Rule 3.2.

2.7 Placing, Cancellation and Variation of Orders

2.7.1 On placing, cancelling or varying an Order by way of the electronic trading system, a Membershall provide the following information:

(i) the Series, Type, Class and the Listed Product in question;

(ii) the Expiration Month;

(iii) whether its order is to buy or to sell;

(iv) in the case of an Options Contract, whether it is a Call or a Put;

(v) the price for the Order or, if the Order is a Combination Order, its net price;

(vi) the Order's volume;

(vii) whether it is a Limit Order, Market Order or a Combination Order;

(viii) whether it is a Single Order or a Block Order;

(ix) the Account to which the transaction, if executed, is to be allocated;

(x) if appropriate, the identification code of the customer for whom the Order has beenplaced.

On placing an Order Members should ensure that the value of the Order does not exceed themaximum permitted size for an Orderbook Order for the Contract in question for the time beingspecified by Turquoise. Members should note that any Order placed in the Orderbook whichexceeds the applicable maximum permitted size and any transaction which results from such

Order shall be null and void. The maximum permitted size for an Orderbook Order is 50,000Contracts.



RULE BOOK

34

2.7.1A The tick size applicable for trading in the Orderbook is described in the relevant contractspecification. An Internal Trade or Interbank Trade can however be registered in the Orderbookat a tick size that differs from the one specified in contract specifications.

2.7.2 Where an Order is placed in accordance with these Rules which meet the terms of a StoredOrder, an Transaction shall be executed. Where an Order is placed in accordance with theseRules which does not meet the terms of a Stored Order, it shall be stored, ranked or cancelled

in accordance with its terms. Orders are executed, stored and ranked in accordance with therules of priority set out below at Rules 2.7.3 to 2.7.7.

2.7.3 The primary rule for ranking of Orders stored in the Orderbook is that priority is given to theOrder having the best price.

Where two or more Orders are entered at the same price, priority is given to the Order whichhas been stored in the Orderbook longest.

2.7.4 Any variation in a stored Order involving its price, the extension of its period of validity, achange from a Single Order to a Block Order or an increase in the volume of an Order istreated as the cancellation of the original Order and the substitution of a new Order. The timepriority of such Order shall be determined by reference to the time at which the amended Orderis entered in the Orderbook.

2.7.5 Where the variation of a Stored Order involves only a reduction in its volume or period ofvalidity or a variation in the customer identity, the ranking of the original Order is not affected.

2.7.6 Where volume terms attached to an Order having priority under this Rule 2.7 prevent it beingexecuted, the first available Order below such Order in the order of priority which can bematched will be selected for execution.

2.7.7 The primary rule for the ranking of Combination Orders is that priority is given to theCombination Order which has the best net price.

Where two or more Combination Orders are entered at the same net price, priority is given tothe Order which has been stored in the Orderbook for the longest period of time.

2.7.8 Where a Combination Order can be executed against another Combination Order anTransaction will be executed on the terms of the matching Combination Orders provided that itis not possible to execute either Combination Order against Stored Orders on better terms thanthose provided by the matching Combination Order.

2.7.9 Stored Orders may be cancelled or varied by the Member in question giving instructions toTurquoise at any time before the Order has been executed. A Stored Order will remain validand effective unless and until an instruction to cancel or vary it given by the Member whichplaced the Order takes effect.

2.7.10 Instructions concerning the placing, varying or cancelling of Orders may be given to Turquoiseby a Member by electronic transmission or by telephone to the MPS.

2.8 Order Types

2.8.1 Orders of the following type may be placed by Members:

(i) Orderbook Orders;

(ii) Market Orders; and

(iii) Combination Orders.

The terms governing an Order will vary according to its type.

2.8.2 Deleted

2.8.3 A Market Order is an Order which is for immediate acceptance only. A Market Order may notbe stored in the Orderbook. There are two types of Market Order:

(i) "Fill or Kill" being an Order which must be traded in its entirety or cancelled; and

(ii) "Fill and Kill" being an Order which can be executed in part with the unfilled part ofthe Order being cancelled.



RULE BOOK

35

2.8.4 A Combination Order is an Order comprising two or more individual Orders in Listed Serieswhich are subject to the condition that each individual order forming part of the CombinationOrder must be executed simultaneously.

Turquoise may impose general restrictions concerning Combination Orders from time to time.Such restrictions may limit the number of individual Orders which may be included in aCombination Order or the size of any such individual order.

2.8.5 A Combination Order shall be placed as a Market Order of the type Fill or Kill unless the Orderin question is a Standardised Combination. Members can define a Non-StandardisedCombination using the “Enter Tailor -Made Combination” function that at the time of placing theOrder creates a Standardised Combination and is therefore subject to the StandardisedCombination Rules.

2.8.6 A Standardised Combination is an Order which meets the following requirements:

(i) it comprises two individual Orders;

(ii) these Orders are both subject to the condition that they be executed simultaneously;and

(iii) the two individual Orders are of a type and in Listed Series included in Turquoise's

List of Standardised Combinations for the time being.

A Standardised Combination may be placed as either a Derived Limit Order or a Market Order.A Derived Limit Order will be stored in the Orderbook until the time specified by the Memberwhich placed the Order. A Derived Limit Order is subject to the condition that both Orderscomprised in the Derived Limit Order must be executed simultaneously. A StandardisedCombination which is a Market Order may not be stored in the Orderbook.

2.8.7 The volume terms applicable to an Order in an Listed Product are prescribed in the section ofPart 4 applicable to the Product in question.

2.8.8 The term “Hidden volume” means that an Orderbook Order can be placed with a total volumeand a shown volume. Hidden volume is the part of the volume that is not visible in theOrderbook. The shown volume is part of the total volume. When such an Order is partiallytraded and the shown volume reaches zero, an additional part is shown, as long as there istotal volume remaining.

2.9 The Marketplace Service

2.9.1 The rules and procedures governing the facilities provided by Turquoise's Marketplace Serviceare set out at Rules 2.9 to 2.12.

2.9.2 All communications relating to the placing, cancellation or variation of Orders betweenMembers and the Marketplace Service shall be made by telephone. In order to ensure that it isable to perform its regulatory functions, Turquoise records all telephone conversations relatingto the placement of orders by Members with the Marketplace Service.

2.9.3 The Marketplace Service provides the following services:

(i) receiving, cancelling and varying:

(a) Orders in Listed Products in accordance with Rule 2.10;

(b) Orders relating to Non-Standardised Combinations and Large Blocks inListed Products.

(ii) receiving and handling Indications of Interest pursuant to Rule 2.11;

(iii) receiving Instructions from Members and executing or arranging Transactions inaccordance therewith under Rule 2.12.

2.9.4 The Marketplace Service is normally available for use by Members during the hours in whichTurquoise is open for trading the Listed Product in question. In extraordinary circumstancesTurquoise may extend or curtail such hours. Turquoise will use its best endeavours to secure

the availability of the Marketplace Service to Members during the normal trading hours for eachListed Product indicated in the respective Contract Specification.



RULE BOOK

36

2.9.5 Where an Order, Indication of Interest or Instruction has been given to the Marketplace Serviceby a Member prior to the close of trading in the Listed Product to which it relates, theMarketplace Service may at its discretion continue to inform other Members thereof and mayarrange for an Transaction to be executed in appropriate circumstances in accordance with theprocedures set out in Rules 2.10 to 2.12. The Member which placed the Order, Indication ofInterest or Instruction may inform the Marketplace Service that it does not wish the procedureprovided for in this Rule 2.9.5 to be applied in relation thereto.

2.10 Placing of Orders with the Marketplace Service

2.10.1 Members may place Orders of the type described in Rule 2.8 relating to Listed Products byway of the Marketplace Service in the following circumstances:

(i) if the Member does not have an electronic connection to the platform;

(ii) if the Member's electronic connection is not functioning properly; or

(iii) if the operation of the electronic trading system is suspended.

2.10.2 Members may additionally place Orders relating to Non-Standardised Combinations by way ofthe Marketplace Service.

2.10.3 On placing Orders with the Marketplace Service under Rule 2.10.1 or 2.10.2, Members shallprovide the information prescribed in Rule 2.7.

2.10.4 Orders placed by Members in the circumstances described in 2.10.1(i) and (ii) will be enteredin the Orderbook forthwith by the Marketplace Service. Such Orders will be ranked inaccordance with Rule 2.7 from the time at which the Order is entered in the Orderbook.

2.10.5 Orders placed by Members in accordance with Rule 2.10.1(iii) or 2.10.2 shall be recorded andranked by the Marketplace Service in accordance with Rule 2.7.

2.10.6 Where two or more Orders are given to the Marketplace Service so closely in time thatTurquoise is unable to determine the relative priorities of such Orders and it becomes possiblefor a Transaction to be executed against one of these Orders, Turquoise may arrange for the

resulting Transaction to be allocated equally to the Members involved.

2.10.7 The reporting and Registration of a Transaction which results from an Order or Orders given tothe Marketplace Service will be dealt with in the same manner as a Transaction resulting fromOrders placed in the Orderbook by Members directly by electronic means.

2.11 Indications of Interest

2.11.1 Members may place an Indication of Interest with the Marketplace Service by giving details ofthe Listed Series in which it is interested, whether the interest is a call or a put and the priceand volume or approximate price and volume applicable to the interest.

2.11.2 The Marketplace Service records Indications of Interest and will advise the Member which hasplaced the Indication of Interest if it appears that another Member is interested in executing atransaction in accordance with such Indication of Interest.

2.11.3 The Marketplace Service shall not execute a transaction pursuant to an Indication of Interestunless it has received express confirmation from the Member which placed the fIndication ofInterest that it wishes to replace the Indication of Interest with an Order with a view to theexecution of a Transaction.

2.11.4 Such Orders will be ranked, stored, varied or executed in the manner provided for in Rules2.7.3 to 2.7.7.

2.11.5 In receiving and handling an Indication of Interest placed in accordance with this Rule, theMarketplace Service shall maintain the anonymity of the Member which has placed suchIndication.

2.12 Instructions to Marketplace Service

2.12.1 Members may give instructions to the Marketplace Service to execute transactions in ListedProducts or to arrange a transaction in such Products on behalf of the Member.



RULE BOOK

37

2.12.2 On giving such Instruction, the Member shall provide the information prescribed in Rule 2.7.1.

2.12.3 Instructions given to the Marketplace Service in accordance with this Rule shall not be enteredin the Orderbook.

2.12.4 The Marketplace Service may execute transactions in accordance with such Instructions onbehalf of the Member without further reference to the Member.

2.12.5 The Marketplace Service will record all Instructions given by Members under this Rule andshall use its best endeavours to execute such Instructions in the Orderbook if the possibilityarises. If such possibility does not arise, the Marketplace Service may attempt to arrange adeal in accordance with the Instruction with other Members. In seeking to make sucharrangements, the Marketplace Service will have regard to the interest of Members or, whereappropriate, members of Oslo Børs in the Series in question evidenced by the Orderbook andthe records of Instructions and Indications of Interest maintained by the Marketplace Service.

2.12.6 A transaction in a Listed Product may only be executed under this Rule if it is within the bid -ask spread for the Series in question at the relevant time.

2.12.7 Where the Marketplace Service receives two Orders from Members which are capable of beingexecuted as aTransaction, the Marketplace Service will review the Orderbook. If one or both ofthese Orders are capable of being executed against an existing Order stored in the Orderbook

on the same or better terms than those of the Orders given to the Marketplace Service, suchexecution will be effected. If this is not the case a Transaction will be executed on the terms ofthe matching Orders given to the Marketplace Service.

2.12.8 Following execution of a transaction under this Rule, Turquoise shall register such transactionin accordance with its normal procedures.

2.12.9 In executing or attempting to arrange a transaction pursuant to this Rule, the MarketplaceService shall preserve the anonymity of the Member on whose Instructions it is acting.

2.12.10 If at any time the Marketplace Service has received Instructions from Members which areidentical in all respects priority shall be given in attempting to execute such Instructionsaccording to the time at which they are given to the Marketplace Service.

2.13 Rules for Non-Standardised Contracts

2.13.1 The provisions of this Rule 2.13 provide for the trading and reporting to Turquoise oftransactions in Non-Standardised Futures or Options Contracts.

There are three variable elements of a Non-Standardised Options Contract, namely its term, itsstyle and its strike price. The only variable element for a Non-Standardised Futures Contract isits term. The maximum term of a Non-Standardised Contract is three years or such lesserterm as Turquoise may specify from time to time in relation to a particular Non- StandardisedContract.

If for any reason the registered Expiration Date for a Non-Standardised Contract proves not tobe a Trading Day for the relevant Contract, Turquoise shall have the power to modify theExpiration Date by bringing it forward to the Trading Day for the Contract in questionimmediately preceding the registered date.

In relation to a Non-Standardised Contract for which there is a corresponding standardisedcontract, the parties thereto are free to determine the variable elements of each such Contractprovided that such terms must vary in at least one respect from the terms of the correspondingstandardised contract in question. This requirement does not, however, apply in respect of theregistration of a Non-Standardised Contract the registration of which would not increase theopen interest for the Non-Standardised Contract in question.

A Non-Standardised Options transaction in a Product for which there is a correspondingstandardised contract will not be registrable unless its terms meet one or more of the followingcriteria:

(i) the Expiration Date for such contract differs from the Expiration Date of any suchcorresponding standardised contract which is listed for trading at the time the Non-Standardised Contract is effected and, further that such day is a Trading Day for the

Contract in question;



RULE BOOK

38

(ii) the strike price for the Non-Standardised Options Contract is not a price that is a listedstrike price for the corresponding standardised contract at the time the Non-Standardised Contract is effected; or

(iii) the style of a Non-Standardised Stock Option differs from the style of thecorresponding standardised contract.

A Non-Standardised Futures Contract for which there is a corresponding standardised contractwill not be registrable unless the Expiration Date for such contract differs from the ExpirationDate of such corresponding standardised contract which is listed for trading at the time theNon-Standardised Contract is effected and, further that such day is a Trading Day for theProduct in question.

13.2 Transactions in Non-Standardised Contracts may be effected by Menbers by any of thefollowing means:

(i) by providing details of the proposed transaction to the Marketplace Service which willdeal with the matter in accordance with the provisions of Rule 2.13.3;

(ii) by reporting a cross trade in a Non-Standardised Contract to Turquoise in accordancewith Rule 2.13.5; and

(iii) by reporting a transaction in a Non-Standardised Contract to Turquoise for registrationin accordance with Rule 2.13.4;

The procedures for the settlement of Non-Standardised Contracts are set out in the section ofPart 4 as the case may be applicable to the corresponding standardised contract for theProduct in question.

2.13.3 The trading of Non-Standardised Contracts will be conducted by way of Turquoise'sMarketplace Service. A Member which is interested in trading a Non-Standardised Contractmay contact the Marketplace Service by telephone and provide the details of the transaction inwhich it is interested. The required details will include:

(i) the type of and class of Non-Standardised Contract;(ii) the term of the Non-Standardised Contract;(iii) the strike price;(iv) the style;(v) whether it wishes to buy or to sell; and(vi) the contract size.

The Marketplace Service will record the details provided by the Member and will confirm thatthe proposed terms of the contract satisfy the conditions for Non-Standardised Contracts setout in Rule 2.13.2.

If the Marketplace Service believes that another Member is interested in entering into atransaction in the relevant Non-Standardised Contract on the terms specified by the firstMember, the Marketplace Service will inform that party of the proposed terms of the transactionand determine whether the second Member wishes to enter into a Non-Standardised Contracton those terms.

The Marketplace Service will not execute the transaction in such Non-Standardised Contractuntil it receives specific confirmation by telephone from each of the Members in question that itwishes to execute the transaction.

The Marketplace Service will preserve the anonymity of the Members involved in anytransaction in a Non-Standardised Contract that is executed under this Rule or in anydiscussions entered into by it with a view to the execution of any such transaction.

2.13.4.1 Transactions which are entered into as a result of direct negotiation by a Member with anotherparty may be submitted to Turquoise for Registration in accordance with the provisions of thisRule 2.13.4.

2.13.4.2 A Member may submit a Request for Registration to Turquoise relating to:

(i) a transaction in a Non-Standardised Contract which it has entered into directly withanother Member; or



RULE BOOK

39

(ii) a transaction in a Non-Standardised Contract which it has entered into directly with amember of Oslo Børs.

2.13.4.3 The acceptance of such Request will be at the discretion of Turquoise. The Request will not,however, be accepted unless:

(i) a corresponding Request for Registration is submitted by the counterparty to the

transaction to Turquoise or Oslo Clearing as the case may be and that such request isaccepted for Registration; and

(ii) the terms of the transaction referred to in the Request for Registration meet thecriteria for acceptance of a Non-Standardised Contract set out at Rule 2.13.2 above.

2.13.4.4 A Request for Registration of an off-exchange transaction in accordance with this Rule must besubmitted to Turquoise by telephone to the Marketplace Service. Turquoise will inform theMember submitting such Request promptly as to whether it has been accepted for Registrationor not.

2.13.4.5 The procedures for the trading of Non-Standardised Contracts set out in Rule 2.13.3 do notapply to any such transaction in which both legs are to be registered in Accounts held by aMember. Any Member which wishes to register such a cross trade relating to a Non-Standardised Contract shall provide the Marketplace Service with the prescribed information.

The Member shall also specify the Accounts in which each side of the Non-StandardisedContract is to be registered.

Before a Member reports a cross trade for Registration in accordance with this Rule, it shalltake appropriate steps to satisfy itself that the customer or customers for whom it is actingagree to the transaction being registered as a cross trade.

2.13.6 Deleted

2.13.7 A Member which seeks to execute a Non-Standardised Contract on behalf of a customer shallsatisfy itself that that type of transaction is suitable for that customer. To this end, the Memberin question shall draw the attention of their customers to the characteristics of the market inNon-Standardised Contracts and shall in this respect have regard to any guidance issued byTurquoise on the subject.

2.13.8 The acceptance of any transaction reported to Turquoise in accordance with this Rule 2.13 forregistration shall be at the discretion of Turquoise and the Designated Clearing House. If atransaction in a Non-Standardised Contract is executed or accepted for registration inaccordance with this Rule 2.13, the Marketplace Service will confirm the transaction to theparties forthwith.

2.14 Give-Ups

2.14.1 A Member may arrange for all or certain specified Registered Contracts in its Account to begiven up for clearing and settlement purposes to another Member.

2.14.2 The provisions of this Rule 2.14 apply to the exclusion of Rule 3.4 in relation to the Giving-Upof a Registered Contract between Members.

2.14.3 In this Rule, "Giving-up" means the process of transferring a Registered Contract from theAccount of the Transferring Member to the Account of the Accepting Member in accordancewith this Rule and "Give-up" shall be construed accordingly.

2.14.4 Where a Member (the "Transferring Member") has executed an Transaction on theunderstanding that the clearing and settlement of the resulting Registered Contract will beundertaken by another Member or a Members General Clearing Member (the "AcceptingMember"), the Transferring Member shall notify the Marketplace Service of its intention to giveup the Transaction and provide the relevant details thereof including the identity of theAccepting Member. Any request which seeks the transfer of a Contract to or from a customerAccount or a Client Account shall not be considered unless the Members requesting suchtransfer provide satisfactory confirmation that the Clients affected thereby have consentedthereto.

2.14.5 For all Give-Ups except those to or from a Norwegian Clearing Member, the TransferringMember must notify Turquoise no later than 6.00 pm London time where the request issubmitted via the Member‟s electronic connection, or no later than 60 minutes after the close o f



RULE BOOK

40

the market where the request is submitted by other means on the day on which the transactionwas executed.

For a Give-up to or from a Norwegian Clearing Member the request must be submitted no laterthan 5.30 pm London time on the day on which the transaction was executed.

A request for a Give-Up on the Expiration Date for the contract must be submitted by fax or the

Member‟s electronic connection not later than 6.00 pm London time that day.

Where it is satisfied that as a result of an administrative error a Member has failed to notify theMarketplace Service of the intention to give up a transaction within the prescribed deadlines,Turquoise may at its sole discretion accept a request to effect a Give-up which is submitted toit prior to 6.00 pm London time on the applicable Bank Day following the day on which thetransaction in question was executed.

2.14.6 Turquoise shall consider such matter in conjunction with the Designated Clearing House andshall send a Give-Up Confirmation indicating whether the Give-Up has been accepted or not tothe Transferring Member and the Accepting Member as soon as possible following the receiptof the request from the Transferring Member.

2.14.7 The Transferring Member and the Accepting Member will be bound by the Give-UpConfirmation unless an objection is submitted to Turquoise no later than thirty minutes after the

close of trading for the Product in question on the day on which the Give-Up Confirmation isissued. If a valid objection is received or if the Accepting Member declines to accept the Give-Up, the Registered Contract shall remain in the Account of the Member which effected thetransaction.

2.14.8 Where the relevant Transaction has been executed by a member of Oslo Børs, such party mayagree with a member which is a Clearing Member for the resulting Contract to be given-up forclearing and settlement to such Clearing Member. These arrangements and the proceduresgoverning the Registration of any Contract given-up to the Clearing Member shall be carriedout in accordance with the Clearing House Regulations. The acceptance of any such transfershall be at the discretion of the Designated Clearing House.

2.14.9 The procedures for Giving-up set out in this Rule 2.14 do not apply to the arrangements madebetween a Member, a General Clearing Member and the Designated Clearing House wherebythe responsibility for the clearing and settlement of all transactions undertaken by suchMember is accepted by the General Clearing Member which has agreed to act in that capacityfor the said Member. These arrangements will be governed by the terms of the GCMAgreement entered into by the parties in question.

2.15 Deleted

2.16 Cancellation of Incorrect Transactions

2.16.1 From time to time transactions are effected which result from an error in the execution of thetransaction by one of the parties to the transaction. Instances of such transactions are:

(i) a transaction which has been effected at a price or in a volume other than that at

which the party intended to effect the transaction; or

(ii) a transaction where one party intended to place a different order from the order heplaced.

Turquoise believes that it is in the interests of the market generally that Members are able tomitigate the consequences of such errors and that the Members involved in such incorrecttransactions should attempt to reach agreement in order to resolve the matter. The proceduresset out in this Rule provide for an incorrect transaction to be cancelled or for its price to beadjusted in response to a request from a Member.

On receipt of a request for cancellation, Turquoise will consider the circumstances relating tothe execution of the transaction and will determine whether this Rule 2.16 should be applied tothe transaction.

2.16.2 Turquoise shall not be required to take any action pursuant to this Rule where it reasonablydetermines on the basis of market information relating to the relevant products at the time therequest is submitted to Turquoise that the aggregate loss sustained by the Member as a resultof the incorrect transaction does not exceed NOK 5,000, € 500 or USD 110.



RULE BOOK

41

Turquoise will cancel the transaction in question if either:

(i) both parties to the transaction agree that it should be cancelled; or

(ii) Turquoise considers that the requirements of this Rule are satisfied and that thetransaction in question has resulted from an error in the input of the order and that the

request for cancellation submitted by one party to the transaction should be granted.

2.16.3 Any request for cancellation must be submitted to Turquoise as soon as possible after thetransaction in question has been effected and in any event within sixty minutes of the close oftrading for the Contract in question on the day on which the transaction was effected. In theabsence of the agreement of the counterparty to the transaction, Turquoise will not direct that atransaction be cancelled unless a request is submitted within ten minutes of the transactionbeing effected (the “Cancellation Deadline”).

Where the request for cancellation relates to a Combination or Turquoise otherwisedetermines, having regard to the circumstances, that it is not appropriate for the transaction tobe cancelled, it may at its sole discretion direct that the registered transaction price beadjusted.

2.16.4 When a request for cancellation is received by Turquoise, it shall notify the counterparty to the

trade of the request. The counterparty shall inform Turquoise whether it is prepared to agreeto the cancellation of the transaction. Such consent must be received by Turquoise before theclose of trading in the Product in question on the trading day for such Product following the daywhen the Transaction was Registered. If that Member agrees to cancel the transaction,Turquoise shall notify both parties that the transaction has been cancelled.

2.16.4A If a Member objects to a cancellation or a price adjustment, Turquoise will determine whetherthe transaction shall be deemed to be obviously erroneous in accordance with the rules setforth below.

If so required to ensure the integrity of the market or in any other extraordinary situations,Turquoise may, on its own initiative or upon request by a Member cancel a Transaction whichhas occurred due to:

(i) an obvious error or mistake caused by a technical or manual error at Turquoise, ora Member; or

(ii) in the opinion of Turquoise, an obvious or material breach of any law, ordinance orthe Rules and Regulations; or

(iii) a technical disruption in Turquoise‟s trading or clearing system which is beyondthe control of a Member; or

(iv) where the Transaction may reasonably be assumed to have taken place on thebasis of material, erroneous information published by the issuer whose financialinstruments constitute the contract base for the contract in question or where, inconnection with any corporate action with respect to such issuer, significantuncertainty existed regarding recalculation of the contract terms at the time of thetransaction.

2.16.5 In determining whether to cancel a transaction in accordance with a request from a Memberwhich is submitted before the Cancellation Deadline where the counterparty to the transactionhas not consented to cancellation, Turquoise will compare the price at which the transactionwas effected against representative market prices (the “Fair Market Bid and Offer”) in order todetermine whether the price of such transaction is obviously incorrect.

2.16.6 The Fair Market Bid and Offer will be determined as follows:

Turquoise will, in conjunction with Oslo Børs, request bid and offer prices from at least threeMarket Makers not involved in the incorrect transaction. Where the price for the incorrecttransaction is less than 2 NOK, 0.2 EUR or 0.2 USD the market makers shall be requested toquote a price equivalent to the mid point of their bid and ask price for such transaction.

Where the price for the incorrect transaction is more than 2 NOK, 0.2 EUR or 0.2 USD theprices to be provided by the Market Makers must be based on the price of the underlying at thetime of the transaction and have a spread in accordance with the Prescribed Spread forQuotes set out in Rule 2.16.20.



RULE BOOK

42

The respective bid and offer or mid point prices provided by the Market Makers will beaveraged by Turquoise to determine the Fair Market Bid and Offer.

Turquoise may at its sole discretion decide not to use one or more of the prices provided or toestablish the Fair Market Bid and Offer by other means.

2.16.7 If the transaction requested to be cancelled was effected during a period in which Turquoisehad declared a Fast Market, Turquoise shall establish the lowest and highest transaction pricefor the underlying during the period between one minute before and one minute after the timeat which the transaction was effected.

Turquoise shall then, in conjunction with co-operating exchanges, request at least three MarketMakers to quote one bid and one ask price for the relevant Contract at each of these two NOK,0.2 EUR or 0.2 USD of the underlying. Where the price for the incorrect transaction is less thantwo NOK, 0.2 EUR or 0.2 USD, the market makers shall be required to quote mid point pricesfor such transactions at each of the said price levels.

Each bid and offer to be provided by the Market Makers must have a spread in accordancewith the Prescribed Spread for Quotes in Rule 2.16.20.

Turquoise will determine an average bid price and an average offer price at each of the twoprice levels of the underlying.

Turquoise will then determine the Fair Market Bid and Offer as the lowest average bid priceand the highest average offer price.

2.16.8 Where a request for cancellation of a transaction is received by Turquoise before theCancellation Deadline, Turquoise will direct that the transaction be cancelled if the price atwhich it was effected deviates by more than the maximum permitted deviation from the FairMarket Bid and Offer for the contract in question at the time at which the transaction waseffected.

2.16.9 The maximum permitted deviation for the Contract in question is specified as such in Rule2.16.21.

If the transaction requested to be cancelled was effected during a period in which Turquoisehad declared a Fast Market the maximum permitted deviation will be the Fast Market Deviationspecified in Rule 2.16.21.

2.16.10 Where Turquoise decides that the procedures relating to price adjustment should be applied itwill compare the price at which the transaction was effected against the Price AdjustmentRange for such Contract at the time in question.

The Price Adjustment Range for the Contract will be determined by subtracting from andadding to the Fair Market Bid and Offer, the relevant Permitted Deviation specified in Rule2.16.21.

If the price at which the transaction was effected is outside the Price Adjustment Range for thecontract, Turquoise shall adjust the price of the transaction to the price in the said range whichis nearest to the price of the original transaction.

2.16.11 In the absence of express authorisation from the Members in question, the identity of partiesinvolved in a transaction which is the subject of a request for cancellation or adjustment underthis Rule shall not be disclosed.

2.16.12 In determining the Price Adjustment Range in connection with a request for cancellation oradjustment of the price of a transaction, Turquoise may depart from the procedures set out inthis Rule if it is satisfied that such action is appropriate. Where it takes such action it shallinform the Members involved in the transaction of that fact and of the reasons for taking suchaction.

2.16.13 In the event that the underlying security for a Contract is subject to suspension of trading onthe exchange on which it is principally listed, Turquoise shall be entitled at its absolutediscretion to cancel some or all transactions in Contracts based on the underlying security inquestion.

2.16.13A Where the transaction has taken place during a period of time in which no price is quoted forthe underlying Product in question, the first price quoted thereafter shall be used to determinethe spread.



RULE BOOK

43

Where the transaction has taken place during a period of time in which no continuous tradingtakes place with respect to all or parts of the contract base, Turquoise shall determine thespread based on the information which, at the time of the assessment, is available inTurquoise‟s system regarding pricing with respect to the contract base.

When calculating a reasonable spread pursuant to the first and the second paragraph, thepermitted deviation shall be determined as specified at Rule 2.16.21.

2.16.14 If a Transaction relates to a Standardised Combination Order, special rules for cancellation andprice adjustment shall be applied. The situations that may occur under these special rules areas follows:

(i) an incorrect transaction where the error was in an order which was not aStandardised Combination Order which was executed against a StandardisedCombination Order and the price for the combination was reasonable;

(ii) an incorrect transaction where the error was in an order which was not aStandardised Combination Order which was executed against a StandardisedCombination Order and the price for the combination was judged by Turquoise at itssole discretion to be incorrect;

(iii) an incorrect transaction where the error was in a Standardised Combination Orderwhich was executed against another Standardised Combination Order placed byanother Member;

(iv) an incorrect Transaction where the error was in a Standardised Combination Orderwhich was executed against an order which was not a Standardised CombinationOrder.

2.16.15 In cases referred to in Rule 2.16.14(i), firstly it will be determined whether a cancellation orprice adjustment could be made in accordance with Rules 2.16.2 to 2.16.12. If that would notbe possible, the price for the incorrect Transaction shall then be adjusted to a price equal to theprice for the correct Transaction in the Standardised Combination plus or minus, asappropriate, the price at which the Standardised Combination was placed.

2.16.16 In cases referred to in Rule 2.16.14(ii), firstly it will be determined whether a cancellation orprice adjustment could be made in accordance with Rules 2.16.2 to 2.16.12. If that would notbe possible, the price shall be adjusted in accordance with the following procedure:

Turquoise shall, in conjunction with Oslo Børs, request Market Makers to quote prices at whichthey are willing to substitute for the Member that placed the Standardised Combination Order.Turquoise shall offer to the Member that entered the Combination to adjust the price of theincorrect Transaction to a price equal to the price for the correct Transaction in theStandardised Combination plus or minus, as appropriate, the best price offered by one of theMarket Makers. If the Member that placed the Standardised Combination Order objects to priceadjustment, then both Transactions in the Standardised Combination will be cancelled for thatMember, and the position will be transferred to the Market Maker that has offered the bestprice for the Standardised Combination, and price adjustment will take place accordingly.

2.16.17 In cases referred to in Rule 2.16.14(iii), the question as to whether cancellation or price

adjustment shall take place or not shall be assessed for the Standardised Combination as awhole under Rules2.16.2 to2.16.12.

2.16.18 In cases referred to in Rule 2.16.14(iv), the question as to whether cancellation or priceadjustment shall take place or not shall be assessed separately for each Transaction in theStandardised Combination under Rules 2.16.2 to 2.16.12.

2.16.19 Where Turquoise determines that an incorrect transaction should be dealt with by way of priceadjustment Turquoise shall cancel the existing transaction and re-register it at the adjustedprice.

2.16.20 The Maximum Market Spreads to be used in this Rule 2.16 are as follows:

Prescribed Spread for Quotes

NOK

1.5

2.25



RULE BOOK

44

3.00

3.75

Quoted Bid or Offer EUR or USD

Prescribed Spread for Quotes EUR or USD

0.21 – 1 0.2

1.01 – 2 0.3

2.01 – 3 0.4

3.01 – 0.6

Where the price for the transaction is less than 2 NOK, or 0.2 EUR or 0.2 USD, the marketmakers shall provide quotes for a mid price for such transaction.

2.16.21 The permitted price deviations to be used in this Rule2.16 are as follows:

Quoted Bid or Offer NOK

Maximum Permitted Deviation

NOK

Fast Market Deviation

NOK

2.01 - 10 1 2

10.01 - 20 1.5 3

20.01 - 30 2 4

30.01 - 3 6

Quoted Bid or Offer EUR or USD


EUR or USD

Fast Market Deviation

EUR or USD

0.21 – 1 0.1 0.2

1.01 – 2 0.15 0.3

2.01 – 3 0.2 0.4

3.01 – 0.3 0.6

Where the price for the transaction is less than 2 NOK, 0.2 EUR or 0.2 USD, the maximumpermitted deviation which shall be applied to the mid point price quoted by a market makershall be whichever is the greater of 50% of such mid point price or 0.1 NOK, or 0.01 EUR or0.01 USD, or, in cases where a Fast Market applies, 100% of such mid point price or 0.2 NOK,or 0.02 EUR or 0.02 USD.

2.17 Market Supervision

2.17.1 Turquoise supervises trading and price building in Listed Products and the general activity ofMembers with a view to ensuring that trading at Turquoise is conducted properly.

2.17.2 Where Turquoise believes that the activity of a Member requires investigation it may requestthe FSA or any other body which it considers appropriate to assist in any such investigation.

.2.17.3 Members shall co-operate fully with Turquoise's Compliance Department or other bodyappointed pursuant to Rule 2.17.2 in any such investigation and shall take appropriate action inaccordance with any direction issued by Turquoise following such investigation.

2.18 Position Limits

2.18.1 Turquoise may set Position Limits prescribing the maximum number of Registered Contracts ina Listed Product which may be held by a Member or a customer at any time. Such PositionLimits will be set by Turquoise in the interests of maintaining a proper market in the Product inquestion.

2.18.2 Position Limits may also be set by Turquoise following discussions with the DesignatedClearing House where Turquoise and the Designated Clearing House are satisfied that such

action is necessary in order to manage the risk represented by the Member in question.

2.18.3 Turquoise will notify Members in writing of the imposition of Position Limits in relation to anListed Product or of any variation in existing Position Limits. Such notice will normally be given



RULE BOOK

45

not less than three Trading Days for the Product in question before the Position Limits comeinto effect.

2.18.4 A Member shall not enter into any transaction in a Listed Product if such transaction wouldresult in Position Limits applicable to the Product in question being breached by the Member orthe customer for whom the Member is acting in relation to the transaction.

2.18.5 A Member shall take such action as Turquoise may direct in order to rectify any breach of aPosition Limit by the Member. Where the Member fails to act in accordance with instructionsgiven by Turquoise in accordance with this Rule, Turquoise may take such action as itconsiders necessary in the circumstances including, without limitation, excluding the Memberfrom participation in trading at Turquoise and effecting in the name of and at the expense of theMember such transactions as Turquoise at its sole discretion considers are necessary to curethe breach of the relevant Position Limit.

2.18.6 Breach of a Position Limit shall be a disciplinary offence under the Rules of Turquoise. AMember which has breached a Position Limit imposed by Turquoise will be subject todisciplinary action in accordance with Rule 1.9

2.18.7 Turquoise may investigate positions registered in Accounts held by a Member to establishwhether the Member has registered positions in more than one Account in an attempt tocircumvent Position Limits applicable to such Member.

2.19 Prohibition of Market Manipulation

2.19.1 A Member shall not act whether in isolation or in concert with one or more Members or withmembers of other exchanges on which an Underlying Product is traded or with any other partyin such a way as would tend to distort the market in a Listed Product.

2.19.2 Without limiting the generality of Rule 2.19.1, a Member shall not:

(i) distribute any inaccurate or misleading information which might affect the price of anListed Product;

(ii) place any order or report any transaction for registration pursuant to these Rules with

a view to distorting the market in an Listed Product.

2.19.3 A Member which acts in breach of this Rule shall be subject to disciplinary action inaccordance with Rule1.9. Members shall co-operate fully with Turquoise in investigating anyconduct which allegedly contravenes this Rule.

2.19.4 For the avoidance of doubt, a Member shall not be considered to have acted in breach of thisRule if it can satisfy Turquoise that in placing an Order or executing a transaction in a ListedProduct it was acting for bona fide trading purposes relative to the Product in question.

2.20 Trading Hours

2.20.1 Orders may be placed and Trades may be executed during the hours in which Turquoise isopen for trading. Turquoise's normal trading hours for each Listed Product is set out in the

Contract Specification relative thereto at Part 4.

2.20.2 The normal trading hours may be varied by Turquoise in conjunction with public holidays or inexceptional circumstances. Turquoise will give notice in writing to Members of any variation inits normal trading hours.

2.20.3 Outside the hours when Turquoise is open for trading, Orders may be varied or cancelled andIndications of Interest may be posted or withdrawn.

2.21 Emergency Closure or Suspension of Trading

2.21.1 Where Turquoise is satisfied that circumstances have arisen which prejudice the quality of themarket in Listed Products or the proper and timely performance by the Designated ClearingHouse of its functions in relation to the resulting Registered Contract, Turquoise may take suchaction as it considers necessary. Such action may include the closure of Turquoise or thesuspension of trading in a particular Listed Product. Where such action is taken, notice thereofand of the reasons giving rise to the action shall be given to Members as soon as possible bythe most appropriate method.



RULE BOOK

46

2.21.2 Circumstances which may give rise to action under Rule 2.21.1 include technical or otherproblems which affect Turquoise's trading system, communication systems or informationsystems or any comparable problem affecting the systems used by the Designated ClearingHouse or by an exchange on which the Underlying Instruments are principally traded.

2.21.3 Where Turquoise considers that the problem which has caused the emergency closure or the

suspension of trading in particular Listed Products will be resolved within fifteen minutes, boththe electronic trading system and the Marketplace Service will be suspended generally or inrelation to the Product in question.

2.21.4 Where Turquoise considers that such problem will continue for more than fifteen minutes, itmay arrange for trading to be resumed by way of the Marketplace Service only provided that itis satisfied that such action is consistent with the maintenance of a proper market in ListedProducts. Turquoise shall inform Members if such action is to be taken.

2.21.5 On emergency closure or the suspension of trading in particular Listed Products, theplacement of Orders and the execution of Transactions will cease until further notice eithergenerally or in relation to the Products in which trading has been suspended.

2.21.6 Orders relating to a Listed Product which are stored in the Orderbook at the time at whichtrading in such Product is suspended will normally remain in the Orderbook but will not be

capable or being executed until trading in such Product resumes.

2.21.7 In these circumstances, Stored Orders will retain their normal priority in accordance with Rule2.7. If for technical reasons, the procedures described above cannot be followed, Turquoisewill inform Members of the circumstances and of the need to re-enter Orders in the Orderbook.

2.21.8 Indications of Interest, Instructions and Orders placed with the Marketplace Service prior to thetime at which the emergency closure or suspension of trading in the Product to which suchInterest, Instruction or Order relates are not capable of being executed until trading in suchProduct resumes. The Member which gave such Interest, Instruction or Order shall inform theMarketplace Service prior to such resumption of trading whether it wishes to confirm it or towithdraw it.

2.21.9 Normal trading shall be resumed following emergency closure or the suspension of trading in aparticular Listed Product as soon as Turquoise is satisfied that the circumstances permit.Turquoise shall inform Members of such resumption of trading not less than ten minutes beforethe appointed time.

2.22 Information Concerning Listed Series

2.22.1 Turquoise disseminates information regarding Orders and Trades in Listed Series as specifiedin Rule 1.12.

2.22.2 During the normal trading hours for each Listed Product, Turquoise disseminates informationregarding Orders and Transactions in accordance with the Information List as amended fromtime to time. During such hours Turquoise also provides to Members the further informationdescribed in such Information List.

2.22.3 In the absence of an express statement to the contrary, information relating to a Listed Series

which is listed in conjunction with Oslo Børs reflects the combined activity in such Series ofMembers of Turquoise and members of Oslo Børs.

2.22.4 On request from a Member, Turquoise will provide information about the terms of anyIndications of Interest for the relevant Series which have been posted with Turquoise or OsloBørs.

2.23 Eligible U.S. InvestorsRule2.23 will be subject to the Filing of Updated Options Disclosure Documents pursuant to Rule 9b-1 U.S. Securities Exchange Act

2.23.1 Members should note that Stock Options and Index Options may be offered and sold to thoseU.S. persons that are broker-dealers registered with the U.S. Securities and ExchangeCommission (“SEC”) or large financial institutions that, in either case, are “ Eligible Broker-Dealers” or “Eligible Institutions” (collectively, “U.S. Eligible Investors”) subject to the

provisions of this Rule. To be Eligible, each such entity must:



RULE BOOK

47

(i) be a “qualified institutional buyer” as defined in Rule 144A(a)(1) under the U.S.Securities Act of 1933 (“Securities Act”), or an international organization excludedfrom the definition of “U.S. person” by Rule 902(k)(2)(vi) under the Securities Act; and

(ii) have had prior actual experience with options traded in the U.S. standardized or“listed” options market (who would therefore already have received the disclosuredocument for U.S. standardized options called for by Rule 9b-1 under the U.S.

Securities Exchange Act of 1934 (“Exchange Act”).

2.23.2 For the purposes of this Rule, “Stock Option” means a Norwegian Stock Option and “IndexOption” means an OBX Index Option.

2.23.3 Members shall obtain written representations from any U.S. Eligible Investor, signed by anappropriate officer, to the following effect:

(i) it is a “qualified institutional buyer” as defined in Rule 144A(a)(1) under the SecuritiesAct and, as such, it (i) owns and invests on a discretionary basis a specified amountof eligible securities sufficient to be a qualified institutional buyer under Rule 144A(and if a bank, savings and loan, or other thrift institution, has a net worth meeting therequirements of Rule 144A);

(ii) it has had prior actual experience in the U.S. standardized options markets and as a

result thereof has received the options disclosure document entitled “Characteristicsand Risks of Standardized Options” that is prepared by the Options ClearingCorporation and U.S. options exchanges;

(iii) it has received a copy of Turquoise‟s document entitled “Special Characteristics andRisks of Standardised Options Contracts Traded at Turquoise”;

(iv) its transactions in Options will be for its own account or for the account of anotherU.S. Eligible Investor or for the managed account of a non-U.S. person within themeaning of Rule 902(k)(2)(i) under the Securities Act;

(v) it will not transfer any interest or participation in an Option it has purchased or writtento any other U.S. person, or to any person in the U.S., who is not an U.S. EligibleInvestor;

(vi) it will cause any disposition of an Option that it has purchased or written to be effectedonly on Turquoise and to be settled at the Designated Clearing House appointed byTurquoise. It understands that any required payments for premium, settlement,exercise or closing of any Stock Option or Index Option in respect of which it has acontract with a Member must be made in London and in Norwegian Kronor. It alsounderstands that, if in relation to an Option it has a contract with a Member as a writerof such Option, margin must be provided to that Member, and maintained, measuredand deposited in Norwegian Kronor;

(vii) if it is an U.S. Eligible Investor acting on behalf of another U.S. Eligible Investor that isnot a managed account, it has obtained from the other a written representation to thesame effect as the foregoing and will provide it to the Member upon demand; and

(viii) it will notify the Member of any change in the foregoing representations prior to

placing any future order, and the foregoing representations will be deemed to bemade with respect to each order it gives to a Member.

2.23.4 Members that are not U.S. registered broker-dealers may deal in Stock Options or IndexOptions with U.S. Eligible Investors only in accordance with Rule 15a-6 under the ExchangeAct, principally through U.S. registered broker-dealers as provided in such Rule.



RULE BOOK

48

PART 3 CLEARING AND SETTLEMENT

3.1 Introduction

3.1.1 Turquoise has made arrangements which provide for the Designated Clearing House to act asthe central counterparty for Registered Contracts which result from transactions which areexecuted by means of the facilities of Turquoise or reported to it for registration in accordancewith its Rules. The Clearing House Regulations provide for the clearing and settlement of theobligations in respect of Registered Contracts to be performed by the Member directly if it is aClearing Member at the Designated Clearing House or by the General Clearing Member actingon behalf of the Member.

A Member shall ensure that it makes all arrangements which are required in order to ensuresuch obligations will be duly discharged in the manner provided for in the Clearing HouseRegulations, or where applicable, for such matters to be discharged by the General ClearingMember acting on behalf of the Member.

3.1.2 Members should ensure that they or, where applicable, the General Clearing Member actingon their behalf, comply with the Clearing House Regulations which require them to:

(i) make arrangements with a bank approved by the Designated Clearing House for suchpurposes to enable its settlement and payment obligations to the Designated ClearingHouse to be performed by way of a PPS Transfer. The list of banks approved forsuch purposes together with copies of the documents required to be completed byMembers in connection with the PPS arrangements are available from the DesignatedClearing House on request;

(ii) complete the necessary administrative procedures specified by the DesignatedClearing House concerning the performance of delivery obligations appropriate to itsactivities at the Designated Clearing House.

3.1.3 Registered Contracts shall be settled on Expiration or Exercise as the case may be inaccordance with the Clearing House Regulations applicable to the Contract in question.

3.1.4 Settlement of Registered Contracts shall be effected between the Designated Clearing House

and the Clearing Member or General Clearing Member of the Designated Clearing Houseresponsible for the Account in which the Contract which has expired or has been exercisedwas registered at the relevant time.

3.1.5 Members which act as Clearing Members of the Designated Clearing House shall ensure thatthey comply with their obligations to provide collateral to the Designated Clearing House in themanner provided for in the Clearing House Regulations to cover the Margin Requirement inrelation to Registered Contracts in the Clearing Account at the Designated Clearing House.

Members which use the services of a General Clearing Member in relation to the clearing andsettlement of Registered Contracts shall ensure that such General Clearing Member complieswith the abovementioned obligations to provide Collateral to the Designated Clearing House.

3.1.6 Members should note that in accordance with the Clearing House Regulations, the DesignatedClearing House may decline to enter into a Registered Contract or to cancel a Registered

Contract where it is required to take such action in order to comply with Applicable Laws orRegulations or any order or direction given by or a requirement imposed by any relevantregulator or pursuant to the rules of any such regulator.

In such circumstances Turquoise shall take the necessary steps in conjunction with theDesignated Clearing House. Where any such action is taken, Turquoise may at its solediscretion effect such Transactions in the name of and for the account of the Member to whomsuch law, regulation, order, direction or requirement applies as may be necessary in order toensure that following such action and the Registration of the resulting Registered Contracts atthe Designated Clearing House, the balanced position of the Designated Clearing House ismaintained.

3.2 Registration and Requests for Registration of Off-Exchange Transactions

3.2.1 On execution of an Transaction in an Listed Product or the acceptance of a Request forRegistration in accordance with these Rules relating to any such Product, the Clearing HouseRegulations provide that the Designated Clearing House shall enter into a Registered Contractso that:



RULE BOOK

49

(i) where a Clearing Member is the seller in such Transaction, the Designated ClearingHouse shall enter into a Registered Contract as buyer from the Clearing Member; and

(ii) where a Clearing Member is the buyer in such Transaction, the Designated ClearingHouse shall enter into a Registered Contract as seller to the Clearing Member.

As a party to such Registered Contracts, the Designated Clearing House is responsible for theperformance of its obligations to the Clearing Member in question.

3.2.2 If the counterparty to a transaction in a Listed Product entered into by a Member is a memberof Oslo Børs, the Clearing House Regulations provide that it shall enter into a Balance Contractwith identical economic content with Oslo Clearing which will in turn enter into a contract asbuyer or seller as the case may be with the other party involved in the transaction.

3.2.3 In its capacity as central counterparty to Registered Contracts the Designated Clearing Houseaccordingly maintains a neutral position at all times by entering into matching contracts asbuyer and seller contemporaneously

3.2.4 Where a transaction in a Listed Product is effected by means of Turquoise‟s electronic tradingsystem the resulting Registered Contract will normally be registered immediately in the clearingsystem of the Designated Clearing House.

Where a transaction is effected by other means provided for in these Rules or is reported toTurquoise for Registration in accordance with these Rules, the resulting Registered Contractwill be registered at the time that the contract in question is accepted for clearing by theDesignated Clearing House and matched in the clearing system of the Designated ClearingHouse.

3.2.5 The acceptance of a Request for Registration shall be at the sole discretion of Turquoise andthe Designated Clearing House. Requests for Registration may be submitted to Turquoise bythe Member or Members which are the counterparties to the transaction referred to in suchRequest.Requests for Registration relating to transactions in Listed Products which have been effectedoff-exchange may be submitted during the normal trading hours for the Product in question oroutside of such hours.

A Request for Registration may be submitted by way of the electronic connection of a Memberto Turquoise during the normal trading hours for the Contract in question.

Requests for Registration that are submitted by way of the electronic connection of a Memberto Turquoise may be submitted using any of the following three trade types:

Normal trade (NT):

The agreed price may not, at the moment of Registration, be less than the bid price or greaterthan the ask price quoted in Turquoise‟s trading system – or if such prices are missing, pricesregarded by Turquoise as being reasonable - regarding Transactions in Products based onshares, Depository Receipts or stock indices.

Late Trade (LT)

If NT is not applicable but the agreed price has been not less than the bid price or greater thanthe ask prices quoted in Turquoise ‟s trading system – or if such prices are missing, the pricesregarded by Turquoise as being reasonable – during a period of five minutes prior to theapplication for Registration regarding Transactions in Products based on shares, DepositoryReceipts or stock indices.

MTF Granted 1 (EG 1):

If neither NT or LT are applicable, EG 1 shall be used if the agreed price, has been not lessthan the bid price or greater than the ask price quoted in Turquoise ‟s exchange trading system – or if such prices are missing, the prices regarded by Turquoise as being reasonable – during

the day of the application for Registration regarding Transactions in Products based on shares,Depository Receipts or stock indices. Prior to the application of Registration an approval, viatelephone, shall be acquired from Turquoise.



RULE BOOK

50

A Request for Registration submitted to Turquoise in accordance with this Rule shall provideinformation regarding the buyer and the seller of the Contract, the Series, the price or premiumfor the Contract, the volume and the Accounts in which such Contract is to be registered. A

Request submitted by way of the electronic connection of a Member to Turquoise shall inaddition specify the country code and prefix for the Member or Members in question.

Requests for Registration relating to transactions in a Listed Product which have been effectedoff-exchange during trading hours for the Product in question shall be submitted to Turquoiseas soon as possible following the execution of the transaction. The provisions governingRequests for Registration of off-exchange transactions are set out in the section of Part 4 applicable to the Product in question. Turquoise may use alternative procedures to thosespecified in the relevant section of Part 4 where it is satisfied that such action is required in theapplicable circumstances.

3.2.6 Where a Request for Registration is submitted to Turquoise via the telephone, and the agreedprice is at or within the spread of the bid and ask for the Series in question which was obtainedduring the period of five minutes immediately prior to the time at which the Request forRegistration is submitted, the Request for Registration will normally be accepted by Turquoise.

Where the price at which an off-exchange transaction which is reported to Turquoise forRegistration during the trading hours for the Product in question is outside the spread of prices

for the Contract in question prevailing in the period of five minutes preceding the time at whichthe Request is submitted or where prices for the Contract in question have not been quotedduring such period, such request shall only be accepted by Turquoise where it is satisfied at itssole discretion that the Registration of such transaction is appropriate in the circumstanceshaving regard to the interests of the market generally.

3.2.7 Requests for Registration of off-exchange transactions which have been concluded outside thenormal trading hours for the Contract in question may be submitted to Turquoise forRegistration prior to the commencement of trading on the following trading day for suchContract. Such Requests shall be considered by Turquoise for Registration in accordance withthe relevant provisions of the section of Part 4 of these Rules which apply to the Contract inquestion.

3.2.8 In exceptional circumstances, Turquoise will consider a Request for Registration which issubmitted during trading hours for the Contract in question which relates to a transaction whichwas entered into prior to the start of the current trading session. Any such Request forRegistration shall be submitted by telephone to Turquoise‟s Surveillance Department. Thereare no restrictions on the price at which such Contract may be registered. No informationregarding the Registration of such Contract will be published by Turquoise.

In considering any such Request for Registration, Turquoise shall have regard to the time andprice at which the off-exchange transaction was effected and any other factors which itconsiders to be material to its determination with regard to the Request.

3.2.9 Where the price was within the spread at the time of the Request for Registration, Turquoiseshall publish information regarding the price, volume and time at which such Contract wasregistered and will update all the information published by Turquoise.

Where the price was:

(i) outside the spread within the five minutes preceding the submission of the Requestfor Registration; or

(ii) within the spread that was obtained during the day on which the Request forRegistration was submitted;

Turquoise will publish the Trade Report price and quantity and update the daily high and lowand turnover fields. The last published price, last quantity and open fields will not be updatedin the information published by Turquoise.

The foregoing provisions shall not apply in relation to a Contract which is registered pursuant toa Request for Registration accepted by Turquoise pursuant to Rule 3.2.8.

3.2.10 Notwithstanding the preceding paragraphs, if the price of the transaction has been defined byfactors other than the current prices quoted in the order book of the Product, an explanation ofthe source of the agreed price shall be presented to Turquoise. Such factors may for instancebe that the quantity of the transaction is significantly larger than the volumes presented in the



RULE BOOK

51

order book, that the transaction has been executed using an average price as benchmark(VWAP) or that it is part of a combination trade involving other Products. The circumstancesexplaining the background of the transaction and the definition of the price shall be presentedto Turquoise, who will decide whether to register the transaction. Turquoise has no obligationto register a transaction where the price is lower than the bid price or higher than the ask pricequoted in the trading system.

3.3 Protests

3.3.1 Turquoise shall issue Settlement Statements to each Member specifying the RegisteredContracts which have been registered in the Clearing Accounts at the Designated ClearingHouse of the Member or the General Clearing Member used by the Member for such purposeson each day on which Turquoise is open for trading the Listed Product in question.

3.3.2 In relation to a Member which has arranged for its obligations with regard to the provision ofCollateral and the clearing and settlement of transactions it effects at Turquoise to bedischarged by a General Clearing Member, the Settlement Statements shall be sent byTurquoise to such General Clearing Member and to the Member in question.

3.3.3 The Member shall satisfy itself that the information contained in the Settlement Statement iscomplete and correct in all respects and that the Settlement Statement records accurately theterms of the transactions effected by the Member at Turquoise on the day in question.

A Member which uses the services of a General Clearing Member shall confirm with suchGeneral Clearing Member that the particulars of transactions shown in the SettlementStatements as having been entered in to by the Member are complete and correct in allrespects.

In accordance with the Clearing House Regulations, the Member or General Clearing Memberas the case may be shall be bound by the terms of a Registered Contract recorded on aSettlement Statement if a valid Protest is not submitted to Turquoise by the Member within theprescribed time limit following the issue of the Settlement Statement in which the Contract inquestion is recorded.

3.3.4 If a Member alleges that there is an error or omission in any Settlement Statement issued by

Turquoise, it shall submit a Protest to Turquoise within the prescribed time limit. Such Protestshall be in writing and shall provide details of the alleged error.

A Protest which relates to a Contract registered in the Clearing Account of a General ClearingMember (other than an Account used solely for the registration of transactions entered into bysuch General Clearing Member on its own account) shall be submitted in writing by both theGeneral Clearing Member and the Member interested in such Protest.

Except where a different time is specified in the relevant section of Part4 applicable to a givenContract, any Protest submitted in accordance with this Rule will not be entertained byTurquoise unless it is received not later than thirty minutes before the close of trading on theFirst Trading Day for the Product to which it relates following the day to which the SettlementStatement refers except where Registration took place on the Expiration Date of the Product inwhich case the Protest must be received prior to 17:20 London time on the Expiration Date. Protests may be submitted at a later time and modifications or cancellations may be effectedas long as affected Members provide consent. However, in such cases Protests must besubmitted not later than 60 minutes after the close of trading for the specified contract on theBank Day after the day on which Registration took place. Where Registration has or shouldhave taken place on the same day as the Expiration Date of the Contract in question, Protestsmust be submitted prior to the closing of the clearing system on the Expiration Date or, wherethe Protest affects another clearing organisation, not later than 60 minutes prior to the closingof the clearing system or the closing of the other clearing organisation‟s clearing system on thesame day, whichever is the earliest. Exceptions to time limits in this paragraph can be made ifoperationally possible, following approval from Turquoise and Oslo Børs.

3.3.4A In its own authority or following a request by a Member, Turquoise may effect an amendmentof an incorrectly executed or non-executed Exercise or Cash Settlement, which Turquoise hasprocessed or failed to process, on behalf of a Member.

A Member, who wishes to submit a Protest in respect of an incorrectly executed or non-executed Exercise or Cash Settlement, that Turquoise has processed or failed to process, onbehalf of a Member, must submit a request to Turquoise. Such a Protest in accordance withthis Rule will not be entertained by Turquoise unless it is received no later than thirty minutes



RULE BOOK

52

prior to the open of trading on the First Trading Day for the Product to which it relates followingthe day after the Exercise or Cash Settlement was carried out or should have been carried out.Information regarding the series and number of contracts affected shall be provided as part ofthe Protest.

In order that Turquoise can effect an amendment of an incorrectly executed or non-executed

Exercise or Cash Settlement, that Turquoise has processed or failed to process, on behalf of aMember, it shall, not later than 120 minutes after the normal opening of trading on the FirstTrading Day after the Exercise or Cash Settlement was carried out, or should have beencarried out, notify any Member concerned, that an amendment will be effected.

Turquoise will inform the Members concerned how the amendment will be effected.

3.3.4B In its own authority or following a request by a Member, Turquoise may carry out the followingmeasures, as a result of an incorrectly executed or non-executed Exercise or Cash Settlement,which a Member has processed or failed to process.

A Member, who wishes to submit a Protest in respect of an incorrectly executed or non-executed Exercise or Cash Settlement, which that Member has processed or failed to process,must submit a request therefore to Turquoise as soon as the error is discovered, however notlater than 60 minutes after the normal opening of trading for the contract in question on the

Bank Day after the Exercise or Cash Settlement was carried out, or not, as the case may be. Inconnection with such a request, the Member shall provide information regarding the Series,number of Contracts affected, and the specific account in question.

When a Member has made such a Protest, Turquoise shall forward the request to all otherMembers concerned as soon as is possible.

If in Turquoise‟s opinion, a Member‟s request for Exercise or Cash Settlement has beenincorrectly executed, Turquoise may contact Members concerned on its own initiative, even ifno protest has been made. Such contact shall be taken no later than 90 minutes after thenormal opening of trading for the contract in question on the Bank Day after the Exercise orCash Settlement request was carried out.

Turquoise will cancel or amend the Exercise and Cash Settlements in question if Membersconcerned consent to such a measure. If the Members concerned have not approved themeasure 120 minutes after the normal opening of trading for the contract in question on theBank Day after the Exercise or Cash Settlement was carried out no cancellation will be made.

3.3.5 On receipt of a valid Protest, Turquoise shall investigate the matter. Turquoise shall inform theMember submitting the Protest of its decision as soon as possible. Where the Member sorequests, Turquoise shall confirm its decision and the reasons therefor in writing as soon aspossible after the decision is given.

Turquoise shall inform the Designated Clearing House of its decision concerning the Protestand shall arrange for the terms of any Registered Contract affected by the Protest to beadjusted as required in accordance with its decision. The adjustment of the terms of anyRegistered Contract pursuant to a Protest shall be effected by the Designated Clearing Housein accordance with the Clearing House Regulations.

3.4 Re-registration

3.4.1 A Request for Re-registration requesting the transfer of all or certain specified Contractsregistered in a Clearing Account at the Designated Clearing House or the transfer of all orcertain specified Contracts registered in the account of a member at a Co-Operating ClearingHouse to the Clearing Account of a Member at the Designated Clearing House may besubmitted to Turquoise in accordance with the following provisions of this Rule.

3.4.2 A Request for Re-registration may be submitted to Turquoise on the grounds that:

(i) the Member has decided to use the services of a General Clearing Member andseeks the Re-registration of Contracts registered in its Account to the Account of theGeneral Clearing Member;

(ii) the Member has decided to terminate its existing arrangements with a GeneralClearing Member and seeks the Re-registration of Contracts registered in the Accountof such General Clearing Member pursuant to the execution of transactions by such



RULE BOOK

53

Member to the Account of the Member or the Account of another General ClearingMember whose services the Member has decided to use;

(iii) the Registered Contracts to which the Request relates were effected on behalf of aClient or customer who has requested that its positions be transferred to anotherBroker;

(iv) the Registered Contracts to which the Request relates were effected on behalf of aMember as a Client or a customer of a Broker, and the Member has requested thatthe positions in question be transferred to its Proprietary Account;

(v) the Re-registration is requested following the transfer of the business of the transferorMember to the transferee Member or other similar event; or

(vi) that the Registration of the Contract in the Account in question was the result of anerror.

3.4.3 Requests for Re-registration shall be submitted by a person authorised in this regard toTurquoise either by way of the Member‟s electronic connection to Turquoise or by submitting aduly completed request in writing in the form specified by Turquoise on behalf of both thetransferor and the transferee. Any Request which seeks the Re-registration of a Contract to orfrom a Client Account shall not be considered unless the Member requesting Re-registration

provides satisfactory confirmation that the Clients affected thereby have consented to the Re-registration.

3.4.4 Requests for Re-registration seeking the Re-registration of a Registered Contract to or from theClearing Account of a General Clearing Member (other than a Clearing Account used solely forthe Registration of positions entered into by such General Clearing Member on its ownaccount) shall be submitted by a person authorised in this regard to Turquoise either by way ofthe Member‟s electronic connection to Turquoise or by submitting a duly completed request inwriting in the form specified by Turquoise by both the General Clearing Member and theMember affected by such Request.

3.4.5 Where the Contract in question is also listed by Oslo Børs or Clearing House, a Request forRe-registration may seek Re-registration of all or certain specified Contracts to an Accountheld by a member of Oslo Børs or Clearing House PROVIDED THAT the acceptance of anysuch request shall be subject to the specific approval of Turquoise, the Designated ClearingHouse and Oslo Børs or Clearing House and further that no such request shall be consideredunless satisfactory confirmation is provided by the Members in question to Turquoise, theDesignated Clearing House and to Oslo Børs or Clearing House that any customer affectedthereby has consented to the Re-registration.

3.4.6 A Request for Re-registration shall provide the information specified in and shall be submittedby the time prescribed in the section of Part 4 of these Rules applicable to the Contract inquestion.

3.4.7 All Requests for Re-registration will be considered at the discretion of Turquoise and theDesignated Clearing House and shall, if accepted, result in the Re-Registration of the Contractin question being effected at the time specified by the Designated Clearing House.

Turquoise will inform the Member which submitted the Request for Re-registration of the

decision with regard to the Request as soon as practicable following receipt of the Request.

The decision of Turquoise and the Designated Clearing House in this respect shall be finaland binding.

Where a Request for Re-Registration is accepted, Turquoise shall arrange for the terms of anyRegistered Contract affected by its decision to be amended by the Designated Clearing House.

A Re-registration fee will be payable in respect of all Contracts which are re-registered inaccordance with this Rule.

3.4.8 The procedures for Re-registration set out in this Rule shall not be applied in connection withthe amendment of an error or omission in the registration of a transaction or the terms thereof.Such matters are subject to the rule governing Protests at Rule 3.3.

3.5 Exercise of Options Contracts



RULE BOOK

54

3.5.1 The Contract Specification of an Options Contract will indicate whether the Option is anAmerican Style Option or a European Style Option. The Holder of an American Style Optionmay exercise the Option at any time during the Lifetime of the Option by submitting an ExerciseOrder to Turquoise. The Holder of a European Style Option may only exercise such Option onits Exercise Day. The procedures governing the exercise of Options Contracts based onparticular Listed Products are set out in the section of Part 4 applicable to the Product inquestion.

3.5.2 The holder of an Option which wishes to exercise it shall, or, where applicable, shall arrange forits General Clearing Member to, submit an Exercise Order to Turquoise relating to the Option inquestion.

3.5.3 Any such Exercise Order shall be submitted to Turquoise either by the Member‟s electronicconnection or by submitting a duly completed request in writing in the form specified byTurquoise for the time being.

Requests for Exercise submitted to Turquoise in other forms or by other means shall not bevalid.

3.5.4 Exercise Orders relating to Option Contracts must be submitted to Turquoise in accordance withthe time limits specified in the section of Part 4 applicable to the Contract in question.Turquoise‟s determination of the time at which an Exercise Order was received by it shall be

final and binding.

3.5.5 Where an Exercise Order has been accepted by Turquoise or an Options Contract is exercisedin accordance with the procedures governing Standard Exercise of such Contract, Turquoisewill select a corresponding Written Options Contract to be exercised against. Such Contract willbe selected on a random basis from the available Contracts.

Where a valid Exercise Order or an instruction negating Standard Exercise has been receivedby Turquoise, it shall inform the Designated Clearing House accordingly so that the necessaryaction may be taken in relation to the Registered Contracts affected by such Exercise Order.

3.5.6 The procedures governing settlement and delivery of Futures and Options Contracts which haveexpired or been exercised and any other conditions or restrictions applicable to the Exercise ofparticular Options Contracts are set out in the section of Part 4 applicable to the Product inquestion.

3.6 Fees and Cash Settlement Obligations

3.6.1 Members should note that all fees payable in relation to the execution, registration, clearing,settlement, exercise or expiration of a Registered Contract relating to a Turquoise Transactionand other matters relative thereto shall be payable to the Designated Clearing House inaccordance with instructions and Settlement Statements relating to such fees issued by theDesignated Clearing House in respect of each calendar month.

3.6.2 The Member shall pay fees in accordance with Turquoise‟s schedule of fees for the time being.The fees payable in respect of transactions in particular Listed Products are set out in thesection of Part 4 applicable to the Product in question.

3.6.3 Fees are payable by a Member in respect of the following events:

(i) on Registration of a Contract;

(ii) on Re-registration of a Contract;

(iii) on Settlement of a Contract;

(iv) on Exercise of an Options Contract;

(v) on Delivery;

(vi) on failure to deliver or settle at the prescribed time;

(vii) fees relating to custody services provided by the Designated Clearing House;

(viii) for miscellaneous administrative services.



RULE BOOK

55

The times at which the above mentioned fees are payable in respect of particular ListedProductss are specified in the Fee Schedule at Appendix A.

3.6.4 The penalty fee for failure to perform delivery or settlement obligations at the prescribed timeshall be payable on the day specified by Turquoise or the Designated Clearing House (as thecase may be) in the notice requiring payment of the said penalty fee.

3.6.5 Miscellaneous administrative fees are payable at the time specified in the invoice issued byTurquoise or the Designated Clearing House (as the case may be) relative to the services inquestion.

3.6.6 The foregoing provisions of this Rule 3.6 shall not apply in relation to the performance of dailyor other periodic cash settlement obligations. Such obligations shall be performed by thepayment by the Member of the amount specified in the Daily Settlement Statements issued byTurquoise in accordance with the section of Part 4 of these Rules or the Rules for ClearedOnly Contracts applicable to the Contract in question.



RULE BOOK

56

PART 4.1 FUTURES AND OPTIONS CONTRACTS BASED ON INTERNATIONAL ORDER BOOK DEPOSITARY RECEIPTS (IOB DRs)

4.1.1 International Order Book Depositary Receipt (IOB DR)

4.1.1.1 The Contract Specifications for IOB DR Contracts listed by Turquoise and the rules andprocedures relating specifically to the trading, clearing and settlement of such Contracts are setout in this Part 4.1.

The Trading Hours for IOB DR Futures and Options Contracts shall normally be from 8.15 amto 3.30 pm London time on IOB Trading Days.

4.1.1.2 The rules and procedures set out in this Part 4.1 apply to the following IOB DR Contracts:

IOB DR FuturesIOB DR Options

and references to IOB DR Contracts in this Part 4.1 shall be construed as references to eachof the above Contracts unless the context requires to the contrary.

4.1.1.3 The settlement of IOB DR on exercise or expiration is performed by the delivery of theUnderlying Depositary Receipt against the payment of the Exercise Settlement Amount in thecase of an Options Contract and the Expiration Settlement Amount in the case of a FuturesContract in accordance with the Clearing House Regulations.

4.1.1.4 Members should ensure that they comply with any instructions given by the DesignatedClearing House and complete any documents specified by the Designated Clearing Houserelating to the settlement of IOB DR.

The rights and obligations concerning delivery of the Underlying Depositary Receipt followingthe expiration of a Futures Contract or the Exercise of an Options Contract under this Part 4.1shall be performed by means of the Designated Settlement Venue‟s system in accordance withinstructions issued by Turquoise relative thereto. The Member shall make arrangements witha nominee holding an account at the Designated Settlement Venue to act on its behalf inrelation to such deliveries where necessary.

4.1.1.5 The Member shall open and maintain a securities account(s) and a related cash account(s)("the IOB DR Securities Account ") at a Custodian(s) or directly with the DesignatedSettlement Venue(s) for purposes of delivery settlement in accordance with the Regulations ofthe Designated Clearing House.

4.1.1.6 The application and interpretation of this Part 4.1 shall be governed by English law and theCourts of England and Wales shall have exclusive jurisdiction to determine any dispute arisingout of or in connection with this Part 4.1.

4.1.1.7 Save where there is an express indication to the contrary, all references to time in this Part 4.1shall be construed as references to London time.

4.1.2 Interpretation

In this Part 4.1 the following terms shall have the meanings ascribed thereto:

“Custodian” means a bank or other institution which is used by a Member for delivery orreceipt of securities deliverable under the terms of a Registered Contract;

"Daily Cash Settlement" in relation to an IOB DR Futures means the process of cashsettlement effected for such Contracts on each IOB Trading Day where applicable during itslifetime in accordance with Rule 4.1.15;

"Daily Settlement Amount" means the amount payable to or by a Member in relation to eachDaily Cash Settlement;

"Daily Settlement Statement" in relation to an IOB DR Contract, means the note issued by

Turquoise showing the amount payable to or by a Member on the Daily Cash Settlement of theContract in question;



RULE BOOK

57

“Deliverable Depositary Receipts” in relation to the settlement of a Depositary ReceiptFutures or Depositary Receipt Options Contract means the Underlying Depositary Receipt forthe Contract in question;

“Delivery” in relation to the settlement of a Depositary Receipt Contract means the process ofdelivering the Underlying Depositary Receipt against payment of the Delivery SettlementAmount;

“Delivery Fee” means the fee payable in relation to the delivery of the Underlying DepositaryReceipt Contract following Expiration of a Futures Contract or Exercise of an Options Contract;

“Delivery Settlement Amount” means the amount payable by the party entitled to receivedelivery of the Underlying DR under the contract in question;

“Depositary Receipt (DR)” means either a Global Depositary Receipt or American DepositaryReceipt which is listed or traded on the IOB and which corresponds to a share, shares or to apercentage of a share of the company in question;

“Derivatives Leg” means that part of a Derivatives Cash Market Combination that comprisesan IOB DR;

“Designated Market Maker (DMM)” means a Member which has agreed to act in such

capacity in relation to IOB DR Products in accordance with Rule 4.1.8.

“Designated Settlement Venue” means Euroclear for any DR that falls within the LSE‟s IOBCCP Securities list as published on the LSE website, or means either the DTCC or Euroclearfor all DRs that do not fall within the LSE‟s IOB CCP Securites list (and known as the DefaultSettlement Location) as specified in the IOB Depositary Receipt List for the provision ofsettlement services of IOB DRs

“Designated Settlement Venue System” means the system used by the DesignatedSettlement Venue for the transfer of title to American Depositary Receipts or Global DepositaryReceipts as amended from time to time;

“DR Issuer” in relation to a Contract, means the depositary that issues the DRs on which suchcontract is based;

“DTCC” means Depository Trust and Clearing Corporation, the American SecuritiesSettlement System;

“Euroclear” means the settlement system for domestic and international securitiestransactions, covering bonds, equities and investment funds and acts as the Central SecuritiesDepository (CSD) for Dutch, French, Irish and UK securities;

“ex- Day” shall mean the day on which the DR is first available for trading without risks toparticipate in the corporate action;

“Exercise Order” means an instruction given by the Holder of an Option to Turquoisepursuant to Rule 4.1.18 requesting the Exercise of the Option in question;

“Exercise Settlement Amount” means the amount payable following Exercise of an IOB DR

by the party entitled to receive delivery of the Underlying Depositary Receipt under theContract in question;

“Exercise Settlement Statement” in relation to an IOB DR Contract, means the note issuedby Turquoise showing the amount payable to or by the Member on Exercise of the Contract inquestion;

“Exercise Value” in relation to an IOB DR, means the Strike Price for such Contract multipliedby the number of Depositary Receipts of the Underlying Depositary Receipt represented bysuch Contract;

“Expiration Date” in relation to a standardised IOB DR Series means the third Friday of theExpiration Month or, if that day is not an IOB Trading Day, the immediately preceding IOBTrading Day and, in relation to a Non-Standardised IOB DR, means the day agreed upon bythe Counterparties as the day on which such Contract will expire;

“Expiration Exercise Window” means the time at which Members normally can submitExercise Order transactions via the electronic connection, usually between 6.10 pm and 6.40pm London time;



RULE BOOK

58

“Expiration Year” in relation to a standardised IOB DR Series means the year designated byTurquoise as the year in which such Series shall expire and, in relation to a Non-StandardisedIOB DR, means the year agreed upon by the Counterparties as the year in which suchContract will expire;

“Expiration Month” in relation to a standardised IOB DR Series means the month designatedby Turquoise as the month in which such series will expire and, in relation to a Non-

Standardised IOB DR Contract means the month agreed upon by the Counterparties as themonth in which such Contract will expire;

"Expiration Settlement Amount" means the monetary amount due to or payable by aMember on Expiration of an IOB DR Futures Contract as specified in the Expiration SettlementStatement;

“Expiration Settlement Date” in relation to an IOB Contract means the third IOB Bank Daywhere applicable after the Expiration Date for the Contract in question;

“Expiration Delivery Settlement Price (EDSP)” means the closing price as determined bythe London Stock Exchange (LSE) in accordance with the LSE‟s “Guide to Trading Services”on the Expiration Date. The EDSP as applied by Turquoise shall normally be rounded to 2decimal places unless Turquoise provides otherwise;

“International Order Book (IOB)” means the London Stock Exchange‟s International OrderBook which is an order-driven trading service for trading international equity market securities;

“International Order Book Depositary Receipt Contracts” (IOB DR Contracts)” meansstandardised and Non-Standardised Futures and Options Contracts listed by Turquoise whichare based on any of the Depositary Receipts included in the International Order BookDepositary Receipt List for the time being the terms of which are in accordance with theProduct Specifications for such Contracts, and “International Order Book DepositaryReceipt Futures” and “International Order Book Depositary Receipt Option” shall beconstrued accordingly;

“IOB Depositary Receipt List (IOB DR List)” means the list published by Turquoise on itswebsite at www.tradeturquoise.com as amended from time to time showing the DRs on whichIOB DR Contracts are based and other relevant information concerning such Contracts;

“IOB DR Options Series” means IOB DR Options having the same Expiration Date, ExpirationMonth, Expiration Year and the same Exercise Price and “Series” shall be construedaccordingly;

“IOB Bank Day” means a day other than a Saturday or a Sunday or other holiday on whichbanks in the United States or in the United Kingdom are generally open for business aspublished in Turquoise‟s trading and settlement calendar on its website atwww.tradeturquoise.com ;

“IOB Trading Day” means a day other than a Saturday or Sunday or other UK public holidayon which the IOB is generally open for trading as published in Turquoise‟s trading andsettlement calendar on its website at www.tradeturquoise.com ;

“Issuing Company” in relation to a Contract, means the company on whose DRs such

Contract is based;

“LSE’s IOB CCP Securities List” means the list published by the London Stock Exchange atwww.londonstockexchange.com as amended from time to time showing those IOB DRs onwhich IOB DR Contracts are based that are eligible for Central Counterparty (CCP) clearing;

“LSE trading system” means the London Stock Exchange‟s electronic trading system;

“Premium Settlement Day” in relation to an IOB DR Option, means the first IOB Bank Dayfollowing Registration;

“Primary Market Maker (PMM)” means a Member which has agreed to act in such capacity inrelation to IOB DR Products in accordance with Rule 4.1.8;

“Recalculation Day” shall mean the IOB Trading Day on which recalculation of IOB Contracts

is effected;

“Request for Listing” means the request submitted to Turquoise by a Member in accordancewith Rule 4.1.5 relating to the listing of a new IOB DR for trading at Turquoise;

http://www.tradeturquoise.com/








http://www.londonstockexchange.com/








RULE BOOK

59

“Settlement Statement” means:

(i) in relation to an IOB DR Futures Contract, the note issued by Turquoise showing therights and obligations of the Counterparties to such Contract with regard to thedelivery of the Underlying Depositary Receipt and the associated cash paymentsfollowing its Expiration; and

(ii) in relation to an IOB DR Options Contract, the note issued by Turquoise showing therights and obligations of the Counterparties to such Contract with regard to thedelivery of the Underlying Depositary Receipt and the associated cash paymentsfollowing its Exercise;

“Trading Hours” has the meaning given in Rule 4.1.1.1;

“UK Trading Day” means a day other than a Saturday or Sunday or other UK public holidayon which the London Stock Exchange is generally open for trading as published in Turquoise‟strading and settlement calendar on its website at www.tradeturquoise.com ;

“UK Stock Contracts” means Non-Standardised Futures and Options Contracts which arebased on any of the stocks included in the UK Stock List for the time being, the terms of which

are in accordance with the Product Specifications for such Contracts.

“UK Stock List” means the lists published by Turquoise on its website atwww.tradeturquoise.com as amended from time to time showing the Underlying UK Stocks onwhich UK Stock Contracts are based and other relevant information concerning suchContracts;

Underlying Depositary Receipt” in relation to a DR Futures or Options Contract, means theDepositary Receipt as the case may be on which such Contract is based;

4.1.3 Contract Specifications

4.1.3.1 Contract Specifications: Standardised Futures on an International Order BookDepositary Receipt (“IOB DR”)

Type of Contract Standardised Futures Contracts with Daily Cash Settlement and Delivery of theUnderlying Depositary Receipt

Contract Base The DR listed or traded on which the Future is based as shown in Turquoise's IOBDR List as published on the Turquoise website.

Currency DRs listed or traded on the IOB are denominated in US Dollars.

Deliverable Instruments The relevant Underlying DR.

Minimum Price Movement

0.10

Contract Size Normally one hundred DRs except where shown on the IOB Depositary Receipt List.Recalculation of the number of DRs represented by a Contract can occur in certaincases in accordance with the Recalculation Rules for IOB DR Contracts set out atRules.4.1.20.

Lifetime Three, six or twelve months in accordance with the Series Designation.

Last day of Trading The Expiration Date.

Listing of New Series Futures Series will be listed for trading by Turquoise in accordance with Rule 4.1.4.

Series Designation Each Series shall be designated by a maximum of eleven symbols, where amaximum of five symbols designates the Underlying Depositary Receipt, one symboldesignates the Expiration Year and one symbol designates the Expiration Month.

The use of the symbol X, Y or Z indicates that the Recalculation Rules have beenapplied to the Futures Contracts in question.







RULE BOOK

60

Daily Settlement IOB DR Contracts shall be subject to Daily Cash Settlement on each IOB Bank Daybased upon the Daily Settlement Price of the Contracts calculated on the precedingIOB Trading Day in accordance with Rule 4.1.15.

Expiration Date The third Friday of the Expiration Month of the Expiration Year, or where such day isnot an IOB Trading Day or is declared by Turquoise in advance to be a half trading

day, the preceding IOB Trading Day. If there is a Suspension of Trading on the IOBor any other market or exchange approved by Turquoise in the DR in question atClosing on the Expiration Date or if the Suspension of Trading terminates less thanone hour from Closing, the Expiration Date shall be postponed to the following IOBTrading Day

Expiration Month The month indicated in the Series designation.

Expiration Year The year indicated in the Series designation.

Expiration Delivery Settlement Price (EDSP)

The closing price as determined by the LSE in accordance with its “Guide to TradingServices” on the Expiration Date rounded to 2 decimal places (with numbers from 0to 4 being rounded down and numbers from 5 to 9 being rounded up).

Delivery A Standardised Futures Contract based on an IOB DR is settled by delivery of theDR in accordance with Rule 4.1.16.

Expiration Settlement Day

The third IOB Bank Day after the Expiration Date.

Expiration Settlement Payment of the Expiration Settlement Amount against delivery of the Underlying DRshall occur in accordance with Turquoise's instructions pursuant to Rules 4.1.16 and4.1.17.

Trading Hours As specified in Rule 4.1.1.1.

4.1.3.2 Contract Specifications: Standardised Options on an International OrderBook Depositary Receipt (“IOB DR")

Type of Contract Standardised Options Contracts with Delivery.

Style of Options European Style.

Types Calls and Puts.

Contract Base The DR listed or traded on the IOB on which the Option is based as shown inTurquoise's IOB DR List as published on the Turquoise website.



For Options with a Premium below USD 0.1: 0.01For Options with a Premium from USD 0.1 to USD 3.95: 0.05

For Options with a Premium from USD 4 to USD 9.90: 0.10For Options with a Premium above USD 10: 0.25

Contract Size Normally one hundred DRs except where shown on the IOB Depositary Receipt List.Recalculation of the number of DRs represented by a Contract can occur in certaincases in accordance with the Recalculation Rules for IOB DR Contracts set out atRules 4.1.20.

Premium The amount agreed to by the parties as the premium payable for the Contractmultiplied by the number of DRs represented by the Contract.

Premium Settlement Day The first IOB Bank Day following Registration.

Strike Price The Strike Price contained in the Series designation. Recalculation of the Strike

Price may occur in certain cases in accordance with the Recalculation Rules for DRContracts set out at Rules 4.1.20.

Strike Price Interval As shown in the Scale of Strike Prices.



RULE BOOK

61

Lifetime Three, six or twelve months in accordance with the Series Designation.

Last day of trading The Expiration Date.

Listing of New Series Options Series will be listed for trading by Turquoise in accordance with Rule 4.1.4.

Series Designation Each Series shall be designated by a maximum of eleven symbols, where amaximum of five symbols designates the Underlying Depositary Receipt, one symboldesignates the Expiration Year, one symbol designates the Expiration Month and anumber of symbols designate the Strike Price. The use of the symbol X, Y or Zindicates that the Recalculation Rules have been applied to the Futures Contracts inquestion.

Expiration Date The third Friday of the Expiration Month of the Expiration Year, or where such day isnot an IOB Trading Day the preceding IOB Trading Day. If there is a Suspension ofTrading on the IOB in the DR in question at Closing on the Expiration Date or if theSuspension of Trading terminates less than one hour from Closing, the ExpirationDate shall be postponed to the following IOB Trading Day.



Exercise IOB DR Options are subject to Exercise in accordance with Rule 4.1.18.

Standard Exercise IOB DR Options shall be subject to Standard Exercise in accordance with Rule 4.119.

Delivery A Standardised Options Contract based on an IOB DR is settled by delivery of theDR in accordance with Rule 4.1.16.

Exercise Settlement Payment of the Premium and of the Exercise Settlement Amount against delivery ofthe DR shall occur in accordance with Turquoise's instructions pursuant to Rules4.1.18 and 4.1.19.

Exercise Settlement Day The third IOB Bank Day following the day on which Exercise of the Contract iseffected in accordance with Rule 4.1.19.


4.1.4 Listing of New Series

4.1.4.1 The First Listing Day for new Futures and Options Contracts based on an IOB DR shallnormally be the fourth IOB Trading Day prior to the Expiration Date for the Contract in questionin each calendar month.

4.1.4.2 On the First Listing Day for an IOB DR Options Series Turquoise shall list at least five Series

for each applicable Options Type.

4.1.4.3 Turquoise reserves the right to adjust either of the First Listing Day or the Expiration Date inrespect of any given Series where such adjustment is deemed necessary in the interests of themarket. Members shall be informed in advance in writing of any such intended adjustment.

4.1.4.4 For one Call and one Put Options Series, the Strike Price shall be set at the point inTurquoise's Scale of Strike Prices for the Contract in question which is closest to the lasttransaction price of the Underlying Depositary Receipt at the close of trading on the IOB onthe immediately preceding IOB Trading Day. Where there is no transaction price, the last bidprice shall be used instead. Where neither a last transaction price nor a bid price is recordedfor the immediately preceding IOB Trading Day, the latest available transaction price from thepreceding IOB Trading shall be used. For other Series, the Strike Price shall be set so that it

is higher for at least two Call and two Put Options Series and lower for at least two Call and

two Put Options Series than the first Strike Price.



RULE BOOK

62

4.1.4.5 The Strike Price for the second Series shall be set at the point in such scale of Strike Prices forStock Contracts immediately above the first Strike Price. The Strike Price for the third Seriesshall be set at the point in such scale immediately below the first Strike Price.

4.1.4.6 If during the Lifetime of an IOB DR Options Contract the closing transaction price for theUnderlying Depositary Receipt on the IOB is above the second highest or below the secondlowest Strike Price for Listed Series for such Contracts, at least one new Series for each

applicable Options Type will be listed by Turquoise on the next IOB Trading Day.

4.1.4.7 On listing new Series under this Rule, the Strike Prices for the newly listed Series will be set atthe appropriate point or points in Turquoise's Scale of Strike Prices for such Contracts.

4.1.5 Request for Listing of New Series

4.1.5.1 The Listing of new Futures and Options Contracts based on an IOB DR Series shall beeffected in accordance with the provisions of this Rule 4.1.5.

The Expiration Date for such Futures and Options Contracts shall be the day designated assuch by Turquoise in the Expiration Month indicated in the Series Designation.

Turquoise reserves the right to adjust the Expiration Date in respect of any given Series wheresuch adjustment is deemed necessary in the interests of the market. Members shall beinformed in advance in writing of any such intended adjustment.

4.1.5.2 New IOB DR Series based on an IOB DR will be listed for trading by Turquoise where aRequest for Listing submitted to it by one of its members has been accepted.

Where a Member is interested in trading a particular IOB DR Series based on an IOB DRwhich is not available for trading at Turquoise at such time, it may submit a Request for Listingto the Turquoise Surveillance Department at Turquoise, specifying the following details:

(i) the Underlying Instrument;(ii) the Type of Contract;(iii) the Expiration Month;(iv) the Strike Price for the Options Series in question or the Futures Contract price as

applicable.

4.1.5.3 Such Request for Listing may be submitted to the Turquoise Surveilance Department atTurquoise by telephone or by email.

Where Turquoise is satisfied that it is appropriate in the interests of the market to list for tradingthe IOB DR Series specified in the Request for Listing, it shall arrange for such Series to belisted for trading as soon as reasonably practicable. Where the relevant Request for Listing isreceived by Turquoise during the Trading Hours for IOB DR Contracts on the day in question,the new IOB DR Series will normally be available for trading on such day.

Turquoise shall inform the Member which submitted the Request for Listing of its decisionforthwith.

4.1.6 Designation of Expiration Month

4.1.6.1 The Expiration Month for an IOB DR Options Contract shall be designated as follows:

Expiration Month Call Option Put Option

January A M

February B N

March C O

April D P

May E Q

June F R

July G S

August H T

September I U

October J V

November K W



RULE BOOK

63

December L X

4.1.6.2 The Expiration Month for an IOB DR Futures Contract shall be designated as follows:

January M

February NMarch O

April P

May Q

June R

July S

August T

September U

October V

November W

December X

4.1.7 Payment of Fees

4.1.7.1 Fees in respect of IOB DR Contracts are payable by Members in the amount and at the timespecified in Appendix A for the Contract in question. Such fees shall be paid to theDesignated Clearing House at the time specified in the relevant Settlement Statement.

4.1.7.2 Penalty fees for late deliveries in relation to an IOB DR Contract shall be payable inaccordance with Rule 4.1.16.

4.1.8 Market Making Obligations

4.1.8.1 Market Makers who have agreed to act as such in respect of standardised Futures and OptionsContracts based on IOB DR Products may elect to act in one of two categories and shall

perform the obligations applicable to the market making category in which they have agreed toact set out below.

For the purposes of this Rule, “IOB DR Product” shall mean:

(i) any of the DRs shown in Turquoise‟s IOB DR List for the time being; and

(ii) the FTSE Russia IOB Index.

A Market Maker in IOB DR Products may elect to act as either:

(a) a Primary Market Maker (“PMM”) in

IOB DR FuturesIOB DR OptionsFTSE Russia IOB Index FuturesFTSE Russia IOB Index Options; or

(b) a Designated Market Maker (“DMM”) .

References in Part 4.1 of these Rules to a Market Maker shall be construed as references toPrimary Market Makers and Designated Market Makers collectively unless the context requiresto the contrary.

The obligations of Primary Market Makers and Designated Market Makers are set out in Rule4.1.8.4 below.

Market Makers will only be obligated to provide continuous quotes in accordance with this Rule4.1.8 when the IOB market is open for trading, normally from 9.00 am to 3.30 pm London time.

Where a Market Maker operates more than one Market Maker Account in accordance with anarrangement made by it with Turquoise under Rule 2.5.6, the Market Maker shall make aseparate election for each such Account regarding the capacity in which it intends to act andthe IOB DR Products in which the applicable market making obligations are to be performed. In



RULE BOOK

64

such circumstances, the performance of the applicable market making obligations shallsimilarly be assessed by reference to the Market Making Account in question.

4.1.8.2 The Primary Market Maker shall provide quotes in the Products which it has agreed to act assuch in writing with Turquoise and such arrangements may only be varied with the priorconsent in writing of Turquoise.

A Designated Market Maker may, subject to the agreement of Turquoise, elect to act as amarket maker in one or more IOB DR Products. Turquoise shall inform the Designated MarketMaker in writing of the IOB DR Products in which it has agreed to provide quotes. Sucharrangements may only be changed with the prior consent in writing of Turquoise.

4.1.8.3 The Primary Market Maker shall provide quotes in respect of the IOB DR Products in which itacts as such for a minimum period equivalent to 85% of Turquoise ‟s ordinary Trading Hours ineach calendar month. A Designated Market Maker shall provide quotes in respect of theProducts in which it acts as such for a minimum period equivalent to 75% of Turquoise‟sordinary Trading Hours in each calendar month.

For each IOB DR Product in respect of which it acts as such, a Market Maker shall quotecontinuous two way prices within the applicable Prescribed Spread and in the minimum amountapplicable to the Contract in question as published on the Turquoise website.

For a Primary Market Maker such quotes shall be provided in all Expiration Months providedalways that the Primary Market Maker shall not be required to provide quotes in relation to anySeries for the week in which the Expiration Date falls for such Series. However, Turquoise mayask a Primary Market Maker to provide quotes for such series on request. In any such week inwhich the Expiration Date falls, the Primary Market Maker shall be required to provide quotes inall Expiration Months following the month in which such Expiration Date falls.

For a Designated Market Maker such quotes shall be provided in both of the nearest twoExpiration Months provided always that the Designated Market Maker shall not be required toprovide quotes in relation to any Series on a day which is the Expiration Date for such Series.On any such Expiration Date, the Market Maker shall be required to provide quotes in each ofthe next two Expiration Months after the month in which such Expiration Date falls.

4.1.8.4 The IOB DR Products in respect of which a Designated Market Maker shall be required toprovide quotes shall be determined by such Market Maker and Turquoise in accordance withthe procedures published by Turquoise for such purposes from time to time.

The Primary Market Maker which performs its obligations as such to the satisfaction ofTurquoise shall pay fees in respect of all Contracts entered into by it in IOB DR Products onthe basis specified in Rule 4.1.9.

A Designated Market Maker which performs its obligations as such to the satisfaction ofTurquoise shall pay fees in respect of the IOB DR Products in which it acts as a market makeron the basis specified in Rule 4.1.9.

The Primary Market Maker shall provide quotes for each IOB DR Product in respect of which ithas agreed to act in such capacity:

(i) in respect of either all IOB DR Options or FTSE Russia IOB Index Options listed by

Turquoise in a minimum of five Call and five Put Options Series, such quotes to beprovided for Call or Put Options in the Series that is at the money, in the two Series thatis out of the money and in the two Series that is in the money

(ii) in respect of either all IOB DR Futures or all FTSE Russia IOB Index Futures Contractslisted by Turquoise.

A Designated Market Maker shall provide quotes for each Product in respect of which it hasagreed to act in such capacity:

(i) in respect of Options expiring in the next Expiration Month in a minimum of three Calland three Put Options Series, such quotes to be provided for Call or Put Options in theSeries that is at the money, in the first Series that is out of the money and in the first

Series that is in the money;



RULE BOOK

65

(ii) in respect of Options expiring in the second Expiration Month in for a minimum of threeCall and three Put Options Series, such quotes to be provided for Call and Put Optionsin each Series that is at the money and in the first two out of the money Series.

(iii) in respect of Futures Contracts expiring in the nearest two Expiration Months.

If a Designated Market Maker satisfies Turquoise that it is unable to provide quotes in Futures

Contracts as required by this Rule, the Designated Market Maker may, subject to the priorconsent in writing of Turquoise, perform its obligations by providing:

(i) in relation to the nearest Expiration Month, quotes in Call and Put Options in respect ofthe second Series that is out of the money; and

(ii) in relation to the second Expiration Month, quotes in Call and Put Options in respect ofthe first in the money Series

in substitution for its obligation to provide quotes in the relevant Futures Contracts.

The performance by the Market Maker of its obligation to provide quotes in the IOB DRProducts in which it agrees with Turquoise to act as a Market Maker will determine theentitlement of the Market Maker to the benefits specified in Rule 4.1.9.

4.1.8.5 The Prescribed Spread for both Primary and Designated Market Makers in relation toStandardised IOB DR Futures shall be published on the Turquoise website.

4.1.8.6 The Prescribed Spread for both Primary and Designated Market Makers in relation toStandardised IOB DR Options shall be published on the Turquoise website.

4.1.8.7 Each Primary Market Maker will be granted a total of ten days per calendar year in relation toeach IOB DR Product in which it acts as a Primary Market Maker on which it is not required tofulfil its obligations as a Primary Market Maker in relation to the IOB DR Product in question asset out in this Rule 4.1.8.7. Any such day is referred to in this Rule as an “Exempt Day”. Forthe Primary Market Maker an Exempt Day is allowed only when the Primary Market Maker isunable to fulfil its obligations due to technical reasons.

Each Designated Market Maker will be granted a total of twenty days per calendar year inrelation to each IOB DR Product in which it acts as a Designated Market Maker on which it isnot required to fulfil its obligations as a Designated Market Maker in relation to the IOB DRProduct in question as set out in this Rule 4.1.8.7. Any such day is referred to in this Rule asan “Exempt Day”.

A Market Maker that wishes to nominate a trading day as an Exempt Day shall informTurquoise‟s Market Operations Department in writing prior to 08:20 London time on the day inquestion. Turquoise shall confirm by notice in writing to the Market Maker that it will be exemptfrom the obligation to provide quotes in the IOB DR Product or Products in question on thatday.

Where a Market Maker operates more than one Market Maker Account in accordance with anarrangement made by it with Turquoise under Rule 2.5.6, the Market Maker shall make aseparate election regarding such Exempt Days for each Market Maker Account that is used forthe registration of transactions in IOB DR Products.

4.1.8.8 When extreme market conditions arise, Turquoise will issue a general notice to the marketdeclaring that there is a "fast market" indicating that the obligations of Market Makers aremodified or, in extreme circumstances, suspended as appropriate.

4.1.9 Market Maker Fees

4.1.9.1 A Market Maker in IOB DR Products which performs its obligations as such to the satisfactionof Turquoise shall pay fees in respect of transactions it effects in standardised IOB DRProducts on the basis set out at Appendix A. Such fees are referred to in this Part 4.1 as“Market Maker Fees”.

The fees payable in respect of IOB DR Products by a Primary Market Maker which performs itsquoting obligation under Rules 4.1.8.3 and 4.1.8.4 to the satisfaction of Turquoise shall be

determined in accordance with Appendix A to these Rules.



RULE BOOK

66

The fees payable in respect of the IOB DR Products by a Designated Market Maker whichperforms its quoting obligations under Rules 4.1.8.3 and 4.1.8.4 to the satisfaction of Turquoiseshall be determined in accordance with Appendix A to these Rules.

4.1.9.2 Where a Designated Market Maker operates more than one Market Maker Account for theexecution of transactions in IOB DR Products in accordance with an arrangement made by itwith Turquoise under Rule 2.5.6, the fees payable by the Designated Market Maker in relation

to such transactions in IOB DR Products shall be determined for each such Account byreference to the number of transactions registered in the Account in question and theperformance of the obligations of the Designated Market Maker in relation to such Account.

4.1.10 Market Making: Sanctions

4.1.10.1 In this Rule 4.1.10, references to “Quoting Obligations” shall be construed as references tothe obligations to provide quotes in relation to IOB DR Products applicable to the relevantcategory of Market Maker set out in Rule 4.1.8.

If a Primary Market Maker fails properly to perform its obligations as such in relation tostandardised IOB DR Products, Turquoise shall have the right:

(i) to impose a financial sanction on the Primary Market Maker in the manner specified inthe Primary Market Maker Agreement;

(ii) to terminate the Primary Market Maker Agreement;

If a Designated Market Maker fails properly to perform its obligations as such in relation tostandardised IOB DR Products, Turquoise shall have the right:

(i) to exclude the Designated Market Maker temporarily from acting in such capacity inrelation to such Contracts;

(ii) to terminate the Designated Market Maker Agreement with immediate effect;

(iii) to require the Designated Market Maker to pay fees in the manner prescribed in Rule4.1.10.2 below.

4.1.10.2 A Designated Market Maker which fails to perform its quoting obligations under Rules 4.1.8.3and 4.1.8.4 to the satisfaction of Turquoise shall be liable to pay fees in respect of the IOB DRProducts in respect of which it is eligible to pay Market Maker Fees at the higher rateapplicable having regard to the level of performance of such party in the monthly period inquestion as shown in Appendix A to these Rules.

Where a Designated Market Maker fails to perform its obligations under Rule 4.1.8.3 in anythree months in a calendar year, Turquoise may suspend such party from acting as aDesignated Market Maker for such period as it considers appropriate in the circumstances.

Where in any monthly period, a Designated Market Maker provides quotes in the IOB DRProducts in which it acts as a market maker for less than 25% of the normal Trading Hours ofTurquoise for such Products in the period in question, Turquoise may suspend such party fromacting as a Designated Market Maker in IOB DR Products for such period as it considersappropriate in the circumstances.

Without prejudice to its general power to terminate the Designated Market Maker Agreementunder Rule 4.1.10.1(ii) above, where a Designated Market Maker fails to fulfil its obligations inany three months in a calendar year, the Member‟s right to act as a Designated Market Maker shall be suspended for such period as Turquoise considers appropriate in the circumstances.

Turquoise may also suspend a Designated Market Maker from acting in such capacity at anytime if it considers that the Designated Market Maker has abused its position as a DesignatedMarket Maker.

4.1.10.3 Turquoise shall maintain a record of the manner in which each Market Maker performs itsobligations in each calendar month.

In determining whether a Market Maker has performed its obligations as such in relation tostandardised IOB DR Products on any day, Turquoise will have regard to its overall activities

as a Market Maker in such Contracts on the day in question.

Turquoise maintains an electronic record of the aggregate time on an IOB Bank Day duringwhich a Market Maker provides quotes to satisfy its quoting obligations in respect of each



RULE BOOK

67

series in which quotes are required. This record will be used to determine whether the MarketMaker in question has provided quotes for the minimum period specified in Rule 4.1.8.3.

4.1.10.4 Where a Market Maker operates more than one Market Maker Account for the execution oftransactions in IOB DR Products in accordance with an arrangement made by it with Turquoiseunder Rule 2.5.6, Turquoise shall assess the performance of the applicable obligations relatingto market making in IOB DR Products separately for each such Market Maker Account.

4.1.11 Orders

4.1.11.1 Orders relating to IOB DR Futures and Options Contracts may be placed as Single Orders orBlock Orders.

4.1.11.2 A Block Order for IOB DR Futures and Options Contracts comprises five Contracts.

4.1.11.3 A Single Order consists of an offer to buy or sell the number of IOB DR Contracts specified inthe Order. This number may be any whole number in excess of one. A Member placing aSingle Order may stipulate that the Order may only be executed in its entirety. In the absenceof such stipulation, the offer may be accepted in any amount up to the specified number.Where an Order is executed partially, the unfilled portion of the Order will remain in theOrderbook.

4.1.11.4 A Block Order consists of an offer to buy or to sell the number of Blocks of IOB DR Contractsspecified in the Order.

4.1.11.5 A Member placing a Block Order may stipulate that the Order may only be executed in itsentirety. In the absence of such stipulation, the offer may be accepted in any number ofBlocks up to the specified maximum. Where a Block Order is executed partially, the unfilledportion of the Order will remain in the Orderbook.

4.1.11.6 Orderbook Orders, Market Orders, Combination Orders and Standardised Combinationsrelating to IOB DR Contracts may only be placed as Block Orders.

4.1.12 Registration of Off-Exchange Transactions

4.1.12.1 Where a Member enters into an off-exchange transaction in a standardised IOB DR Contract

with another Member or with a member of Oslo Børs, the Member shall submit a Request forRegistration relating to such transaction to Turquoise at the earliest opportunity if it wishes thetransaction to be registered. Such Request for Registration shall:

(i) specify the Product which forms the subject of the off-exchange transaction;

(ii) identify the counterparty to such transaction, the Series, the agreed price, the numberof contracts involved in the transaction and the Account for registration.

4.1.12.2 A Request for Registration shall only be considered for acceptance by Turquoise and theDesignated Clearing House if the counterparties to the off-exchange transaction submitidentical requests specifying the Contracts to be registered, the Accounts in which the Contractis to be registered and the terms of the transaction in question to Turquoise or to Turquoiseand to the Oslo Børs in question as appropriate.

4.1.12.3 A Request for Registration of an off-exchange transaction may be submitted to Turquoise by aMember either by way of its electronic connection to Turquoise‟s clearing system or bytelephone to Turquoise‟s Market Operations Department as set out in Rule 3.2.5.

A Request for Registration of an IOB DR Contract shall be considered for acceptance byTurquoise and the Designated Clearing House in accordance with rule 3.2 and the followingprovisions of this Rule.

4.1.12.4 A Request for Registration of an IOB DR Contract in respect of an off-exchange transactionwhich has been concluded at a time when Turquoise is not open for trading such Contracts,will not normally be accepted by Turquoise and the Designated Clearing House unless theagreed price does not deviate by more than 10% from the closing price or such price asTurquoise determines.

Where a Request for Registration of an IOB DR Contract is submitted in respect of a Series forwhich bid and ask prices are not quoted at the time, Turquoise shall obtain bid ask quotes forsuch Series in conjunction with Oslo Børs as it considers appropriate. Where in the opinion ofTurquoise an acceptable quote is obtained, the Request for Registration shall be consideredfor acceptance by Turquoise and the Designed Clearing House if it is within the spread of the



RULE BOOK

68

quoted prices. If Turquoise considers that an acceptable price has not been provided for suchpurposes, the acceptance of the Request for Registration shall be determined at theirdiscretion.

4.1.12.5 The acceptance of a Request for Registration submitted under this Rule is at the discretion ofTurquoise and the Designated Clearing House. Without limiting the generality of the foregoing,a Request for Registration shall not be accepted if such acceptance would not be conducive to

the maintenance of a proper market in the Product in question or would not be consistent withthe Designated Clearing House‟s obligation to maintain a sound basis to its clearing services.

4.1.12.6 Where a Request for Registration of an IOB DR Contract which is submitted by a Memberduring trading hours for such Contracts is accepted by Turquoise and the Designated ClearingHouse, Turquoise shall arrange with the Designated Clearing House for the resultingRegistered Contract to be registered by the Designated Clearing House forthwith.

Where a Request for Registration in relation to an IOB DR Contract is submitted by a Memberafter the close of trading in such Contracts on an IOB Trading Day, the Contract in questionshall be registered by the Designated Clearing House on that day if it is received and acceptedby Turquoise and the Designated Clearing House before 5.30 pm London time. Where aRequest for Registration is received by Turquoise after such time, it shall, if accepted, beregistered by the Designated Clearing House on the next IOB Trading Day.

4.1.12.7 Turquoise shall inform the Member as soon as possible if a Request for Registration submittedunder this Rule is not accepted for registration.

4.1.13 Requests for Re-Registration

4.1.13.1 A Request for Re-Registration of an IOB DR Contract made pursuant to Rule 3.4.2(vi) will notbe considered by Turquoise and the Designated Clearing House unless it is received by othermeans or electronic connection no later than 30 minutes prior to the close of the clearingsystem, normally 5.30 pm London time, for IOB DR Contracts on the IOB Trading Dayfollowing the day on which the position in question is registered by the Designated ClearingHouse.

4.1.13.2 A Request for Re-Registration of an IOB DR made pursuant to Rule 3.4.2(i) to (v) inclusive willnot be considered by Turquoise and the Designated Clearing House unless it is received by

electronic connection or by other means no later than 5.30 pm London time on the ExpirationDate for the Contract in question.

4.1.13.3 A Request for Re-Registration of an IOB DR shall specify the following details:

(i) the Contracts to be re-registered;(ii) the Account of the transferor;(iii) the Account of the transferee.

4.1.13.4 The acceptance of a Request for Re-Registration submitted under this Rule is at the discretionof Turquoise and the Designated Clearing House.

4.1.13.5 Where a Request for Re-Registration is received and accepted by Turquoise and theDesignated Clearing House before 5.30 pm London time on an IOB Trading Day the Contractin question shall be registered by the Designated Clearing House on that day. Where a

Request for Re-Registration is received by Turquoise after such time, it shall, if accepted, beregistered by the Designated Clearing House on the next IOB Trading Day.

4.1.13.6 Turquoise shall inform the Member or Members in question as soon as possible if a Requestfor Re-Registration submitted under this Rule is not accepted.

4.1.14 Cancellation of Incorrect Transactions

4.1.14.1 The provisions of Rule 2.16 concerning the cancellation of incorrect transactions shall beapplied in relation to IOB DR Contracts in accordance with the following provisions of this Rule.

4.1.14.2 Turquoise will not direct that an IOB DR transaction shall be cancelled in the absence of theagreement of the Counterparty to the transaction unless the period between the time at whichthe transaction is effected and the time at which the request is submitted is less than tenminutes.

4.1.14.3 The Fair Market Spread or Price Adjustment Range for IOB DR Options and Futures Contractsis defined as 10% deviation outside the relevant Prescribed Spread for Designated MarketMakers as described in Rule 4.1.8.



RULE BOOK

69

4.1.14.4 Turquoise will notify the Member or Members involved in the transaction of its decision in thecase of a request relating to an IOB DR Contract no later than 15 minutes before trading startson the IOB Trading Day following the day on which the transaction in question was effected.

4.1.15 Daily Cash Settlement

4.1.15.1 IOB DR Futures Contracts are subject to Daily Cash Settlement. The first such Daily CashSettlement shall be due for settlement on the first IOB Bank Day following the Registration ofthe Contract. Thereafter, Daily Cash Settlement shall be effected on each IOB Bank until theExpiration Date for the Contract in accordance with the provisions of this Rule.

4.1.15.2 On the transaction day, settlement shall take place in an amount corresponding to thedifference between the Daily Settlement Price on the transaction day and the futures price.After that settlement takes place in an amount corresponding to the difference between theDaily Settlement Price on the Mark-to-Market day and the Daily Settlement Price from theimmediately preceding IOB Trading Day. On the Expiration Date settlement shall take place inan amount corresponding to the difference between the Expiration Delivery Settlement Priceand the Daily Settlement Price from the immediately preceding IOB Bank Day.

4.1.15.3 Daily Settlement Price for IOB DR Futures: During the term of a Futures Contract, the DailySettlement Price is normally determined as the price for the Futures Contract at 3.30 pmLondon time on the relevant IOB Trading Day. Turquoise determines the price for the FuturesContract with reference to the last traded price if within bid and ask prices for the FuturesContract. In the event that bid and ask prices are unavailable, Turquoise may calculate theDaily Settlement Price by using another method.

4.1.15.4 Deleted

4.1.15.5 Turquoise shall issue Daily Settlement Statements to Members having registered positions inIOB DR Futures Contracts normally no later than 10.00 pm London time on each IOB TradingDay. The Daily Settlement Statement for IOB DR Futures shall show the Daily SettlementAmount for such settlement which is payable in US Dollars.

The Daily Settlement Amount for IOB DR Futures shall be payable on the first IOB Bank Dayfollowing the IOB Trading Day in question in accordance with the instructions of the Designated

Clearing House.

4.1.16 Settlement and Delivery of IOB DR Contracts

4.1.16.1 The rights and obligations of a Member and Turquoise regarding the settlement of RegisteredContracts relating to IOB DR and DR Futures Contracts are set out in the following provisionsof this Rule 4.1.16.

4.1.16.2 If the Member holds a net sold position in a DR Futures and Options Series, Turquoise shallsend to it a Delivery Instruction Note by means of the electronic connection with the Membernormally prior to 10:00 pm London time on the Expiration Date which shall specify the IOB DRsto be delivered by the Member in settlement of its obligations in respect of own accounttransactions and of transactions executed on behalf of a Client or customer together with thesettlement amount payable to the Member in respect thereof.

4.1.16.3 If the Member holds a net bought position in IOB DR Futures and Options Series, Turquoiseshall send to it a Delivery Instruction Note by means of the electronic connection with theMember normally prior to 10.00 pm London time on the Expiration Date which shall specify theIOB DRs to be delivered to the Member in settlement of its rights, together with the relatedsettlement amount.

4.1.16.4 Where a Member exercises an IOB DR Option or where such Option is exercised against theMember, Turquoise shall issue a Delivery Instruction Note normally prior to 10.00 pm Londontime on the day on which the Exercise Order is accepted by Turquoise which shall specify theIOB DRs to be delivered by or to the Member in settlement of its obligations in respect of ownaccount transactions and of transactions executed on behalf of a Client or customer togetherwith the settlement amount payable to or by the Member in respect thereof.

The Delivery Instruction Note issued by Turquoise to a Member which is required to deliverIOB DRs following the Exercise or Expiration of IOB DR Options or Futures Contracts shallspecify the Designated Settlement Venue Account to which the Member is required to transferthe specified IOB DR. The Member shall ensure that the IOB DR in question is credited to the



RULE BOOK

70

specified Designated Settlement Venue Account no later than the time specified in the DeliveryInstruction Note.

Where delivery of an IOB DR is to be made to a Member, the Member shall ensure that thecorrelative settlement amount is paid to the Designated Clearing House no later than the dayspecified in the Delivery Instruction Note. On performance of such obligations, the DesignatedClearing House shall arrange for the transfer of the relevant IOB DR to the Designated

Settlement Venue Account specified by the Member for such purposes.

Where a Member fails to deliver IOB DRs in accordance with the instructions of the DesignatedClearing House for a period of three business days from the Expiration settlement day, apenalty fine of Federal Funds Rate (FFR) + 300 Basis Points (BP) based on the value of thepayment amount to be received will be charged to the Member by the Designated ClearingHouse on behalf of Turquoise. This amount will accrue on a daily basis from the third businessday following the Expiration settlement day until such time that the IOB DRs are settled inaccordance with the instructions of the Designated Clearing House. If the Member fails todeliver IOB DRs for a period of five days after the Expiration Settlement Day, the buyer may atits sole discretion request the Designated Clearing House to initiate either Buying in (withguaranteed delivery only) or cash settlement for the delivery. If after a period of thirty businessdays the seller has not settled in accordance with the instructions of the Designated ClearingHouse, or the buyer has not opted for Buying in (with guaranteed delivery only) or cashsettlement, the Designated Clearing House will initiate Buying in (with guaranteed delivery

only) or where it is unable to do this, compulsory cash settlement.

For purposes of cash settlement, the specified Delivery Settlement Amount will be calculatedbased on either the Expiration Delivery Settlement Price (EDSP) on the Expiration Date or theclosing price defined by the London Stock Exchange on the day on which cash settlement wasinitiated, the better price for the buyer will be used.

4.1.16.5 The Member shall ensure that the information specified in the Delivery Instruction Note isaccurate in all respects and notify Turquoise of any discrepancy no later than 5.30 pm Londontime on the IOB Trading Day after the date of the Delivery Instruction Note.

4.1.16.6 Where the Member is to deliver IOB DRs to the Designated Clearing House it shall ensure thatthe said IOB DRs are deposited in the Member‟s IOB DR Securities Account on the ExpirationSettlement Date for the Contract in question.

4.1.16.7 The Member which is to receive IOB DRs as stated in the Delivery Instruction Note sent to theMember shall ensure that the settlement amount stated therein is deposited in the IOB DRSecurities Account on the Expiration Settlement Day for the Contract in question.

4.1.16.8 A confirmation of the satisfactory completion of the transaction shall be given by theDesignated Clearing House‟s Custodian involved in the settlement procedures to theDesignated Clearing House only and not to the Member.

4.1.16.9 If a Member alleges that delivery or settlement regarding IOB DRs is calculated or carried outin a defective manner, the Member must submit a claim in respect thereof to their DesignatedClearing House no later than the fifth IOB Bank Day following the relevant settlement day.

Protests concerning delivery or settlement made after such time will not be considered by theDesignated Clearing House. The Designated Clearing House shall calculate corrected delivery

or settlement and shall notify the Member in question of the revised obligations where itconsiders that such action is required in relation to a valid protest. The settlement day forcorrected delivery or settlement is the third IOB Bank Day following the issue of such notice.

4.1.16.10 The time at which delivery of an Underlying Depositary Receipt is to be effected following theExercise or Expiration of an IOB DR may be modified where trading in such DepositaryReceipts on the IOB is suspended at the relevant time or decides that such action is required inline with the principles set out in Rule 4.1.20. Turquoise shall inform Members if any suchaction is applied to an IOB DR.

4.1.17 IOB DRs: Expiration Settlement Procedures

4.1.17.1 The rights and obligations of the Buyer and the Seller in respect of the settlement of an IOB DRContract shall be performed in accordance with this Rule 4.1.17.

4.1.17.2 Expiration Settlement of an IOB DR Contract comprises two elements:



RULE BOOK

71

(i) the delivery of the quantity of the Underlying Depositary Receipt represented by theContract in question by the Seller to the Buyer; and the payment of the DeliverySettlement Amount by the Buyer to the Seller.

(ii) the Final Daily Settlement Amount as determined in accordance with Rule 4.1.17.5.

4.1.17.3 On the Expiration Date for an IOB DR Contract, Turquoise shall issue a Delivery Instruction

Note to each Member holding one or more positions in an expiring Futures Series based on anIOB DR showing the quantity of the Underlying Depositary Receipt in question to be deliveredto or by the Member together with the correlative payment obligation in respect of suchsettlement.

4.1.17.4 The Seller of an IOB DR Contract shall deliver the Underlying Depositary Receipt in thespecified amount against payment in accordance with Turquoise‟s instructions on the third IOBBank Day following the Contract‟s Expiration Date.

The Buyer of an IOB DR Contract shall pay the Delivery Settlement Amount to the Selleragainst the delivery of the underlying DRs on the third IOB Bank Day following the Contract‟sExpiration Date. The Delivery Settlement Amount is determined by reference to the ExpirationDelivery Settlement Price for the Underlying Depositary Receipt for the Futures Contract on itsExpiration Date.

4.1.17.5 The Final Daily Settlement Amount for an IOB DR Contract is determined by reference to theExpiration Delivery Settlement Price (EDSP) and carried out in accordance with Rule 4.1.15.

4.1.18 Options: Exercise

4.1.18.1 Standardised and Non-Standardised IOB DR are European Style and are accordingly onlysubject to Exercise on Expiration.

4.1.18.2 IOB DRs are also subject to Standard Exercise in accordance with Rule 4.1.19.

4.1.18.3 Where the Holder of an Option wishes to exercise an Option which is not subject to StandardExercise, it shall submit an Exercise Order to Turquoise providing full details of the Option inquestion.

4.1.18.4 An Exercise Order relative to an IOB DR which is received electronically by Turquoise after6.00 pm London time and outside of the allotted Expiration Exercise Window or, in the case ofan Exercise Order submitted by other means, 5.30 pm London time on the Expiration Date forsuch Contract is void.

4.1.18.5 On receiving a valid Exercise Order, Turquoise shall inform the Member which submitted it thatit has been accepted and shall select at random a correlative IOB DR position respectively tobe exercised against. Turquoise shall also inform the Designated Clearing House of suchExercise so that the necessary action may be taken in relation to the Registered Contracts inquestion.

4.1.18.6 On Exercise of an IOB DR Contract in accordance with this Rule, Turquoise shall issue anExercise Settlement Statement confirming the amount of Depositary Receipts to be deliveredto the Member specified in such note against payment by it of the Exercise Settlement Amount

specified therein.

4.1.18.7 On Exercise of an IOB DR, the Holder of a Call Option or the Writer of a Put Option shall beentitled to receive delivery of the Underlying Depositary Receipt in the quantity represented bythe exercised Option against payment of the Exercise Settlement Amount for such Contract.

4.1.18.9 The Exercise Settlement Amount shall be determined by multiplying the Strike Price for theDepositary Receipt Options Contract on the day on which the Exercise Order is registered bythe number of Depositary Receipts in the Underlying Depositary Receipt represented by theexercised Option.

4.1.18.10 The Exercise Settlement Amount for an IOB DR Options Contract shall be payable in USDollars.

4.1.18.11 The Exercise Settlement Amount for an IOB DR Contract shall be due for settlement and the

correlative obligation to deliver the Underlying Depositary Receipt shall be due for performanceon the third IOB Bank Day following the contract‟s Expiration Date.



RULE BOOK

72

4.1.19 Standard Exercise of IOB DR

4.1.19.1 IOB DR Contracts will be subject to Standard Exercise in accordance with the followingprocedures.

4.1.19.2 A base price shall be calculated by reference to the EDSP rounded up to 2 decimal placesonly (with numbers from 0 to 4 being rounded down and numbers from 5 to 9 being rounded

up) for the underlying DR on its Expiration Date.

4.1.19.3 A Call Option Series which has an Exercise Price lower than (“In-the-money”) the base pricefor the Underlying Depositary Receipt on the Expiration Date, calculated in the mannerdescribed above, will be subject to Standard Exercise.

4.1.19.4 A Put Option Series which has an Exercise Price greater than (“In -the-money”) the base pricefor the Underlying Depositary Receipt on the Expiration Date, calculated in the mannerdescribed above, will be subject to Standard Exercise.

4.1.19.5 If no qualifying transaction in an Underlying Depositary Receipts reported by the IOB on theExpiration Date for the related Depositary Receipt, the last bid price for such DepositaryReceipt quoted on the IOB on the day in question, shall be taken as its base price. If no bidprice has been quoted on the Expiration Date, the base price shall be determined by referenceto the most recent trading day on which either:

(i) it is possible to calculate an average price for such Underlying Depositary Receipt asdescribed above; or

(ii) a bid price for such Underlying Depositary Receipt has been quoted,

provided always that, if on any such day it is possible to use both of the above methods todetermine the base price for the Depositary Receipt in question, the method described in (i)above shall be used.

4.1.19.6 Deleted

4.1.19.7 In calculating the base price of an Underlying Depositary Receipt for the purposes of this Rule,Turquoise will normally use official trade information published by the LSE. In the event that the

required information is not published on the Expiration Date for an IOB DR Option Series,however, alternative trade information will be used. The method of determining the base priceof the relevant Underlying Depositary Receipt may be varied in such cases. In suchcircumstances, Turquoise will inform Members of the alternative information or mode ofcalculation used.

4.1.19.8 At approximately 5.00 pm London time on the Expiration Date for an IOB DR Turquoise willsend to Members holding positions in such Options a list of the relevant Series expiring thatday which will be subject to Standard Exercise in accordance with the above procedures. AllCall Options and all Put Options shown on such list will be exercised by Turquoise unless awritten objection (or submitted by other means) from the Holder of any such Option is receivedby Turquoise no later than 5.45 pm London time.

Turquoise shall inform the Designated Clearing House of all positions that will be subject toStandard Exercise so that the Designated Clearing House may take the necessary action in

relation to the Registered Contracts in question.

4.1.20.1 Recalculation Rules for IOB DR

4.1.20.1.1 The terms of IOB DRs are subject to adjustment in accordance with the following provisions ofthis Rule 4.1.20

If the share capital of a company on which an IOB DR is based is amended in a material waywhich affects the underlying economic value of futures and options contracts based on suchDRs Turquoise will effect a recalculation of the futures and options contracts based on suchUnderlying DR in accordance with its rules governing such matters.

In the event that a Corporate Action taken by a DR Issuer is such that the Recalculation Rulesset out at Rule 4.1.20 are not sufficient to cover such Corporate Action, Turquoise may at its

sole discretion adjust Futures and Options Contracts using a method other than described atRule 4.1.20 which it deems to benefit the market.



RULE BOOK

73

4.1.20.1.2 Turquoise will normally issue a Market Notice to Members confirming the recalculation methodto be applied in any particular case as soon as possible following the publication of thedecision by the DR Issuer which gives rise to the recalculation.

4.1.20.2 General Principles Applicable to Recalculation of IOB Depositary ReceiptContracts

4.1.20.2.1 This Rule describes the general principles applied by Turquoise in effecting a recalculation,including the manner in which the price of the relevant DR is determined for the purposes ofthese Recalculation Rules and the circumstances in which the Expiration Date for a Contractaffected by a recalculation may be amended.

4.1.20.2.2 Volume Weighted Average Price (“VWAP”)

Except where these Recalculation Rules provide expressly to the contrary, the price for the DRContract in question used in the application of this Rule 4.1.20 shall be the Volume WeightedAverage Price (“VWAP”) for such DR for the relevant period.

4.1.20.2.2.1 Calculation of VWAP

In determining the price of a DR on an IOB Trading Day for the purposes of theseRecalculation Rules, Turquoise shall calculate the VWAP for such DR on the day in question.

The VWAP shall be determined by reference to all electronically matched trades automaticallyexecuted on the IOB order book as published in the official price list of the IOB, or any otherexchange or marketplace approved by Turquoise. In determining the VWAP for a given DRon an IOB Trading Day, Turquoise shall ignore any off-order book transactions reported to theIOB. The VWAP is calculated by Turquoise and shall be the total turnover in US Dollars for theDR Contract, during the particular time period applicable to such recalculation in accordancewith Rule 4.1.20.2.2.2 divided by the number of DRs bought and sold during the time period.The principles set out in Rule 4.1.20.2.4 shall be applied in rounding off the total turnover.

4.1.20.2.2.2 Time Period

The time period applied for the purposes of determining the VWAP for a DR in accordance withthese Recalculation Rules shall normally be the entire IOB Trading Day where applicable prior

to the ex-day.

The time period may be extended to cover a greater number of IOB Trading Days where, inTurquoise‟s discretion, it is necessary in order to provide a more equitable average calculation.If the VWAP is calculated on the IOB Trading Day prior to the ex-day, extension of the timeperiod shall only cover IOB Trading Days prior to the ex-day. If the VWAP is calculated on theex-day, extension of the time period shall only cover Trading Days following the ex-day.

If there is no transaction in the DR in question during the said time period, the VWAP shallinstead be calculated on the closing bid prices for the same period.

4.1.20.2.2.3 Valuation Range

Where Turquoise considers it appropriate, a Valuation Range shall be established whencalculating the VWAP. The Valuation Range shall be based upon the median value of not less

than five valuations from members of Turquoise or Oslo Børs which, in Turquoise's opinion,conduct appropriate stock analysis operations. Following the close of trading on the TradingDay prior to the ex-day, Turquoise will publish a Market Notice confirming whether the requisitenumber of valuations has been obtained, and an addition and reduction from the median valueestablished by Turquoise. The established values form the applicable Valuation Range.

If the VWAP for the DR on the Trading Day in question is less than the lowest point in suchValuation Range, the value used for such DR for the purposes of these Recalculation Rules forsuch day shall be the lowest point of the valuation range.

If the VWAP for the DR on the Trading Day in question is more than the highest point in suchValuation Range, the value used for the purposes of these Recalculation Rules for such dayshall be the highest point of the valuation range.

If Turquoise and Oslo Børs receive less than five valuations in accordance with the above, the

valuation shall be made solely on the basis of the measured VWAP.



RULE BOOK

74

4.1.20.2.3 Recalculation Day

The earliest day on which a recalculation can be effective is the Trading Day after the relevantVWAP has been established.

4.1.20.2.4 Rounding and Fractional DRs and UK shares

The recalculated Exercise Price and Futures Price shall be rounded off to two decimal places,with numbers from 0 to 4 being rounded down and numbers from 5 to 9 being rounded up.Unless Turquoise has stated otherwise at the time of the relevant recalculation, whencalculating the VWAP and market value of a DR, the calculation shall be rounded to eightdecimal places and the adjustment factor shall be rounded to six decimal places.

Where the recalculation of the number of DRs which the Contract covers in accordance withthese Recalculation Rules would result in the Contract covering a number of DRs other than awhole number, any fractional element from 0 to 4 shall be rounded down and any fractionalelement from 5 to 9 shall be rounded up.

4.1.20.2.5 Amendment of Expiration Date and Other Miscellaneous Provisions

Turquoise may change the Expiration Date for the Contracts in question and take the followingaction in relation to Futures and Options Contracts in the particular circumstances specified

below:

(i) in the circumstances prescribed in Rule 4.1.20.4.7 where the Issuing Company is thesubject of a bankruptcy order or other equivalent process;

(ii) in the circumstances prescribed in Rule 4.1.20.4.8 where the Issuing Company effectsa merger with another company or where its DRs are the subject of compulsorypurchase proceedings;

(iii) any other circumstances relating to the actions taken by the Issuing Company or otherfactors affecting the trading of DRs on the Issuing company which cause Turquoise toconclude that such action is required in the interests of the market generally.

Where Turquoise believes that the obligations of Members to deliver the DRs through theDesignated Settlement Venue‟s system will be affected by restrictions applied by theDesignated Settlement Venue‟s system relating to the delivery of such DRs at the relevant timeor other factors exist which will restrict the ability to deliver the DRs in question through theDesignated Settlement Venue‟s system at such time, Turquoise may:

(i) change the Expiration Date for the Contracts in question;

(ii) prohibit or restrict the Exercise of Options Contracts based on the relevant DR forsuch period as Turquoise considers to be appropriate in the circumstances;

(iii) prohibit or restrict trading in the relevant Futures and Options Contracts for suchperiod as Turquoise considers to be appropriate in the circumstances.

These measures may also be applied where the relevant VWAP has not been established orwhere the Expiration Date falls at a time at which the recalculation has not been completed.

4.1.20.2.6 Prohibition against increased Exercise and Futures prices

Other than as provided for in Rules 4.1.20.4.2 and 4.1.20.4.7, Recalculation shall not beallowed to result in an increase in the Exercise Price or the Futures Price nor shall suchRecalculation result in a negative Exercise Price or Futures Price.

4.1.20.2.7 Listing of new contracts

With effect from the ex-day, Turquoise may list new Series regarding Options Contracts andFutures Contracts based on the Original DR.

4.1.20.2.8 Valuation model

The valuation is based on a generally accepted valuation model determined by Turquoise andcarried out on the Trading Day prior to the ex-day, in which the VWAP for such DR, determinedin accordance with the principles set forth in 4.1.20.2.2 is applied. Prior to carrying out the



RULE BOOK

75

valuation, Turquoise shall notify Members in respect of the assumptions concerning interestrates, volatility, and any dividends, which shall be applied in the valuation model.

4.1.20.2.9 Valid Delivery

Where the Exercise of the Options Contracts or the Expiration Date for the Contract occurs at atime when the Underlying DR is the subject of a Corporate Action, Turquoise may prescribe

that, during a particular period of time and to a particular extent, the obligation of the sellerregarding the delivery of DRs may, instead, be performed by the delivery of subscription rights,purchase rights, paid subscription DRs or equivalent.

4.1.20.3 Recalculation Methods

4.1.20.3.1 Introductory

There are two principal methods used by Turquoise in the recalculation of Futures and OptionsContracts:

(i) the Ratio Method;

(ii) the Reduction in Strike Price Method.

The principles applied in each of these methods are described in this Rule 4.1.20.3. Thecircumstances in which each Method may be applied are described in Rule 4.1.20.4.

In addition to the two methods above the Fair Value method may also be used in connection toa Merger or De-listing in accordance with Rules 4.1.20.4.7A and 4.1.20.4.7B. More informationregarding the Fair Value method can be found at Appendix 1 to Part 4.1.

4.1.20.3.2 Ratio Method

The Ratio Method will be used where it is necessary to establish an adjustment factor todetermine the appropriate ratio between the number of DRs represented by a Contract or thenumber of Contracts held by a Member before and after the Corporate Action undertaken bythe issuing Company or to reflect the effect of any cash payment made in connection with theCorporate Action on the relative value of the contracts in question before or after such event.

The circumstances in which the Ratio Method may be used are specified in Rule 4.1.20.4.

4.1.20.3.2(1) Uniform formula for calculating the adjustment factor

The adjustment factor to be applied in relation to a Bonus Issue, Reverse Split, Split or RightsIssue involving the issue of DRs of the same type as the UK share shall be determined inaccordance with the following formula:

A = N cum / N ex (1 – (P / VWAP cum)) + P / VWAP cum

Where:A = adjustment factorN cum = Number of Contracts or DRs per Contract prior to the offerN ex = Number of Contracts or DRs per Contract after the offerP = Issue price

VWAP cum = Volume weighted average price prior to the offer

4.1.20.3.2(2) Application of the adjustment factor

The recalculated Exercise Price or Futures Price shall be the Exercise Price or Futures Priceprior to the recalculation multiplied by the adjustment factor determined in accordance with thisRule 4.1.20.

The recalculated number of Contracts shall be the number of Contracts prior to therecalculation divided by the adjustment factor determined in accordance with this Rule 4.1.20.

If the recalculation of the number of Contracts results in a fraction of a Contract, the number ofDRs covered by each Contract shall be recalculated.

This adjustment factor shall be used to determine:

(i) the number of DRs represented by a Contract following the CorporateAction;



RULE BOOK

76

(ii) the adjusted Exercise Price or Futures Price following such CorporateAction;

by applying the applicable formula:

N ex = N cum / A

EP ex = EP cum * A

Where:

A = adjustment factorEP cum = Exercise Price or Futures Price prior to the offerEP ex = Exercise Price or Futures Price after the offerN cum = Number of Contracts or DRs per Contract prior to the offerN ex = Number of Contracts or DRsper Contract after the offer

The recalculated Exercise Price, Futures Price or number of Contracts determined inaccordance with this Rule shall be applied with effect from the ex-day or such subsequentTrading Day as is specified by Turquoise in the circumstances provided for in this Rule 4.1.20.

4.1.20.3.4 Reduction in Strike Price Method

The Exercise Price or Futures Price shall be recalculated with effect from the ex-day, or afollowing IOB Trading Day as described under the specific Corporate Action.

The Exercise Price or Futures Price shall be reduced by a value calculated according to thefollowing formula:

EP ex = EP cum – R

Where:

EP cum = Exercise Price or Futures Price prior to the offerEP ex = Exercise Price or Futures Price after the offerR = Value of Right

4.1.20.4 Corporate Actions

This Rule 4.1.20.4 describes the various types of Corporate Action which may be taken by anIssuing Company for an IOB Depositary Receipt which will give rise to the recalculation of suchContracts.

4.1.20.4.1 Bonus Issue

Where the DR issuer carries out a bonus issue of DRs, pursuant to which it issues new DRs, inconjunction with the Issuing Company, the conditions for the Contract shall be adjusted byTurquoise, with effect from the ex-day as determined by the London Stock Exchange.

Where the conditions for the bonus issue result in DR holders receiving one or more bonusDRs of the same type for each Original DR, a recalculated number of Contracts as well as a

recalculated Exercise Price or Futures Price shall be applied. The adjustment factor for suchpurposes shall be established in accordance with Rule 4.1.20.3.2(1), and the recalculationshall be carried out in accordance with Rule 4.1.20.3.2(2).

Where the bonus issue covers DRs of a type other than those covered by the original Option orFutures Contract, the new DRs which are received in accordance with the terms and conditionsfor the bonus issue shall be regarded as equivalent to the Original DRs and can be used forthe purpose of valid delivery.

Where the new DRs deviate with respect to right to dividends, a recalculation of the number ofDRs per Contract and a recalculation of the Exercise and Futures Price shall be carried out byTurquoise as follows:

N ex = (N cum x M ex) / M cum

Where:

N ex = Number of DRs per contract after recalculation



RULE BOOK

77

N cum = Number of DRs per contract prior to recalculationM ex = Number of DRs after recalculationM cum = Number of DRs prior to recalculation

EP ex = (EP cum x M cum + O x U) / M ex`

Where:

EP ex = Exercise or futures price after recalculationEP cum = Exercise or futures price prior to recalculationM cum = Number of DRs prior to recalculationM ex = Number of DRs after recalculationO = Number of newly issued DRsU = Difference in dividend entitlement

4.1.20.4.2 Reverse Split

Where the DR Issuer, in conjunction with the Issuing Company, carries out a reverse DR split,a corresponding recalculation of the number of DRs which the Contract covers as well as of the

Exercise Price or the Futures Price shall be made by Turquoise, with effect from the ex-day.

The adjustment factor to be used for such purposes shall be established in accordance withRule 4.1.20.3.2(1). The recalculation shall be carried out in accordance with Rule 4.1.20.3.2(2).

4.1.20.4.3 Split

Where the Issuing Company carries out a DR split, a corresponding recalculation of thenumber of Contracts as well as of the Exercise Price or the Futures Price shall be made byTurquoise with effect from the ex-day. The adjustment factor to be used for such purposesshall be established in accordance with Rule 4.1.20.3.2(1). The recalculation shall be carriedout in accordance with Rule 4.1.20.3.2(2).

4.1.20.4.4 Rights Issue

Where the DR Issuer, in conjunction with the Issuing Company, carries out a rights issuewhere the new DRs, are to be paid for with money and where the DR holders have preferentialrights to the new DRs, or other securities, a recalculation shall be carried out by Turquoise,with effect from the ex-day, or a following Trading Day if so described. If the rights issueoriginates in the same DR type as the Contract Base, the recalculation shall be carried out inaccordance with Rule 4.1.20.4.4(1). In other cases, the recalculation shall be effected inaccordance with Rule 4.1.20.4.4(2).

Recalculation of the number of DRs, which are covered by the Contract, shall be rounded tothe nearest whole number.

4.1.20.4.4(1) Rights Issue originating in the same DR

A recalculated Exercise Price or Futures Price and a recalculated number of Contracts shall be

applied with effect from the ex-day. An adjustment factor shall be established in accordancewith Rule 4.1.20.3.2(1) and the recalculation shall be carried out in accordance with Rule4.1.20.3.2(2).

4.1.20.4.4(2) Rights Issue involving the issue of different DRs

Where the terms of the Rights Issue involve the issue to the holders of a Contract DRs of adifferent type from the Underlying DRs for such Contract, the Contracts in question shall berecalculated in accordance with this Rule 4.1.20.4.4(2).

4.1.20.4.4(2)(a) Ratio

Turquoise will apply the Ratio Method if it is satisfied that the liquidity in thetrading of the new security will be sufficient. One of the following two ratiomethods will be used as determined by Turquoise, the preferred method

being as set out in Rule.4.1.20.4.4(2)(a)(i).



RULE BOOK

78

Where Turquoise considers that the liquidity in the trading of the newsecurity will not be sufficient, it shall reduce the Strike Prices of the relevantContract in accordance with Rule 4.1.20.4.4(2)(b).

4.1.20.4.4(2)(a)(i) Ratio with Valuation Model

The recalculation shall be effective on the ex-day. The adjustment

factor shall be calculated according to the formula below. Thevaluation of the right to participate per Contract DR shall be basedon a generally accepted Valuation Model determined by Turquoise.The recalculation shall be carried out in accordance with Rule4.1.20.3.2(2).

The following formula shall be applied:

A = (VWAP cum – R) / VWAP cum

Where:

A = Adjustment factorVWAP cum = Volume weighted average price of the DRwhich constitute the Contract base, prior to the offer

R = Calculated value of the right to participate per DRContract according to a generally accepted ValuationModel

4.1.20.4.4(2)(a)(ii) Ratio calculated with VWAP on the ex-day

The recalculation shall be effective on the Trading Day following theex-day or applicable Trading Day thereafter. In effecting suchrecalculation, Turquoise shall use the Valuation Range procedure inaccordance with Rule 4.1.20.2.2.3 in determining the VWAP for theDR in question on the ex-day. The adjustment factor shall becalculated in accordance with the formula below and therecalculation shall be carried out in accordance with Rule4.1.20.3.2(2).

A = (VWAP ex + D) / VWAP cum

Where:

A = Adjustment factorVWAP cum = Volume weighted average price of the DR ,which constitute the Contract base, prior to the offerVWAP ex = Volume weighted average price of the whichconstitute the Contract base, after the offerD = Distribution of ordinary dividend during the periodwhich occurs on the ex-day or a Trading Day thereafter onwhich the VWAP ex is established

4.1.20.4.4(2)(b) Reduction in Strike Prices

Where Turquoise considers that the liquidity in such DR will be insufficient,the recalculation of the relevant Contracts shall be effected by way of theReduction in Strike Prices method.

In these circumstances, the recalculation will be effected by reference to theReduction in Strikes with Valuation Method described in Rule4.1.20.4.4(2)(b)(i) or, in cases where Turquoise considers such method to beinappropriate, by reference to the Reduction of Strikes calculated with VWAPon the ex-day method described in Rule 4.1.20.4.4(2)(b)(ii).

4.1.20.4.4(2)(b)(i) Reduction in Strikes with Valuation Model

The recalculation shall be effected on the ex-day. The valuation ofthe right to participate per Contract DR shall be based on a

generally accepted Valuation Model determined by Turquoise. Therecalculation shall be carried out in accordance with Rule4.1.20.3.4.



RULE BOOK

79

R = Calculated value of the right to participate per Contract DRaccording to a generally accepted Valuation Model

4.1.20.4.4(2)(b)(ii) Reduction in Strike Prices calculated with VWAP on the ex-day

The recalculation shall be effected on an IOB Trading Day followingthe ex-day or an applicable IOB Trading Day thereafter. A

Valuation Range will be applied to the VWAP on the ex-day inaccordance with Rule 4.1.20.2.2.3. The value of the right shall becalculated in accordance with the formula below and therecalculation shall be carried out in accordance with Rule4.1.20.3.4.

R = VWAP cum – VWAP ex + D

Where:

R = Value of the rightVWAP cum = Volume weighted average price of the DR ,which constitutes the Contract base, prior to the offerVWAP ex = Volume weighted average price of the DR ,which constitutes the Contract base, after the offer

D = Distribution of ordinary dividend during the periodwhich occurs on the ex-day or an IOB Trading Daythereafter on which the VWAP ex is established

4.1.20.4.5 De-merger

Where the DR Issuer, in conjunction with the Issuing Company, directs an offer to its DRholders, without consideration, the terms and conditions for the Contract shall be adjusted byTurquoise according to one of the following provisions according to Turquoise ‟s determinationof the most appropriate method, listed in preferred order:

4.1.20.4.5(1) Ratio

Where Turquoise considers that the liquidity in the DR, which constitutes the ContractBase to be sufficient, the ratio method shall be applied. The recalculation shall beeffective from the ex-day, or a following applicable IOB Trading Day. Recalculationshall be carried out in accordance with Rule 4.1.20.4.4(2)(a)

4.1.20.4.5(2) Reduction in Strike Prices

Where the liquidity in the DR, which constitutes the Contract Base is considered, byTurquoise, to be insufficient, the reduction in strike prices method shall be applied.The recalculation shall be effective from the ex-day, or a following applicable IOBTrading Day. The recalculation shall be carried out in accordance with Rule4.1.20.4.4(2)(b).

4.1.20.4.6 Dividends

Where the DR Issuer, decides and announces prior to the ex-day that it will paya dividend deemed to be an Extraordinary dividend, Turquoise shall carry out a recalculationeffective on the ex-day, according to one of the methods described in the following paragraphs.Dividends will be deemed to be Extraordinary where they are declared to be a special dividendby the DR Issuer or where the dividend is not distributed within the normal dividend pattern forthe relevant DR. Where the dividend is declared or deemed to be Extraordinary Turquoise shalladjust in full.

Turquoise shall not carry out recalculations where dividends are deemed to be ordinary by theDR Issuer or where the dividend is distributed within the normal dividend pattern for therelevant DR.

4.1.20.4.6 (1) If the liquidity in the Depositary Receipt , which constitutes the Contract Base, isconsidered by Turquoise to be sufficient, the ratio method shall be applied. Theadjustment factor will be calculated according to the formula below and the

recalculation shall be carried out in accordance with Rule 4.1.20.3.2(2).

A = (VWAP cum – D) / VWAP cum



RULE BOOK

80

Where:

A = Adjustment factorVWAP cum = Volume weighted average price prior to the dividendD = Extraordinary Dividend

4.1.20.4.6(2) Where Turquoise considers that it is not appropriate to apply the method described

above it shall carry out the recalculation in accordance with Rule 4.1.20.3.4 where Ris determined as the value of the Extraordinary Dividend.

4.1.20.4.6(3) Where an Extraordinary dividend is announced prior to the ex-day but the amount orrate is not announced prior to the ex-day, Turquoise shall suspend trading in therelevant derivative series for the duration of the ex-day and calculate the differencebetween the VWAP of the relevant underlying on the IOB Trading Day prior to the ex-day and the VWAP on the ex-day to determine the value of the Extraordinary dividendin accordance with Rule 4.1.20.4.6 (1). Turquoise will also apply a Valuation Rangeas set out at Rule 4.1.20.2.2.3 when determining the value of the Extraordinarydividend.

4.1.20.4.7 Liquidation and Insolvency

The provisions regarding compulsory purchase in Rule 4.1.20.4.8 will also apply equally should

the company in question approve an agreement on merger under which the company wouldbecome a part of another company or where a decision is taken to place the company inliquidation.

Turquoise shall, if a company, who‟s DRs constitute the Contract Base, is being delisted fromthe IOB with the company being placed into bankruptcy, files its own petition for bankruptcy,suspends payments, or the existence of other circumstances which objectively indicate that thecompany is insolvent or will soon become insolvent, set a new Expiration Date and at StandardExercise set the VWAP to 0. If a decision to delist is taken, due to any of the events mentionedabove, when trading in the Contract Base is halted and that trading halt remains until thedelisting of such contract base, Turquoise may, on the Expiration Date, change the contracttype from a deliverable to a cash settled contract where the Expiration price will be set to 0 orto another value of the Contract Base if such is available on the Expiration Date.

4.1.20.4.7A Merger

Where a company approves a merger agreement whereby the company shall be merged withanother company or where the company is the subject of a public offer, Turquoise shall beentitled, as an alternative to setting a new Expiration Date in accordance with Rule 4.1.20.4.8,to replace the Contract base in the merged or acquired company with DRs in the acquiringcompany, and where applicable, to change the number or DRs per contract and the ExercisePrice or Futures Price in accordance with the terms and conditions of the merger or publicoffer.

Turquoise may replace the Contract Base in the merged or acquired company with DRs whereapplicable in the acquirer company and, where applicable, to change the number of DRs perContract and the Exercise Price and Futures Price in accordance with the terms and conditionsof the merger or the public offer, according to the Ratio Method. Change of contract base shallbe used when the offer consists of DRs where applicable in the acquirer company or of a

combination of DRs and payment, where the payment consists of not more than 67 % of thetotal offer, provided that DRs where applicable in the acquirer company are, or in the nearfuture will be, traded on the IOB in the same currency as the original Contract Base. The above

shall also apply if the DR of the acquiring company is traded on the IOB determined at thetime the offer is made public. Once Turquoise has determined the proportion of the payment tothe total offer, the methodology will not be changed due to DR price movements of the offeredDR. A bid is considered to be made public when a price is mentioned and may also include anindicative bid. The adjustment shall be carried out when the acquirer company announcesholding of at least 90% of the DRs and votes of the merged or acquired company, whose DRsconstitute the Contract Base.

Turquoise may, as an alternative to making a change to the Contract Base, set a newExpiration Date earlier than the previously determined Expiration Date. On the new ExpirationDate contracts will undergo cash settlement according to the Contracts theoretical value (Fair

Value).

The Fair value method will be used when



RULE BOOK

81

(i) the offer consists solely of cash, or

(ii) the offer consists of a combination of cash and DRs where the cash part exceeds67 % of the offer; or

(iii) where the offered DR is not traded on the IOB or any other exchange or marketplace approved by Turquoise in the same currency as the original Contract Base.

Alternatively, the above adjustment shall be carried out where the share that constitutes theContract Base is delisted when trading in that underlying DR is considered insufficient tosupport related derivatives trading.

4.1.20.4.7B Delisting

If a company, whose DRs or relevant UK shares constitute the Contract Base, decides todelist the DRs or relevant UK share from the current list, for other reasons than Liquidation andInsolvency according to Rule 4.1.20.4.7 and if the DRs or relevant UK shares thereafter are nolonger available for trading on the IOB or The London Stock Exchange or on any otherexchange or marketplace approved by Turquoise, Turquoise may set a new Expiration Dateearlier than the previously determined Expiration Date. On the new Expiration Date contractswill undergo cash settlement according to the Contracts theoretical value (Fair Value)calculated as described at Appendix 1 to Part 4.1.

4.1.20.4.8 Compulsory purchase proceedings

If a DR constituting the Contract Base for an IOB Depositary Receipt Contract, is based uponan Issuing Company that becomes the object of compulsory purchase proceedings, or if suchDRs will be de-listed for trading and clearing, Turquoise shall be entitled, for the respectiveseries in respect of the Contract Base in question, to set a new Expiration Date earlier than theoriginal Expiration Date for the Contracts in question.

4.1.20.4.9 Decreased share capital

Should the share capital of an Issuing Company for an IOB DR Contract be decreased througha repayment to the share holders, Turquoise shall carry out a recalculation in accordance withone of the methods described in the following paragraphs:

4.1.20.4.9(1) Ratio

If the liquidity in the DR which constitutes the Contract Base, is considered byTurquoise to be sufficient, the ratio method shall be applied. In other cases Rule4.1.20.4.9(2) shall be applied. The recalculation shall be effective on the ex-day. Theadjustment factor shall be calculated in accordance with the formula below and therecalculation shall be carried out in accordance with Rule 4.1.20.3.2(2).

A = (VWAP cum – b) / VWAP cum

Where:

A = Adjustment factorVWAP cum = Volume weighted average price prior to the decrease in DRs b

= Amount repaid per DR

4.1.20.4.9(2) Reduction in Strikes

If Turquoise considers that it is not appropriate to apply the above method, therecalculation shall be effected in accordance with this Rule by calculating the value ofthe repayment in accordance with the formula below:

R = b

Where:

R = Value of repaid amountb = Amount repaid per DR

The recalculation shall be carried out in accordance with Rule 4.1.20.3.4.

The recalculation shall be effective on the ex-day.



RULE BOOK

82

PART 4.1.A FUTURES CONTRACTS BASED ON INTERNATIONAL ORDER BOOK DEPOSITARYRECEIPT DIVIDENDS (“IOB DR DIVIDEND FUTURES”) AND LATE DIVIDENDFUTURES ON INTERNATIONAL ORDER BOOK DEPOSITARY RECEIPT (“LATE IOBDR DIVIDEND FUTURES”)

4.1.A.1 International Order Book Depositary Receipt Dividend Futures (IOB DR DividendFutures) and Late Dividend Futures on International Order Book DepositaryReceipt (“Late IOB DR Dividend Futures”) - Introductory

4.1.A.1.1 The Contract Specifications for IOB DR Dividend Futures Contracts and Late IOB DR DividendFutures listed by Turquoise and the rules and procedures relating specifically to the trading,clearing and settlement of such Contracts are set out in this section - Part 4.1.A.

The Trading Hours for IOB DR Dividend Futures Contracts shall normally be from 8.15 am to3.30 pm London time on IOB Trading Days.

4.1.A.1.2 The rules and procedures set out in this Part 4.1.A apply to the following Contracts:

IOB DR Dividend FuturesLate IOB DR Dividend Futures

and references in Part 4.A.1 of these Rules to an IOB DR Dividend Futures and Late IOB DRDividend Futures shall be construed as references to IOB DR Dividend Futures collectivelyunless the context requires to the contrary.

4.1.A.1.3 Members should ensure that they comply with any instructions given by the DesignatedClearing House and complete any documents specified by the Designated Clearing Houserelating to the settlement of IOB DR Dividend Futures.

4.1.A.1.4 The application and interpretation of this Part 4.1.A shall be governed by English law and theCourts of England and Wales shall have exclusive jurisdiction to determine any dispute arisingout of or in connection with this Part 4.1.A.

4.1.A.1.5 Save where there is an express indication to the contrary, all references to time in this Part4.1.A shall be construed as references to London time.

4.1.A.2 Interpretation

In this Part 4.1.A the following terms shall have the meanings ascribed thereto:

"Daily Cash Settlement" in relation to an IOB DR Dividend Futures, means the process ofcash settlement effected for such Contracts on each IOB Trading Day during its lifetime inaccordance with Rule 4.1.A.13;


"Daily Settlement Statement" in relation to an IOB DR Dividend Futures Contract, means the

note issued by Turquoise showing the amount payable to or by a Member on Daily CashSettlement of the Contract in question;

“Depositary Receipt (DR)” means either a Global Depositary Receipt or AmericanDepositary Receipt which is listed or traded on the IOB and which corresponds to a share,shares or to a percentage of a share of the company in question;

“Dividend” means an Ordinary Dividend;

“Dividend Information Provider” means a supplier of dividend data;

“DR Bank” in relation to a Contract, means the depositary bank that issues the DRs on whichsuch contract is based;

“DR Issuer” in relation to a Contract, means the depositary that issues the DRs on which such

contract is based;



RULE BOOK

83

“Expiration Date” in relation to an IOB DR Dividend Futures Series means the third Friday ofthe Expiration Month or, if that day is not an IOB Trading Day, the immediately preceding IOBTrading Day;

“Expiration Year” in relation to an IOB DR Dividend Futures Series means the yeardesignated by EDX London as the year in which such Series shall expire;

“Expiration Month” in relation to a standardised IOB DR Dividend Futures Series means themonth designated by Turquoise as the month in which such series will expire;

"Expiration Settlement Amount" means the monetary amount due to or payable by aMember on Expiration of an IOB DR Dividend Futures Contract as specified in the ExpirationSettlement Statement;

“Expiration Settlement Date” in relation to an IOB DR Dividend Futures Contract means thefirst Bank Day where applicable after the Expiration Date for the Contract in question;

“Expiration Delivery Settlement Price (EDSP)” means the closing price as determined byTurquoise and normally rounded to 4 decimal places unless Turquoise provides otherwise;

“Gross Dividend” means the amount of a dividend paid by the Depositary Bank in USD oneach DR prior to deductions of any tax or any DR Bank fees;

“International Order Book (IOB)” means the London Stock Exchange‟s International OrderBook which is an order-driven trading service for trading international equity market securities;

“International Order Book Depositary Receipt Dividend Futures Contracts” (IOB DRDividend Futures Contracts)” means standardised Futures Contracts listed by Turquoisewhich are based on the gross dividend paid out on one hundred Depositary Receipts for aspecific company as traded or listed on the International Order Book for the time being theterms of which are in accordance with the Contract Specifications for such Contracts, and“International Order Book Depositary Receipt Dividend Futures shall be construedaccordingly;

“IOB Bank Day” means a day other than a Saturday or a Sunday or other holiday on whichbanks in the United States or in the United Kingdom are generally open for business aspublished in Turquoise‟s trading and settlement calendar on its website atwww.tradeturquoise.com;

“IOB Trading Day” means a day other than a Saturday or Sunday or other UK public holidayon which the IOB is general ly open for trading as published in Turquoise‟s trading andsettlement calendar on its website at www.tradeturquoise.com;

“Issuing Company” in relation to a Contract, means the company on whose DRs suchContract is based;

“Late Dividend Futures contract” shall mean a contract created should a portion of anOrdinary Dividend be paid after the Expiration Date of an IOB DR Dividend Futures contract;

“LSE trading system” means the London Stock Exchange‟s electronic trading system;

“Market Maker” means a Member which has agreed to act in such capacity in relation to IOBDR Dividend Futures Contracts in accordance with Rule 4.1.A.7.

“Net Dividend” means the amount of dividend that is physically paid by the DR Bank in USDon each DR after deductions of withholding tax and any DR Bank fees;

“Ordinary Dividend” shall mean dividends defined as ordinary by the DR Bank;

“Recalculation Day” shall mean the IOB Trading Day on which recalculation of IOB DRFutures Contracts is effected;

“Settlement Statement” in relation to an IOB DR Dividend Futures Contract, means the noteissued by Turquoise showing the rights and obligations of the Counterparties to such Contractwith regard to the cash payments following its Expiration;

“SOLA trading system” means Turquoise‟s derivatives electronic trading system;

“Trade Registration” means reporting of an off-exchange transaction to Turquoise;



RULE BOOK

84

“Trading Hours” has the meaning given in Rule 4.1.A.1.1;

“Withholding Tax” means the tax deducted by the DR issuer.

4.1.A.3 Contract Specifications

4.1.A.3.1 Contract Specifications: Standardised Futures on International Order BookDepositary Receipt Dividends (“IOB DR Dividend Futures”)

Type of Contract Standardised Futures Contracts with Expiration Cash Settlement and Daily CashSettlements.

Contract Base The Annual Gross Dividend paid per relevant DR. “Annual” is defined as havinggone ex between the first Bank Day after the third Friday of December and the thirdFriday of December the following year.

Currency US Dollars.


Futures price tick size< USD 0.9995 USD 0.0005

USD 1.0000 – USD 4.9990 USD 0.0010> USD 5.00 USD 0.0100

Contract Multiplier One hundred.Recalculation of the multiplier for a Contract can occur in certain cases inaccordance with the Recalculation Rules for IOB DR Dividend Futures Contracts setout at Rules 4.1.A.15.

Lifetime Two years in accordance with the Series Designation.

Last day of Trading Normally the Expiration Date.

Listing of New Series Futures Series will be listed for trading by Turquoise in accordance with Rule4.1.A.4.

Series Designation Each Series shall be designated by a maximum of nine symbols, where a maximumof six symbols designates the Underlying Depositary Receipt and the year ofdividend capture, one symbol designates the Expiration Year and one symboldesignates the Expiration Month. The use of the symbol X, Y or Z indicates thatthe Recalculation Rules have been applied to the Futures Contracts in question.

Daily Cash Settlement IOB DR Dividend Futures Contracts shall be subject to Daily Cash Settlement oneach IOB Bank Day based upon the Daily Settlement Price of the Contractscalculated on the preceding IOB Trading Day in accordance with Rule 4.1.A.13.

Expiration Date The third Friday of January in the Expiration Year, or where such day is not an IOBTrading Day or is declared by Turquoise in advance to be a half trading day, thepreceding IOB Trading Day.

Expiration Month Normally January.

Expiration Year The year as indicated in the year field of the Series designation.

Expiration Settlement Price

Expration Settlement Amount

The amount of Gross Ordinary Dividend as paid by the DR bank on or before theclose of trading on the Expiration Date. This is in relation to dividends which aremarked ex between between the first Bank Day after the third Friday of Decemberand the third Friday of December the following year and normally be rounded to 4decimal places unless Turquoise provides otherwise.

Calculated in accordance with Rule 4.1.A.14.

Expiration Settlement Day The first IOB Bank Day after the Expiration Date.



RULE BOOK

85

Expiration Settlement Payment of the Expiration Settlement Amount is due on the Expiration SettlementDay in accordance with the instructions of the Designated Clearing House.

Trading Hours As specified in Rule 4.1.A.1.1.

4.1.A.3.2 Contract Specifications: Standardised Late Futures on International Order BookDepositary Receipt Dividends (“Late IOB DR Dividend Futures”)

Contract Trigger Late IOB DR dividend futures will only come into existence, when a dividend thatwas marked ex in relation to a normal IOB DR dividend futures contract, has notbeen physically paid in its entirety by the DR Bank before the close of trading on theExpiration Date of the normal IOB DR Dividend Futures contract.

This will usually be due to a late payment of ordinary dividends by the underlyingcompany.Late IOB DR Dividend Future‟s contracts act as extensions of normal contracts toprotect against late payment.

Automatic allocation In the event that not all dividends are paid on the underlying DR within the relevanttimeframe, an equal position in a “Late IOB DR Dividend Contract” will automaticallybe created for any normal IOB DR Dividend Future contract position that has beencarried to expiration. The position will be opened at a price of zero and is subject toDaily Cash Settlement calculations as specified in Rule 4.1.A.13

Type of Contract Standardised Futures Contracts with Expiration Settlement and Daily CashSettlements.

Contract Base The remaining amount of an ordinary dividend that went ex in the relevant period forthe normal contract but was not physically paid by the DR Bank before expiration.

Currency US Dollars.


Futures price tick size<USD 0.9995 USD 0.0005

USD 1.0000 – USD 4.9990 USD 0.0010>USD 5.00 USD 0.0100

Contract Multiplier As per contract size on the corresponding IOB DR Dividend Future at expiration.

Lifetime Normally One year.Turquoise reserves the right to bring forward the Expiration Date once alloutstanding dividends have been physically paid.

Last day of Trading Normally the Expiration Date.

Listing of New Series Late Futures Series will be listed for trading by Turquoise in accordance with Rule4.1.A.4.

Series Designation Each Series shall be designated by a maximum of nine symbols, where a maximumof six symbols designates the Underlying Depositary Receipt and the year ofdividend capture, one symbol designates the Expiration Year and one symboldesignates the Expiration Month. The use of the symbol X, Y or Z indicates thatthe Recalculation Rules have been applied to the Futures Contracts in question.

Daily Cash Settlement IOB DR Late Dividend Futures Contracts shall be subject to Daily Cash Settlementon each IOB Bank Day based upon the Daily Settlement Price of the Contractscalculated on the preceding IOB Trading Day in accordance with Rule 4.1.A.13.

Expiration Date The third Friday of the Expiration Month of the Expiration Year, or where such day isnot an IOB Trading Day or is declared by Turquoise in advance to be a half tradingday, the preceding IOB Trading Day. Turquoise reserves the right to bring forwardthe Expiration Date once all outstanding dividends have been physically paid.


Expiration Year The year as indicated in the year field of the Series designation.



RULE BOOK

86


Expiration Settlement Amount

The remaining dividend amount prior to Withholding Tax and DR Bank fees paid bythe DR Bank during the lifetime of the Late contract which applies in relation todividends captured by the corresponding normal IOB DR Dividend Futures

The remaining amount captured by the Late contract which was not paid during thelifetime of the corresponding normal contract.

Calculated in accordance with Rule 4.1.A.14


The first IOB Bank Day after the Expiration Date.

Expiration Settlement Payment of the Expiration Settlement Amount is due on the Expiration SettlementDay in accordance with the instructions of the Designated Clearing House

Trading Hours As specified in Rule 4.1.A.1.1.

4.1.A.4 Listing of New Series

4.1.A.4.1 The First Listing Day for a new Futures Contracts based on IOB DR Dividends shall normally

be the fourth IOB Trading Day prior to the Expiration Date for the Contract in question in eachcalendar year.

4.1.A.4.2 The First Listing Day for a Late IOB DR Dividend Futures contract based on IOB DR Dividendsshall be the first IOB Trading Day following expiration of the corresponding IOB DR DividendFutures contract. This shall only occur were part of a relevant dividend has not been physicallypaid before expiration of the corresponding normal IOB DR Dividend Futures contract.

4.1.A.4.3 Turquoise reserves the right to adjust either the First Listing Day or the Expiration Date inrespect of any given Series where such adjustment is deemed necessary in the interests of themarket. Members shall be informed in advance in writing of any such intended adjustment.

4.1.A.5 Designation of Expiration Month

4.1.A.5.1 The Expiration Month for an IOB DR Dividend Futures Contract and the corresponding LateIOB DR Dividend Futures contract shall be designated as follows:

January M

4.1.A.6 Payment of Fees

4.1.A.6.1 Fees in respect of IOB DR Dividend Futures Contracts are payable by Members in the amountand at the time specified in Appendix A for the Contract in question. Such fees shall be paidto the Designated Clearing House at the time specified in the relevant Settlement Statement.

4.1.A.7 Market Making Obligations

4.1.A.7.1 A Market Maker shall provide quotes in respect of IOB DR Dividend Futures Contracts in whichit acts for a minimum period equivalent to 75% of Turquoise‟s ordinary Trading Hours in eachcalendar month.

The obligations of Market Makers are set out in Rule 4.1.A.7.4 below.

Market Makers will only be obligated to provide continuous quotes in accordance with this Rule4.1.A.7 when the IOB DR Dividend Futures market is open for trading.

4.1.A.7.2 Market Maker obligations are applied on an account level and in accordance with anarrangement made by it with Turquoise under Rule 2.5.6.

4.1.A.7.3 For each IOB DR Dividend Futures Contracts in respect of which it acts as such, a MarketMaker shall quote continuous two way prices within the applicable Prescribed Spread and in

the minimum amount applicable to the Contract in question as published on the Turquoisewebsite.



RULE BOOK

87

Such quotes shall be provided in both of the nearest two Expiration months provided alwaysthat the Market Maker shall not be required to provide quotes in relation to any Series on a daywhich is the Expiration Date for such Series. On any such Expiration Date, the Market Makershall be required to provide quotes in each of the next two Expiration months after the month inwhich such Expiration Date falls

4.1.A.7.4 The IOB DR Dividend Futures Contracts in respect of which a Market Maker shall be required

to provide quotes shall be determined by such Market Maker and Turquoise in accordance withthe procedures published by Turquoise for such purposes from time to time.

The performance by the Market Maker of its obligation to provide quotes in IOB DR DividendFutures Contracts will determine the entitlement of the Market Maker to the benefits specifiedin Rule 4.1.A.8.

4.1.A.7.5 The Prescribed Spread for Market Makers in relation to Standardised IOB DR Dividend Futuresshall be published on the Turquoise website.

4.1.A.7.6 Each Market Maker will be granted a total of twenty days per calendar year in relation to eachIOB DR Dividend Futures Contract in which it acts as a Market Maker on which it is notrequired to fulfil its obligations as a Market Maker in relation to the IOB DR Dividend FuturesContract in question as set out in this Rule 4.1.A.7. Any such day is referred to in this Rule asan “Exempt Day”.

A Market Maker that wishes to nominate a trading day as an Exempt Day shall informTurquoise in writing prior to 08:20 London time on the day in question. Turquoise shall confirmby notice in writing to the Market Maker that it will be exempt from the obligation to providequotes in the IOB DR Dividend Futures Contracts in question on that day.

Where a Market Maker operates more than one Market Maker Account in accordance with anarrangement made by it with Turquoise under Rule 2.5.6, the Market Maker shall make aseparate election regarding such Exempt Days for each Market Maker Account that is used forthe registration of transactions in IOB DR Dividend Futures Contracts.

4.1.A.7.7 When extreme market conditions arise, Turquoise will issue a general notice to the marketdeclaring that there is a "fast market" indicating that the obligations of Market Makers aremodified or, in extreme circumstances, suspended as appropriate.

4.1.A.8 Market Making Fees

4.1.A.8.1 A Market Maker in IOB DR Dividend Futures Products which performs its obligations as suchto the satisfaction of Turquoise shall pay fees in respect of transactions it effects instandardised IOB DR Dividend Futures Products on the basis set out at Appendix A. Suchfees are referred to in this Part 4.1.A. as “Market Maker Fees”.

4.1.A.9 Market Making: Sanctions

4.1.A.9.1 In this Rule 4.1.A.9, references to “Quoting Obligations” shall be construed as references tothe obligations to provide quotes in relation to IOB DR Dividend Futures Contracts applicableto the Market Maker set out in Rule 4.1.A.7.

If a Market Maker fails properly to perform its obligations as such in relation to standardisedIOB DR Dividend Futures Contracts, Turquoise shall have the right:

(i) to exclude the Market Maker temporarily from acting in such capacity in relation tosuch Contracts;

(ii) To terminate the Market Maker Agreement with immediate effect;

(iii) To require the Market Maker to pay fees in the manner prescribed in Rule 4.1.A.9.2below.

4.1.A.9.2 A Market Maker which fails to perform its quoting obligations under Rules 4.1.A.7.3 and4.1.A.7.4 to the satisfaction of Turquoise shall be liable to pay fees in respect of the IOB DRDividend Futures Contracts in respect of which it is eligible to pay Market Maker Fees at thehigher rate applicable having regard to the level of performance of such party in the monthlyperiod in question as shown in Appendix A to these Rules.



RULE BOOK

88

Where a Market Maker fails to perform its obligations under Rule 4.1.A.7. in any three monthsin a calendar year, Turquoise may suspend such party from acting as a Market Maker for suchperiod as it considers appropriate in the circumstances.

Where in any monthly period, a Market Maker provides quotes in the IOB DR Dividend FuturesContracts in which it acts as a market maker for less than 25% of the normal Trading Hours ofTurquoise for such Contracts in the period in question, Turquoise may suspend such party

from acting as a Market Maker in IOB DR Dividend Futures Contracts for such period as itconsiders appropriate in the circumstances.

Without prejudice to its general power to terminate the Dividend Futures Market MakerAgreement under Rule 4.1.A.9.1(ii) above, where a Market Maker fails to fulfil its obligations inany three months in a calendar year, the Member‟s right to act as a Market Maker shall besuspended for such period as Turquoise considers appropriate in the circumstances.

Turquoise may also suspend a Market Maker from acting in such capacity at any time if itconsiders that the Market Maker has abused its position as a Market Maker.

4.1.A.9.3 Turquoise shall maintain a record of the manner in which each Market Maker performs itsobligations in each calendar month.

In determining whether a Market Maker has performed its obligations as such in relation to

standardised IOB DR Dividend Futures Contracts on any day, Turquoise will have regard to itsoverall activities as a Market Maker in such Contracts on the day in question.

Turquoise maintains an electronic record of the aggregate time on an IOB Bank Day duringwhich a Market Maker provides quotes to satisfy its quoting obligations in respect of eachseries in which quotes are required. This record will be used to determine whether the MarketMaker in question has provided quotes for the minimum period specified in Rule 4.1.A.7.

4.1.A.9.4 Where a Market Maker operates more than one Market Maker Account for the execution oftransactions in IOB DR Dividend Futures Contracts in accordance with an arrangement madeby it with Turquoise under Rule 2.5.6, Turquoise shall assess the performance of theapplicable obligations relating to market making in IOB DR Dividend Futures Contractsseparately for each such Market Maker Account.

4.1.A.10 Registration of Off-Exchange Transactions

4.1.A.10.1 Where a Member enters into an off-exchange transaction in an IOB or Late IOB DR DividendFutures Contract with another Member or with a member of Oslo Børs, the Member shallsubmit a Request for Registration relating to such transaction to Turquoise at the earliestopportunity if it wishes the transaction to be registered. Such Request for Registration shall:

(i) specify the Instrument which forms the subject of the off-exchange transaction;


Where the off-exchange transaction in question has been arranged by an OTC Broker, theMember may arrange for the Request for Registration relating to such transaction to besubmitted to Turquoise by the OTC Broker.

4.1.A.10.2 A Request for Registration shall only be considered for acceptance by Turquoise and theDesignated Clearing House if the counterparties to the off-exchange transaction or an OTCBroker acting on their behalf submit identical requests specifying the Contracts to beregistered, the Accounts in which the Contract is to be registered and the terms of thetransaction in question to Turquoise or to Turquoise and to Oslo Børs in question asappropriate.

4. 1.A.10.3 A Request for Registration of an off-exchange transaction may be submitted to Turquoise by aMember or by an OTC Broker acting on behalf of the Member either by way of its electronicconnection to Turquoise‟s clearing system or by telephone to Turquoise‟s Market OperationsDepartment as set out in Rule 3.2.5.

A Request for Registration of an IOB or Late IOB DR Dividend Futures Contract shall beconsidered for acceptance by Turquoise and the Designated Clearing House in accordance

with Rule 3.2 and the following provisions of this Rule.



RULE BOOK

89

4. 1.A.10.4 A Request for Registration of an IOB or Late IOB DR Dividend Futures Contract in respect ofan off-exchange transaction can only be accepted if the off-exchange transaction has beenconcluded at a time when Turquoise is open for trade registration.

If Turquoise considers that an acceptable price has not been provided for such purposes, theacceptance of the Request for Registration shall be determined at their discretion.

4. 1.A.10.5 The acceptance of a Request for Registration submitted under this Rule is at the discretion ofTurquoise and the Designated Clearing House. Without limiting the generality of the foregoing,a Request for Registration shall not be accepted if such acceptance would not be conducive tothe maintenance of a proper market in the Instrument in question or would not be consistentwith the Designated Clearing House‟s obligation to maintain a sound basis to its clearingservices.

4. 1.A.10.6 Where a Request for Registration of an IOB or Late IOB DR Dividend Futures Contract whichis submitted by a Member or an OTC Broker acting on behalf of the Member during tradinghours for such Contracts is accepted by Turquoise and the Designated Clearing House,Turquoise shall arrange with the Designated Clearing House for the resulting RegisteredContract to be registered by the Designated Clearing House forthwith.

Where a Request for Registration in relation to an IOB or Late IOB DR Dividend FuturesContract is submitted by a Member or an OTC Broker acting on behalf of the Member after the

close of trading in such Contracts on an IOB Trading Day, the Contract in question shall beregistered by the Designated Clearing House on that day if it is received and accepted byTurquoise and the Designated Clearing House before 5.30 pm London time. Where a Requestfor Registration is received by Turquoise after such time, it shall, if accepted, be registered bythe Designated Clearing House on the next IOB Trading Day.

4. 1.A.10.7 Turquoise shall inform Members and, where applicable, the OTC Broker in question as soon aspossible if a Request for Registration submitted under this Rule is not accepted for registration.

4.1.A.11 Requests for Re-Registration

4.1.A.11.1 A Request for Re-Registration of a normal IOB DR Dividend Futures contract made pursuant toRule 3.4.2(vi) will not be considered by Turquoise and the Designated Clearing House unless itis received by other means or electronic connection no later than 30 minutes prior to the close

of the clearing system, normally 5.30 pm London time, for IOB or Late IOB DR DividendFutures Contracts on the IOB Trading Day following the day on which the position in questionis registered by the Designated Clearing House.

For the purpose of this Rule 4.1A.11, Turquoise will not accept Requests for Re-Registrationfor Late IOB DR Dividend Futures Contracts.

4. 1.A.11.2 A Request for Re-Registration of an IOB DR Dividend Futures Contract made pursuant to Rule3.4.2(i) to (v) inclusive will not be considered by Turquoise and the Designated Clearing Houseunless it is received by electronic connection or by other means no later than close of tradingon the Expiration Date for the Contract in question.

4. 1.A.11.3 A Request for Re-Registration of an IOB DR Dividend Futures Contract shall specify thefollowing details:


4. 1.A.11.4 The acceptance of a Request for Re-Registration submitted under this Rule is at the discretionof Turquoise and the Designated Clearing House.

4. 1.A.11.5 Where a Request for Re-Registration is received and accepted by Turquoise and theDesignated Clearing House before 5.30 pm London time on an IOB Trading Day, the Contractin question shall be registered by the Designated Clearing House on that day. Where aRequest for Re-Registration is received by Turquoise after such time, it shall, if accepted, beregistered by the Designated Clearing House on the next IOB Trading Day.

4. 1.A.11.6 Turquoise shall inform the Member or Members in question as soon as possible if a Requestfor Re-Registration submitted under this Rule is not accepted.

4.1.A.12 Cancellation of Incorrect Transactions



RULE BOOK

90

4.1.A.12.1 The provisions of Rule 2.16 concerning the cancellation of incorrect transactions shall beapplied in relation to IOB or Late IOB DR Dividend Futures Contracts in accordance with thefollowing provisions of this Rule.

4.1.A.12.2 Turquoise will not direct that an IOB or Late IOB DR Dividend Futures transaction shall becancelled in the absence of the agreement of the Counterparty to the transaction unless theperiod between the time at which the transaction is effected and the time at which the request

is submitted is less than ten minutes.

4.1.A.12.3 The Fair Market Spread or Price Adjustment Range for IOB DR Dividend Futures Contracts isdefined as 10% deviation outside the relevant Prescribed Spread for Market Makers asdescribed in Rule 4.1.A.7 or where no spread is available, Turquoise may after consulting withMembers of Turquoise define the Fair Market Spread or Price Adjustment Range at its solediscretion.

4.1.A.12.4 Turquoise will notify the Member or Members involved in the transaction of its decision in thecase of a request relating to an IOB or Late IOB DR Dividend Futures Contract no later than 15minutes before trading starts on the IOB Trading Day following the day on which thetransaction in question was effected.

4.1.A.13 Daily Cash Settlement

4.1.A.13.1 IOB DR Dividend Futures Contracts and any corresponding Late IOB DR Dividend FuturesContracts are subject to Daily Cash Settlement. The first such Daily Cash Settlement shall bedue for settlement on the first IOB Bank Day where applicable following the Registration of theContract. Thereafter, Daily Cash Settlement shall be effected on each IOB Bank Day whereapplicable until the Expiration Date for the Contract in accordance with the provisions of thisRule.

4.1.A.13.2 On the transaction day, settlement shall take place in an amount corresponding to thedifference between the Daily Settlement Price on the transaction day and the futures price.After that settlement takes place in an amount corresponding to the difference between theDaily Settlement Price and the Daily Settlement Price from the immediately preceding IOBTrading Day. On the Expiration Date settlement shall take place in an amount corresponding tothe difference between the Expiration Delivery Settlement Price and the Daily Settlement Pricefrom the immediately preceding IOB Bank Day.

4.1.A.13.3 Turquoise determines the Daily Settlement price for the Futures Contract with reference to themost up to date announcement by the DR bank relating to the dividend. In the period of timebefore any announcements are made, Turquoise will use relevant dividend forcasts as suppliedby its chosen Dividend Information Provider.

For Late IOB DR Dividend Futures contracts, the Daily Settlement Price shall be determined bysubtracting the Expiration Settlement value of the corresponding IOB DR Dividend Future fromthe most up to date announcement by the DR Bank relating to the relevant dividend period.

4.1.A.13.4 Turquoise shall issue Daily Settlement Statements to Members having registered positions inIOB or Late IOB DR Dividend Futures Contracts normally no later than 10.00 pm London timeon each IOB Trading. The Daily Settlement Statement for IOB or Late IOB DR DividendFutures shall show the Daily Settlement Amount for such settlement which is payable in USDollars.

The Daily Settlement Amount for IOB or Late IOB DR Dividend Futures shall be payable on thefirst IOB Bank Day following the IOB Trading Day in question in accordance with theinstructions of the Designated Clearing House.

4.1.A.14 IOB DR Dividend Futures and Late IOB DR Dividend Futures: ExpirationSettlement Procedures

4.1.A.14.1 The rights and obligations of the Buyer and the Seller in respect of the settlement of an IOB DRDividend Futures Contract or corresponding Late IOB DR Dividend Futures Contract shall beperformed in accordance with this Rule 4.1.A.14.

4.1.A.14.2 Expiration Settlement of an IOB or Late IOB DR Dividend Futures Contract comprises oneelement:

The Final Settlement Amount for the IOB DR Dividend contract is determined as theamount of Gross Ordinary Dividend paid by the DR Bank on or before the close oftrading on the Expiration Date and normally rounded to 4 decimal places unlessTurquoise provides otherwise. This is in relation to dividends which are marked ex



RULE BOOK

91

between the first Bank Day after the third Friday of December and the third Friday ofDecember the following year.

The Final Settlement Amount for the Late IOB DR Dividend contract is determined asthe amount of the Gross Ordinary Dividend paid by the DR bank during the Latecontract lifetime in relation to dividends marked ex between the first Bank Day afterthe third Friday of December and the third Bank Day of December the following year

for the corresponding IOB DR Dividend contract

4.1.A.14.3 The Final Daily Settlement Amount for an IOB DR Dividend Futures Contract is determined byreference to the Expiration Settlement Price (ESP) and carried out in accordance with Rule4.1.A.13.

4.1.A14.4 The payment of the Expiration Settlement Amount shall be due on the Expiration SettlementDay for the IOB DR Dividend Futures Contract in question.

4.1.A.14.5 All payments required to be made under the settlement procedures set out in Rule 4.1.A.13 toRule 4.1.A.14 shall be made in accordance with instructions issued by the Designated ClearingHouse. Such payments shall be made in USD. Turquoise will issue Daily Settlement andExpiration Settlement Statements showing the amount due to or payable by the Member andthe time at which such payments are due. In the absence of manifest error, Turquoise'sSettlement Statements shall be final and binding.

4.1.A14.6 Where the Expiration Settlement Price for an IOB DR Dividend Futures Contract orcorresponding Late IOB DR Dividend Futures Contract is higher than the Daily SettlementPrice for such Contract on the day before its Expiration Date, the Expiration Settlement Amountshall be payable to the Buyer and by the Seller.

Where the Expiration Settlement Price for an IOB DR Dividend Futures Contract orcorresponding Late IOB DR Dividend Futures Contract is lower than the Daily Settlement Pricefor such Contract on the day before its Expiration Date, the Expiration Settlement Amount shallbe payable by the Buyer and to the Seller.

The Expiration Settlement Price for the Expiration Date for an IOB DR Dividend FuturesContracts or corresponding Late IOB DR Dividend Futures Contract shall be calculated byTurquoise in accordance with the principles set out in this Rule. Turquoise publishes theExpiration Settlement Price for the Expiration Date of the IOB DR Dividend Futures orcorresponding Late IOB DR Dividend Futures Contract that is to be used as the basis for cashsettlement of IOB DR Dividend Futures Contracts or corresponding Late IOB DR DividendFutures Contract which expire on the Expiration Date in question on the IOB Trading Dayimmediately following the Expiration Date. Turquoise shall notify all Members of thedetermined Expiration Settlement Price of the IOB DR Dividend Futures or corresponding LateIOB DR Dividend Futures Contract. The published Expiration Settlement Price for theExpiration Date is final and binding.

Turquoise may defer its Expiration Settlement procedures for IOB DR Dividend FuturesContracts or corresponding Late IOB DR Dividend Futures Contract if abnormal circumstancesoccur which prevent settlement being effected at the normal time. Turquoise shall informMembers at the earliest opportunity of any such occurrence.

4.1.A.15 Recalculation Rules for IOB DR Dividend Futures Contracts

4.1.A.15.1 Recalculation rules for IOB DR Dividend contracts will be applied in accordance with therelevant Turquoise Recalculation Rules for IOB DR Contracts at Rule 4.1.20.1.

APPENDIX 1 TO PART 4.1 - Adjustment Method - Fair Value

1 Valuation Variables

The Table below shows the variables used in the respective valuation models as well as a short description ofhow these variables are determined.

Calculation Turquoise will use a the binomial Cox-Ross-Rubinstein calculation model forDR options using 100 steps

Turquoise will use a The Black-Scholes Method calculation model for DRoption contracts



RULE BOOK

92

Turquoise will use The cash and carry arbitrage calculation Model for DRfutures contracts

Underlying In order to calculate the Theoretical Fair Value, the value of the underlying isdefined as the Volume Weighted Average Price (VWAP) for the underlying inquestion on the day of the adjustment.

Volatility Volatilities relate to the underlying DRs. The arithmetic mean of the volatilitiesimplicit in the daily settlement prices provided by the CC&G clearing system onthe ten days before the date of the announcement of the offer. In cases whereoffers are revised or competing offers are issued, Turquoise will always usethe volatilities calculated at the time of the first offer being made public. For amerger, the date of the announcement is the date in which the essentialfinancial elements of the corporate action are released. In abnormal situations,to define the volatility Turquoise may apply adjustments using linearinterpolation.

Dividends: Those estimated dividends consistent with the residual life of the contract byTurquoise and used to calculate the daily closing prices on the day precedingthe delisting of the DR

Interest Rate: Prevailing domestic interbank offered rate, consistent with the residual life ofthe contract, observed on the last day before the closure and cash settlementof DR contracts

Time to expiration Number of days between the date of adjustment and the original ExpirationDate.

When the bid has been made public Turquoise shall publish the volatility and dividend estimates that will be usedto calculate the Fair Value in a Market Notice. A bid is considered to be public when a price has been mentionedby the bid company and may also include an indicative bid. The underlying DR and the interest rate can changeuntil the time of the adjustment and is published in a Market Notice at the time of the adjustment.



RULE BOOK

93

PART 4.2 FUTURES AND OPTIONS CONTRACTS BASED ON THE FTSE RUSSIA IOB INDEX1

4.2.1 Introductory

4.2.1.1 The Contract Specifications for FTSE Russia IOB Contracts listed by Turquoise and all rulesand procedures relating specifically to the trading, clearing and settlement of such Contractsare set out in this Part 4.2.

The Trading Hours for FTSE Russia IOB Index Futures Contracts shall normally be from 8.00am to 4.00 pm London time on IOB Trading Days. On the Expiration Date the Trading Hoursfor expiring FTSE Russia IOB Index Futures Contracts shall normally be from 8.00 am to 3.30pm London time.

The Trading Hours for FTSE Russia IOB Index Options Contracts shall normally be from 8.15am to 3.30 pm London time on IOB Trading Days.

4.2.1.2 The rules and procedures set out in this Part 4.2 apply to the following Contracts based on theFTSE Russia IOB Index:

FTSE Russia IOB Index Futures

FTSE Russia IOB Index Options

and references to “FTSE Russia IOB Index Contracts” in this Part 4.2 shall be construed asreferences to each of the above Contracts unless the context otherwise requires.

4.2.1.3 The FTSE Russia IOB Index is described in the Ground Rules for the management of theFTSE Russia IOB Index are available from www.ftse.com/Indices.

4.2.1.4 The FTSE Russia IOB Index is calculated continuously during the day on each IOB TradingDay by FTSE in its capacity as the Index Calculator for the FTSE Russia IOB Index appointedby Turquoise. In the event of computer failure or lack of information the frequency ofcalculations and reports may be altered.

4.2.1.5 Save where there is an express indication to the contrary, all references to time in this Part 4.2shall be construed as references to London time.

4.2.1.6 The application and interpretation of this Part 4.2 shall be governed by English law and theCourts of England and Wales shall have exclusive jurisdiction to determine any dispute arisingout of or in connection with this Part 4.2.


4.2.2.1 In this Part 4.2 the following terms shall have the meanings ascribed thereto:

“Closing Settlement” in relation to a FTSE Russia IOB Index Futures Contract, means theprocess of cash settlement effected for such Contracts following the execution of a ClosingTransaction as provided for in Rule 4.2.15;

"Closing Settlement Amount" means the amount payable to or by a Member in relation to a

Closing Settlement;

"Closing Transaction" in relation to a FTSE Russia IOB Index Futures position, means atransaction which liquidates an existing futures position by registration of an equal andopposite position;

"Daily Cash Settlement" in relation to a FTSE Russia IOB Futures Contract, means theprocess of cash settlement effected for such Contracts on each IOB Bank Day during itslifetime in accordance with Rule 4.2.14;


"Daily Settlement Statement" in relation to a FTSE Russia IOB Index Futures Contract,means the note issued by Turquoise showing the amount payable to or by a Member on DailyCash Settlement of the Contract in question;

1 FTSE RUSSIA IOB Index is a trade and service mark of the Financial Times Limited, the London Stock Exchange Plc and

FTSE International Limited (FTSE)



RULE BOOK

94

“Daily Settlement Price” in relation to a FTSE Russia IOB Index Futures Contract, means thevalue certified as such by Turquoise on each IOB Trading Day as being the value of a FTSERussia IOB Index Futures Contract at the close of trading at Turquoise on such day;

“Depositary Receipt” means a depositary receipt which is listed or traded on the IOB andwhich corresponds to a share, shares or to a percentage of a share of the company in

question;

“Designated Market Maker (DMM)” means a Member which has agreed to act in suchcapacity in relation to FTSE Russia IOB Index products in accordance with Rule 4.1.8;

“Exercise Settlement Amount” means the monetary amount determined in accordance withRule 4.2.17 due to or payable by a Member on Exercise of a FTSE Russia IOB Index OptionsContract as specified in the Exercise Settlement Statement;

“Exercise Settlement Statement” in relation to a FTSE Russia IOB Index Options Contract,means the note issued by Turquoise showing the amount payable to or by the Member onExercise of the Contract in question;

“Expiration Date” in relation to a standardised Series, means the third Friday in the ExpirationMonth for such Series, or, if that day is not an IOB Trading Day, the immediately preceding IOB

Trading Day and in relation to a Non-Standardised Contract, means the IOB Trading Dayagreed upon by the counterparties as the day on which the Contract will expire;

“Expiration Month” in relation to a standardised Series, means the month designated byTurquoise as the month in which such Series will expire and in relation to a Non-StandardisedContract, means the month agreed upon by the counterparties as the month in which theContract will expire;

“Expiration Settlement Amount” means the monetary amount due to or payable by aMember on expiration of a FTSE Russia IOB Index Futures Contract in accordance with Rule4.2.16 as specified in the Expiration Settlement Statement for the Contract in question;

“Expiration Settlement Day” in relation to a FTSE Russia IOB Index Contract means the firstIOB Bank Day after the Expiration Date for the Contract in question;

“Expiration Settlement Price” in relation to a FTSE Russia IOB Index Contract, means theprice certified as such in accordance with Rule 4.2.12;

“Expiration Settlement Statement” in relation to a FTSE Russia IOB Index Futures Contract,means the note issued by Turquoise showing the amount payable to or by the Member onExpiration of the Contract in question;

“Expiration Year” in relation to a standardised Series, means the year designated byTurquoise as the year in which such Series will expire and in relation to a Non-StandardisedContract means the year agreed upon by the counterparties as the year in which the Contractwill expire;

“FTSE Russia IOB Index Contracts” means Standardised and Non-Standardised Futures andOptions Contracts listed by Turquoise which are based on the FTSE Russia IOB Index, the

terms of which are in accordance with the Contract Specifications for such Contracts and“FTSE Russia IOB Index Options” and “FTSE Russia IOB Index Futures” shall beconstrued accordingly;

“FTSE Russia IOB Index” described more particularly in the Conditions for the FTSE RussiaIOB Index which are set out at www.ftse.com/Indices as amended from time to time;

“FTSE Russia IOB Index Options Series” means FTSE Russia IOB Index Options having thesame Expiration Date, Expiration Month, Expiration Year and the same Exercise Price and“Series” shall be construed accordingly;

"First Daily Cash Settlement" in relation to a FTSE Russia IOB Index Futures Contractmeans the first cash settlement for the Contract in question carried out following Registration ofthe Contract;

“First Listing Day” means the day on which a Series is first listed by Turquoise;

“Futures Contract Price” in relation to a FTSE Russia IOB Index Futures Contract, means theprice for such Contract agreed by the counterparties to the transaction in question;

http://www.ftse.com/Indices






RULE BOOK

95

“Ground Rules for the management of the FTSE Russia IOB Index” means the conditionsgoverning the composition of the FTSE Russia IOB Index, the calculation of the Index Value,and adjustments thereto and other similar factors relating to the FTSE Russia IOB Index asamended from time to time and which have been adopted by FTSE and can be found onwww.ftse.com/Indices;

“Index Calculator” means FTSE, the organisation appointed by Turquoise havingresponsibility for the calculation of the FTSE Russia IOB Index in accordance with these Rulesand the Conditions for the FTSE Russia IOB Index;

“Index Provider” means FTSE;

“Index Constituent” means a Depositary Receipt which is included in the FTSE Russia IOBIndex for the time being;

“International Orderbook Depositary Receipt” means a depositary receipt which is listed ortraded on the IOB;

“IOB Bank Day” means a day other than a Saturday or a Sunday or other holiday on whichbanks in the United States or in the United Kingdom are generally open for business aspublished in Turquoise‟s trading and settlement calendar on its website at www.

tradeturquoise.com;

“IOB Trading Day” means a day other than a Saturday or Sunday or other UK public holidayon which the IOB is generally open for trading as published in Turquoise‟s trading andsettlement calendar on its website at www. tradeturquoise.com;

“Primary Market Maker” means a Member which has agreed to act in such capacity inrelation to FTSE Russia IOB Index products in accordance with Rule 4.1.8;

“Opening Transaction” means a FTSE Russia IOB Index Futures transaction which is not aClosing Transaction;

“Settlement Statement” means any of the following:

(i) a Daily Settlement Statement;

(ii) an Expiration Settlement Statement; or

(iii) the note issued by Turquoise in relation to a FTSE Russia IOB Index Options Contractshowing the rights and obligations of the Counterparties to such Contract with regardto the associated cash payments following its Exercise.



RULE BOOK

96


4.2.3.1 Contract Specifications: Standardised FTSE Russia IOB Index Futures

Type of Contract Standardised Futures Contracts with Expiration Settlement and Daily Cash

Settlement.

Contract Index The FTSE Russia IOB Index.

Index Multiplier USD 50 per Index Point.


0.25 and 0.05 where the Future is traded as part of a standard combination.

Lifetime Three, six, nine or twelve months in accordance with the Series Designation.

Daily Settlement Price The Daily Settlement Price is determined in accordance with Rule 4.2.14.

Last Day for Trading The Expiration Date.

Listing of New Series Futures Contracts are listed in each calendar month on the First Listing Day.

Series Designation Each Series shall be designated by a maximum of eleven symbols, where amaximum of six symbols designates the Contract Index, one symbol designates theExpiration Year and one symbol designates the Expiration Month.

Initial Daily Settlement The first IOB Bank Day following Registration.

Daily Settlement FTSE Russia IOB Index Futures Contracts are subject to Daily Settlement on eachIOB Bank Day following Registration in accordance with Rule 4.2.14.

Expiration Settlement

Price

The index value for the Expiration Date calculated in accordance with Rule 4.2.12.1.

Expiration Date The third Friday of the Expiration Month of the Expiration Year, or where such day isnot a IOB Trading Day, the preceding IOB Trading Day




Calculated in accordance with Rule 4.2.16.



The first IOB Bank Day following the Expiration Date.




RULE BOOK

97

4.2.3.2 Contract Specifications: Standardised FTSE Russia IOB Index Options

Type of Contract Standardised Options Contracts with Cash Settlement.


Type Calls and Puts.

Contract Index The FTSE Russia IOB Index.



For Options with a Premium below USD 0.1: 0.01 of an Index Point;For Options with a Premium from USD 0.1 to USD 3.95: 0.05 of an Index Point;For Options with a Premium of USD 4 to USD 9.90: 0.10 of an Index Point.For Options with a Premium of USD 10 or above: 0.25 of an Index Point.

Premium The amount agreed to by the parties as the premium payable for the Contractmultiplied by the Index Multiplier.

Premium Settlement Day The first IOB Bank Day following Registration.

Strike Price The index value contained in the Series designation.


Lifetime Three, six, nine or twelve months in accordance with the Series Designation.

Last Day for Trading The Expiration Date for the Series in question.

Listing of New Series On or around the fourth IOB Trading Day prior to the Expiration Date in each monthin accordance with Rule 4.2.4.

Series Designation Each Series shall be designated by a maximum of eleven symbols, where amaximum of four symbols designates the Contract Index, one symbol designates theExpiration Year, one symbol designates the Expiration Month and a maximum offour symbols designates the Strike Price. The use of the symbol X indicates that theContracts in the FTSE Russia IOB Series in question have been adjusted inaccordance with the Conditions for the FTSE Russia IOB Index.


The index value for the Expiration Date calculated in accordance with Rule 4.2.12.1.

Expiration Date The third Friday of the Expiration Month of the Expiration Year, or where such day isnot an IOB Trading Day, the preceding IOB Trading Day.


Exercise Settlement Amount



Expiration Settlement Payment of the Exercise Settlement Amount shall occur on the ExpirationSettlement Day in accordance with the instructions of the Designated ClearingHouse.



Exercise FTSE Russia IOB Index Options are subject to exercise in accordance with Rule4.2.17.

Standard Exercise FTSE Russia IOB Index Options which are In the Money at expiration are subject toStandard Exercise in accordance with Rule 4.2.18.



RULE BOOK

98


4.2.4 Listing of New Series

4.2.4.1 The First Listing Day for new FTSE Russia IOB Index Contracts shall normally be the fourthIOB Trading Day prior to the Expiration Date in each calendar month.

On the First Listing Day for an Options Series Turquoise shall list at least five Call OptionsSeries and five Put Options Series, or in accordance with the Scale of Strike Prices aspublished on the Turquoise website.

4.2.4.2 Turquoise reserves the right to adjust either of the First Listing Day or the Expiration Date inrespect of any given Series where such adjustment is deemed necessary in the interests of themarket. Members shall be informed in advance of any such intended adjustment.

4.2.4.3 For one Call and one Put Options Series, the Strike Price shall be set at the point inTurquoise's Scale of Strike Prices for FTSE Russia IOB Index Contracts which is closest to thevalue of the FTSE Russia IOB Index at the close of trading on the IOB on the immediatelypreceding IOB Trading Day. For other Series, the Strike Price shall be set so that it is higher forat least two Calls and two Put Options Series and lower for at least two Call and two Put

Options Series than the first Strike Price.

The Strike Price for the second Series shall be set at the point in such scale immediately abovethe first Strike Price. The Strike Price for the third Series shall be set at the point in such scaleimmediately below the first Strike Price.

4.2.4.4 If the final value of the FTSE Russia IOB Index at the end of a IOB Trading Day is higher thanthe second highest or lower than the next lowest Strike Price for the Contracts based on theIndex in question at least one new Call and one new Put Options Series will be listed above thepreviously highest or below the previously lowest Strike Price, respectively, for Series havingthe same Expiration Month. Such listing shall be effected on the next IOB Trading Day.

4.2.4.5 FTSE Russia IOB Index Contracts are listed for trading with a Lifetime of three months, sixmonths or twelve months.

FTSE Russia IOB Index Contracts with a Lifetime of twelve months will be listed in Decemberin each calendar year.

FTSE Russia IOB Index Contracts with a Lifetime of six months will be listed in December,March, June and September in each calendar year. Index Contracts with a Lifetime of threemonths will be listed in all other months.

4.2.5 Designation of Expiration Months

4.2.5.1 The Expiration Month for a Listed Series shall be designated in accordance with the followingprovisions of this Rule.

4.2.5.2 The Expiration Month for FTSE Russia IOB Index Futures Contracts shall be designated asfollows:

January A

February B

March C

April D

May E

June F

July G

August H

September I

October JNovember K

December L



RULE BOOK

99

4.2.5.3 The Expiration Month for a FTSE Russia IOB Index Options Contract shall be designated asfollows:


January A M

February B N

March C O

April D P

May E Q

June F R

July G S

August H T

September I U

October J V

November K W

December L X


4.2.6.1 Fees in respect of FTSE Russia IOB Index Contracts are payable by Members in the amountand at the time specified in Appendix A applicable to the Contract in question. Such fees shallbe paid to the Designated Clearing House at the time specified in the relevant statementissued to the Member by the Designated Clearing House.

4.2.7 Market Making Obligations, Market Making Fees, Market Making Sanctions

4.2.7.1 The provisions of Rule 4.1.8 shall apply to the provision of quotes by Market Makers in relation

to FTSE Russia IOB Index Futures and Options.

4.2.7.2 The provisions of Rule 4.1.9 shall apply to the provision of Market Maker Fees in relation toFTSE Russia IOB Index Futures and Options.

4.2.7.3 The provisions of Rule 4.1.10 shall apply to the provision of Market Making Sanctions inrelation to FTSE Russia IOB Index Futures and Options.

4.2.8 Orders

4.2.8.1 Orders relating to Futures and Options Contracts based on the FTSE Russia IOB Index maybe placed in the Single Order Market.

4.2.8.2 A Single Order consists of an offer to buy or sell the number of FTSE Russia IOB Index

Contracts specified in the Order. This number may be any whole number in excess of one. AMember placing a Single Order may stipulate that the Order may only be executed in itsentirety. In the absence of such stipulation, the offer may be accepted in any amount up to thespecified number. Where an Order is executed partially the unfilled portion of the Order willremain in the Orderbook.

4.2.8.3 Price quotations for FTSE Russia IOB Index Futures Contracts normally relate to one-fiftieth ofa Contract and are quoted in Index Points. The minimum price movement is described at Rule4.2.3.1.

4.2.8.4 Price quotations for FTSE Russia IOB Index Options Contracts normally relate to one-fiftieth ofa Contract and are quoted in Index Points. The minimum price movement is described at Rule4.2.3.2.

4.2.9 Registration of off-exchange transactions

4.2.9.1 Where a Member enters into an off-exchange transaction in a FTSE Russia IOB IndexContract with another Member or with a member of Oslo Børs, the Member shall submit a



RULE BOOK

100

Request for Registration relating to such transaction to Turquoise at the earliest opportunity if itwishes the transaction to be registered. Such Request for Registration shall:



4.2.9.2 A Request for Registration shall only be considered for acceptance by Turquoise and theDesignated Clearing House if the counterparties to the off-exchange transaction submitidentical requests specifying the Contracts to be registered, the Accounts in which the Contractis to be registered and the terms of the transaction in question to Turquoise or to Turquoiseand to Oslo Børs as appropriate.

4.2.9.3 A Request for Registration of an off-exchange transaction may be submitted to Turquoise by aMember either by way of its electronic connection to Turquoise‟s clearing system or bytelephone to Turquoise Market Operations as set out in Rule 3.2.5.

A Request for Registration of a FTSE Russia IOB Index Contract shall be considered foracceptance by Turquoise and the Designated Clearing House in accordance with Rule 3.2 andthe following provisions of this Rule.

4.2.9.4 A Request for Registration of a FTSE Russia IOB Index Contract in respect of an off-exchangetransaction which has been concluded at a time when Turquoise is not open for trading suchContracts, will not normally be accepted by Turquoise and the Designated Clearing Houseunless the agreed price does not deviate by more than 10% from the closing price or suchprice as Turquoise determines.

Where a Request for Registration of a FTSE Russia IOB Index Contract is submitted in respectof a Series for which bid and ask prices are not quoted at the time, Turquoise shall obtain bidask quotes for such Series in conjunction with Oslo Børs as it considers appropriate. Where in

the opinion of Turquoise an acceptable quote is obtained, the Request for Registration shall beconsidered for acceptance by Turquoise and the Designated Clearing House if it is within thespread of the quoted prices. If Turquoise considers that an acceptable price has not beenprovided for such purposes, the acceptance of the Request for Registration shall bedetermined at their discretion.

4.2.9.5 The acceptance of a Request for Registration submitted under these Rules is at the discretionof Turquoise and the Designated Clearing House. Without limiting the generality of theforegoing, a Request for Registration shall not be accepted if such acceptance would not beconducive to the maintenance of a proper market in the Product in question or would not beconsistent with the Designated Clearing House‟s obligation to maintain a sound basis to itsclearing services.

4.2.9.6 Where a Request for Registration of a FTSE Russia IOB Index Contract which is submitted bya Member during trading hours for such Contracts is accepted by Turquoise and theDesignated Clearing House, Turquoise shall arrange with the Designated Clearing House forthe resulting Registered Contract to be registered by the Designated Clearing House forthwith.

Where a Request for Registration relating to a FTSE Russia IOB Index Contract is submittedby a Member after the close of trading in such Contracts on an IOB Trading Day, the Contractin question shall be registered by the Designated Clearing House on that day if it is receivedand accepted by Turquoise and the Designated Clearing House before 5.30 pm London time.Where a Request for Registration is received by the Designated Clearing House after suchtime, it shall, if accepted, be registered on the next IOB Trading Day.

4.2.9.7 Turquoise shall inform the Member or Members as soon as possible if a Request forRegistration submitted under this Rule is not accepted for registration.


4.2.10.1 A Request for Re-Registration of a FTSE Russia IOB Index Contract made pursuant to Rule3.4.2(vi) will not be considered by Turquoise and the Designated Clearing House unless it is

received by other means or electronic connection no later than 30 minutes prior to the close ofthe clearing system, normally 5.30 pm London time, for FTSE Russia IOB Index Contracts onthe IOB Trading Day following the day on which the position in question is registered by theDesignated Clearing House.



RULE BOOK

101

4.2.10.2 A Request for Re-Registration of a FTSE Russia IOB Index Contract made pursuant to Rule3.4.2(i) to (v) inclusive will not be considered by Turquoise and the Designated Clearing Houseunless it is received by electronic connection or other means no later than 5.30 pm Londontime on the Expiration Date for the Contract in question.

4.2.10.3 A Request for Re-Registration of a FTSE Russia IOB Index Contract shall specify the following

details:


4.2.10.4 The acceptance of a Request for Re-Registration submitted under this Rule is at the discretionof Turquoise and the Designated Clearing House.

4.2.10.5 Where a Request for Re-Registration is received and accepted by Turquoise and theDesignated Clearing House before 5.30 pm London time on an IOB Trading Day, the Contractin question shall be registered by the Designated Clearing House on that day. Where aRequest for Re-Registration is received by Turquoise after such time, it shall, if accepted, beregistered by the Designated Clearing House on the next IOB Trading Day.

4.2.10.6 Turquoise shall inform the Member or Members in question as soon as possible if a Requestfor Re-Registration submitted under this Rule is not accepted for Re-Registration.


4.2.11.1 The provisions of Rule 2.16 concerning the cancellation of incorrect transactions shall beapplied in relation to FTSE Russia IOB Index Contracts in accordance with the followingprovisions of this Rule.

4.2.11.2 Turquoise will not direct that a FTSE Russia IOB Index transaction shall be cancelled in theabsence of the agreement of the Counterparty to the transaction unless the period between thetimes at which the transaction is effected and the time at which the request is submitted is lessthan ten minutes.

4.2.11.3 The Fair Market Spread or Price Adjustment Range for FTSE Russia IOB Index Options andFutures Contracts is defined as 10% deviation outside the relevant Prescribed Spread forDesignated Market Makers as described in Rule 4.1.8.

4.2.11.4 Turquoise will notify the Member or Members involved in the transaction of its decision in thecase of a request relating to a FTSE Russia IOB Index Contract no later than 15 minutesbefore trading starts in the relevant contract on the IOB Trading Day following the day on whichthe transaction in question was effected.

4.2.12 Expiration Settlement Price

4.2.12.1 The Expiration Settlement Price for the FTSE Russia IOB Index is the closing value for theFTSE Russia IOB Index as established during the IOB‟s closing auction for IOB DRs normallyat 3.40 pm London time.

Turquoise shall determine the Expiration Settlement Price of the FTSE Russia IOB Index thatis to be used as the basis for cash settlement on Expiration of the Futures Contracts inquestion. Such determination shall be made no later than 9.00 am London time on the IOBBank Day immediately following the Expiration Date for the Contract in question, and may notbe appealed.

Turquoise shall notify all Members of the determined Expiration Settlement Price in question.

4.2.13 Expiration and Settlement – FTSE Russia IOB Index Futures Contracts

4.2.13.1 A standardised FTSE Russia IOB Index Futures Contract is an agreement to buy or sell thevalue of the Contract Index on the Expiration Date to be settled in accordance with the rulesregarding cash settlement below. The agreed Futures Contract Price, being the amount thebuyer agrees to pay for the Contract Index value, is determined when the Index Futurestransaction is effected at Turquoise.



RULE BOOK

102

4.2.13.2 Daily Cash Settlement of a FTSE Russia IOB Index Futures Contract shall be effected inaccordance with the Daily Cash Settlement procedures set out in Rule 4.2.14 on each IOBBank Day prior to the Expiration Date.

Expiration Settlement of a FTSE Russia IOB Index Futures Contract shall be effected on theExpiration Settlement Day for such Contract in accordance with the procedures specified inRule 4.2.16.

4.2.13.3 All obligations to make cash payments under the procedures governing Daily Cash Settlementor Expiration Settlement of FTSE Russia IOB Index Futures Contracts shall be effected by wayof the PPS arrangements established by the Designated Clearing House for such purposes.Such payments shall be effected in accordance with the instructions issued by the DesignatedClearing House.

4.2.13.4 All payments required to be made under the settlement procedures set out in Rule 4.2.13 toRule 4.2.18 shall be made in accordance with instructions issued by the Designated ClearingHouse. Such payments shall be made in USD. Turquoise will issue Daily Settlement andExpiration Settlement Statements showing the amount due to or payable by the Member andthe time at which such payments are due. In the absence of manifest error, Turquoise'sSettlement Statements shall be final and binding.

4.2.13.5 In the absence of an express statement to the contrary, the procedures set out in Rules 4.2.13

to 4.2.18 apply equally to the settlement of standardised and Non-Standardised FTSE RussiaIOB Index Futures.

4.2.13.6 Where the performance of any cash settlement obligation relating to a standardised FTSERussia IOB Index Futures Contract falls due on the same day as a settlement obligationrelating to a corresponding non standardised Contract such obligations shall be combined soas to produce a single net settlement entitlement for the Member.

4.2.14 Daily Cash Settlement : FTSE Russia IOB Index Futures Contracts

4.2.14.1 FTSE Russia IOB Index Futures Contracts are subject to Daily Cash Settlement. The first suchDaily Cash Settlement shall be due for settlement on the first IOB Bank Day following theRegistration of the Contract. Thereafter, Daily Cash Settlement shall be effected on each IOB

Bank Day until the Expiration Date for the Contract in accordance with the provisions of thisRule.

4.2.14.2 During the term of a FTSE Russia IOB Index Futures Contract, the Daily Settlement Price shallnormally be determined as the price for the FTSE Russia IOB Index Futures Contract at theclose of trading for FTSE Russia IOB Index Contracts on the relevant IOB Trading Day, suchprice being determined by reference to the bid and ask prices for FTSE Russia IOB IndexFutures Contracts at the relevant time. If such bid and ask prices are not available at suchtime, Turquoise may determine the Daily Settlement Price by using another method.

Turquoise shall publish the Daily Settlement Price on each IOB Trading Day.

4.2.14.3 The First Daily Settlement Amount for a FTSE Russia IOB Index Futures Contract shall bedetermined by reference to the difference between the Registered Price for the Contract in

question and the Daily Settlement Price for the Contract on the day on which the Contract isregistered by the Designated Clearing House.

Where the Registered Price for such Contract is higher than the Daily Settlement Price on theday in question, the First Daily Settlement Amount shall be payable to the Seller.

Where the Registered Price for such Contract is lower than the Daily Settlement Price on theday in question, the First Daily Settlement Amount shall be payable to the Buyer.

4.2.14.4 The Daily Settlement Amount for a FTSE Russia IOB Index Futures Contract (other than theFirst Daily Settlement Amount) shall be determined by reference to the difference between theDaily Settlement Price for the FTSE Russia IOB Index Futures Contract on the IOB TradingDay in question and the Daily Settlement Price for the immediately preceding IOB Trading Dayfor such Contract.

4.2.14.5 Where the Daily Settlement Price for a FTSE Russia IOB Index Futures Contract on an IOBTrading Day is higher than, the Daily Settlement Price for the immediately preceding IOB



RULE BOOK

103

Trading Day for such Contract the Daily Settlement Amount for such Settlement shall bepayable to the Buyer.

Where the Daily Settlement Price for a FTSE Russia IOB Index Futures Contract on an IOBTrading Day is lower than the Daily Settlement Price for the immediately preceding IOB TradingDay for such Contract, the Daily Settlement Amount for such Settlement shall be payable to theSeller.

4.2.14.6 Turquoise shall issue Daily Settlement Statements to Members having registered positions inFTSE Russia IOB Index Futures Contracts normally no later than 10:00 pm London time oneach IOB Trading Day. The Daily Settlement Statement shall show the Daily SettlementAmount for such settlement which is payable in US Dollars.

The Daily Settlement Amount shall be payable on the first IOB Bank Day following the IOBTrading Day in question in accordance with the instructions of the Designated Clearing House.

4.2.15 Closing Transactions: FTSE Russia IOB Index Futures Contracts

4.2.15.1 Where bought and sold positions in FTSE Russia IOB Index Futures Contracts are registeredin an Account at the Designated Clearing House, the positions will be closed out in accordancewith the provisions of this Rule 4.2.15.

4.2.15.2 Where both the Opening Transaction and the Closing Transaction are registered on the sameday, cash settlement between the Designated Clearing House and the Member shall beeffected by reference to the difference between the Futures Contract Prices for the twotransactions.

Where the Futures Contract Price for the Contract bought by the Member is higher than theFutures Contract Price for the Member‟s sold Contract, the Closing Settlement Amount shall bepayable by the Member.

Where the Futures Contract Price for the Contract bought by the Member is lower than theFutures Contract Price for the Member‟s sold Contract, the Closing Settlement Amount shall bepayable to the Member.

4.2.15.3 Where the Opening Transaction and the Closing Transaction are registered on different IOBTrading Days, the Closing Settlement between the Designated Clearing House and theMember shall be effected by reference to the difference between the Daily Settlement Price forthe immediately preceding IOB Trading Day and the Futures Contract Price for the ClosingTransaction.

Where the relevant price for the Member‟s bought position is higher than the correspondingprice for the Member‟s sold position, the Closing Settlement Amount shall be payable by theMember.

Where the relevant price for the Member‟s bought position is lower than the correspondingprice for the Member‟s sold position, the Closing Settlement Amount shall be payable to theMember.

4.2.15.4 The Closing Settlement Amount shall be payable to or by the Designated Clearing House on

the first IOB Bank Day following the day on which the Closing Transaction is registered at theDesignated Clearing House.

4.2.16 FTSE Russia IOB Index Futures Contracts: Expiration Settlement

4.2.16.1 FTSE Russia IOB Index Futures Contracts are subject to cash settlement on Expiration inaccordance with the provisions of this Rule.

4.2.16.2 The Expiration Settlement Amount for a FTSE Russia IOB Index Futures Contract shall bedetermined by reference to the difference between the Daily Settlement Price for such Contracton the day before its Expiration Date and the Expiration Settlement Price calculated inaccordance with Rule 4.2.12.

4.2.16.3 The payment of the Expiration Settlement Amount shall be due on the Expiration SettlementDay for the FTSE Russia IOB Index Futures Contract in question.

4.2.16.4 Where the Expiration Settlement Price for a FTSE Russia IOB Index Futures Contract is higherthan the Daily Settlement Price for such Contract on the day before its Expiration Date, theExpiration Settlement Amount shall be payable to the Buyer and by the Seller.



RULE BOOK

104

Where the Expiration Settlement Price for a FTSE Russia IOB Index Futures Contract is lowerthan the Daily Settlement Price for such Contract on the day before its Expiration Date, theExpiration Settlement Amount shall be payable by the Buyer and to the Seller.

The Expiration Settlement Price for the Expiration Date for FTSE Russia IOB Index FuturesContracts shall be calculated by Turquoise in accordance with the principles set out in this

Rule. Turquoise publishes the Expiration Settlement Price for the Expiration Date of the FTSERussia IOB Index that is to be used as the basis for cash settlement of FTSE Russia IOB IndexFutures Contracts which expire on the Expiration Date in question on the IOB Trading Dayimmediately following the Expiration Date. Turquoise shall notify all Members of thedetermined Expiration Settlement Price of the FTSE Russia IOB Index. The publishedExpiration Settlement Price for the Expiration Date is final and binding.

Turquoise may defer its Expiration Settlement procedures for FTSE Russia IOB Index FuturesContracts if abnormal circumstances occur which prevent settlement being effected at thenormal time. Turquoise shall inform Members at the earliest opportunity of any suchoccurrence.

4.2.16.5 The Expiration Settlement Amount shall be payable to or by the Designated Clearing House onthe first IOB Bank Day following the Expiration Date in accordance with the instructions of theDesignated Clearing House.


4.2.17.1 Standardised and Non-Standardised FTSE Russia IOB Index Options are European Style andare accordingly only subject to Exercise on Expiration.

4.2.17.2 FTSE Russia IOB Index Options are also subject to Standard Exercise in accordance with Rule4.2.18. Accordingly, a FTSE Russia IOB Index Option held by a Member, the Exercise ofwhich would result in the Exercise Settlement Amount for such Contract being payable to thatMember will be subject to Standard Exercise provided that such Expiration Settlement Amountis greater than the fees payable by the Member on Exercise of the Contract in question.


4.2.17.4 An Exercise Order relative to a FTSE Russia IOB Index Option which is received by Turquoiseafter 6.00 pm London time or, in the case of an Exercise Order submitted by other means,5.30 pm London time on the Expiration Date for such Contract is void.

4.2.17.5 On receiving a valid Exercise Order, Turquoise shall inform the Member which submitted it thatit has been accepted and shall select at random a correlative FTSE Russia IOB Index Optionsposition to be exercised against. Turquoise shall also inform the Designated Clearing House ofsuch Exercise so that the necessary action may be taken in relation to the RegisteredContracts in question.

4.2.17.6 On Exercise of a FTSE Russia IOB Index Options Contract in accordance with this Rule,

Turquoise shall issue an Exercise Settlement Statement confirming the cash payment whichsuch Member is entitled to receive or is obliged to make as the case may be.

4.2.17.7 On Exercise of a FTSE Russia IOB Index Option, the Exercise Settlement Amount for suchContract shall be payable to the Holder of a Call Option or the Holder of a Put Option and shallbe payable by the Member whose position has been exercised against pursuant to Rule4.2.17.5.

4.2.17.8 The Exercise Settlement Amount shall be determined by multiplying the amount by which theStrike Price for the FTSE Russia IOB Index Option Contract in question exceeds the ExerciseSettlement Price on the Expiration Date for such Contract by the Index Multiplier.

4.2.17.9 The Exercise Settlement Amount for a FTSE Russia IOB Index Option Contract shall be duefor settlement on the first IOB Bank Day following the Contract's Expiration Date.

4.2.18 Options: Standard Exercise

4.2.18.1 FTSE Russia IOB Index Options Contracts will be subject to Standard Exercise in accordancewith the following procedures.



RULE BOOK

105

4.2.18.2 Turquoise effects Standard Exercise of FTSE Russia IOB Index Options Contracts where suchExercise would result in the payment of an Exercise Settlement Amount to the Holder of theOption which is larger than the fees payable by it to Turquoise on such exercise.

4.2.18.3 At about 5.00 pm London time on the Expiration Date for a FTSE Russia IOB Index Option,Turquoise will send to Members holding positions in such Options a list of the relevant Series

expiring that day which will be subject to Standard Exercise in accordance with the aboveprocedures. All Call Options and all Put Options shown on such list will be exercised byTurquoise automatically.

Turquoise shall inform the Designated Clearing House of all positions that will be subject toStandard Exercise so that the Designated Clearing House may take the necessary action inrelation to the Registered Contracts in question.

4.2.18.4 The Exercise Settlement Amount for a FTSE Russia IOB Index Contract which is subject toStandard Exercise in accordance with this Rule shall be determined in the manner provided forin Rule 4.2.17.9.

PART 4.3 DELETED

PART 4.5 DELETED



RULE BOOK

106

PART 4.5 FUTURES AND OPTIONS CONTRACTS BASED ON NORWEGIAN STOCK

4.5.1 Norwegian Stock - Introductory

4.5.1.1 Turquoise provides a combined market in Norwegian Stock Contracts in conjunction with Oslo

Børs. These arrangements are governed by a Co-operation Agreement entered into byTurquoise with Oslo Børs and are designed to ensure that members of each trading venuemay participate equally in the markets of these Contracts. Turquoise has adopted rules whichare consistent with the rules of Oslo Børs governing Norwegian Stock Contracts. Trading in thecombined market in Norwegian Stock Contracts will be conducted on an anonymous basis sothat Members will not be aware of the identity of their trading counterparty or the trading venueof which it is a member. The Designated Clearing House will be responsible for the clearingand settlement of Norwegian Stock Contracts entered into by Members of Turquoise.

4.5.1.2 The Contract Specifications for “Norwegian Stock Contracts” listed by Turquoise and all rulesand procedures relating specifically to the trading, clearing or settlement of such Contracts areset out in this Part 4.5.

4.5.1.3 The rules and procedures set out in this Part 4.5 apply to the following Norwegian StockContracts:

Norwegian Stock FuturesNorwegian Stock Options

and references to Norwegian Stock Contracts in this Part 4.5 shall be construed as referencesto each of the above Contracts unless the context requires to the contrary.

4.5.1.4 The settlement of Norwegian Stock Contracts on exercise or expiration is performed by thedelivery of the Underlying Stock against the payment of the Exercise Settlement Amount in thecase of an Options Contract and the Expiration Settlement Amount in the case of a FuturesContract.

Members should note that Norwegian Stock Futures Contracts are subject to Daily CashSettlement.

4.5.1.5 The Member shall open and maintain a securities account and a related cash account ("theNorwegian Securities Account") at a Norwegian Stock Custodian for purposes of deliverysettlement in accordance with the Regulations of the Designated Clearing House.

Members should ensure that they comply with any instructions given by the DesignatedClearing House and complete any documents specified by the Designated Clearing Houserelating to the settlement of Norwegian Stock Contracts.

The rights and obligations concerning delivery of the Underlying Stock following the expirationof a Futures Contract or the Exercise of an Options Contract under this Part 4.5 shall beperformed by instructions for the transfer of rights to the relevant Underlying Stock by means ofthe VPS's VP system in accordance with instructions issued by Turquoise relative thereto. TheMember shall make arrangements with a nominee holding an account at the VPS to act on itsbehalf in relation to such deliveries where necessary.

4.5.1.6 The application and interpretation of this Part 4.5 shall be subject to Norwegian law.

4.5.1.7 Save where there is an express indication to the contrary, all references to time in this Part 4.5shall be construed as references to Oslo time.


In this Part 4.5 the following terms shall have the meanings ascribed thereto:

"Deliverable Stock" in relation to the settlement of a Norwegian Stock Futures or NorwegianStock Options Contract means the Underlying Stock for the Contract in question;

"Delivery" in relation to the settlement of a Norwegian Stock Futures or Norwegian StockOptions Contract means the process of delivering the Underlying Stock against payment of theSettlement Sum;



RULE BOOK

107

"Delivery Fee" means the fee payable to Turquoise in relation to the delivery of the UnderlyingStock following Expiration of a Norwegian Stock Futures Contract or Exercise of a NorwegianStock Options Contract;

"Exercise Order" means an instruction given by the Holder of an Option to Turquoise pursuantto Rule 4.5.15 requesting the Exercise of the Option in question;

"Exercise Settlement Amount" means the amount payable following Exercise of a NorwegianStock Option by the party entitled to receive delivery of the Underlying Stock under theContract in question;

"Exercise Value" in relation to a Norwegian Stock Option, means the Strike Price for suchContract multiplied by the number of shares of the Underlying Stock represented by suchContract;

"Expiration Date" in relation to a Norwegian Stock Series means the third Thursday of theExpiration Month or, if that day is not a Norwegian Trading Day, the immediately precedingNorwegian Trading Day;

"Expiration Month" in relation to a Norwegian Stock Series means the month designated byTurquoise as the month in which such series will expire;

"Expiration Settlement Amount" means the monetary amount due to or payable by aMember on Expiration of a Norwegian Stock Futures Contract as specified in the ExpirationSettlement Statement;

"Expiration Settlement Day" in relation to a Norwegian Stock Futures Contract, means thefourth Norwegian Bank Day after the Expiration Date for the Contract in question;

"Expiration Year" in relation to a Norwegian Stock Series means the year designated byTurquoise as the year in which such Series shall expire;

"First Listing Day" in relation to a Norwegian Stock Futures Contract or a Norwegian StockOptions Contract, means the day on which such series is first listed by Turquoise;

"Norwegian Bank Day" means a day other than a Saturday or a Sunday or other publicholiday on which banks in Norway are generally open for business;

"Norwegian Stock Contracts" means Futures and Options Contracts listed by Turquoisewhich are based on any of the Underlying Stocks included in the Norwegian Stock List for thetime being, the terms of which are in accordance with the Product Specifications for suchContracts, and "Norwegian Stock Futures" and "Norwegian Stock Option" shall be construedaccordingly;

"Norwegian Stock Custodian" means a bank or other institution which is a member of theVPS and which is used by a Member for delivery or receipt of securities deliverable under theterms of a Registered Contract;

"Norwegian Stock List" means the list published by Turquoise on its web site atwww.tradeturquoise.com as amended from time to time showing the stocks on whichNorwegian Stock Contracts are based and other relevant information concerning such

Contracts;

"Norwegian Stock Market Maker" means a member which has agreed to act as a marketmaker in respect of Norwegian Stock Contracts;

"Norwegian Trading Day" means a day other than a Saturday or Sunday on which Oslo Børsis generally open for trading;

"Premium Settlement Day" in relation to a Norwegian Stock Option, means the firstNorwegian Bank Day following Registration;

“Record Date” means the date established by an issuer of a security by which a shareholdermust officially own shares in order to be entitled to a dividend or other such distribution;

"Registered Price" in relation to a Norwegian Stock Futures Contract means the price at

which the Contract in question is traded;



RULE BOOK

108

“Settlement Delivery Instruction” in relation to Norwegian Stock deliveries means theinstruction given by the Member to fulfil their delivery obligations;

"Settlement Statement" means:

(i) in relation to a Norwegian Stock Futures Contract, the note issued by Turquoiseshowing the rights and obligations of the Counterparties to such Contract with regard

to the delivery of the Underlying Stock and the associated cash payments following itsExpiration; and

(ii) in relation to a Norwegian Stock Options Contract, the note issued by Turquoiseshowing the rights and obligations of the Counterparties to such Contract with regardto the delivery of the Underlying Stock and the associated cash payments following itsExercise;

“Transaction Date for Settlement Delivery instruction” in relation to Norwegian Stockdeliveries is defined as Exercise +1 or Expiration Date +1;

"Underlying Stock" in relation to a Norwegian Stock Futures or Options Contract, means thestock on which such Contract is based;

"VP System" means the system used by the VPS for the transfer of title to Norwegian shares

as amended from time to time;

"VPS" means Verdipapirsentralen, the Norwegian Registry of Securities.


4.5.3.1 Contract Specifications: Standardised Norwegian Stock Futures

Type of Contract Standardised Futures Contracts with Daily Cash Settlement and Delivery of theUnderlying Stock.

Underlying Stock The share listed on Oslo Børs on which the Future is based as shown in Turquoise'sNorwegian Stock List.

Futures Price Price in NOK per Underlying Share.

Deliverable Instruments The relevant Underlying Stock.


For Futures with a Contract Price at or below NOK 9.99: 0.01.For Futures with a Contract Price from NOK 10 to NOK 49.95: 0.05For Futures with a Contract Price from NOK 50 to NOK 149.90: 0.10For Futures with a Contract Price from NOK 150 to NOK 999.75: 0.25For Futures with a Contract Price of NOK 1,000 or above: 0.50

Contract Size One hundred shares of the Underlying Stock. Recalculation of the number of sharesrepresented by a Contract can occur in certain cases in accordance with theRecalculation Rules for Norwegian Stock Contracts set out at Rule 4.5.17.

Lifetime Three, six, nine and twelve months in accordance with Rule 4.5.4.


Listing of New Series Futures Series will be listed for trading by Turquoise in March, June, September andDecember respectively.

Series Designation Each Series shall be designated by a maximum of eleven symbols, where amaximum of five symbols designates the Underlying Stock, one symbol designatesthe Expiration Year and one symbol designates the Expiration Month. The use ofthe symbol X, Y or Z indicates that the Recalculation Rules have been applied to theFutures Contracts in question.

Daily Settlement Norwegian Stock Futures Contracts are subject to Daily Cash Settlement on each

Norwegian Bank Day based upon the Daily Settlement Price of the Contractcalculated on the preceding Norwegian Trading Day in accordance with Rule4.5.12A.



RULE BOOK

109

Expiration Date The third Thursday of the Expiration Month of the Expiration Year, or where suchday is not a Norwegian Trading Day, the immediately preceding Norwegian TradingDay.




The fourth Norwegian Bank Day after the Expiration Date.

Expiration Settlement A Standardised Norwegian Stock Futures Contract is settled by payment of the CashSettlement Amount and delivery of the Underlying Stock at the Fixing Price inaccordance with Rule 4.5.14.

Trading Hours Normally between 9.00 am and 5.20 pm Oslo time.

Contract Adjustment Norwegian Stock Futures Contracts are subject to adjustment in the circumstancesprescribed in Rule 4.5.17.

Fixing Price As determined by Oslo Børs.

Setting-Off of Contracts Setting-Off of Contracts may take place at any time during the lifetime of theContract.

4.5.3.2 Contract Specifications: Standardised Norwegian Stock Options

Type of Contract Standardised Options Contracts with Delivery.

Style of Options American.


Underlying Stock The Underlying Stock listed on Oslo Børs on which the Option is based as shown inTurquoise's Norwegian Stock List.


Minimum Price Movement For Options with a Premium below NOK 0.1: 0.01For Options with a Premium from NOK 0.1 to 3.95: 0.05For Options with a Premium from NOK 4 to 7.90: 0.10For Options with a Premium of NOK 8 or above: 0.25


Premium The amount payable per share expressed in Norwegian Kroner agreed to by theparties as the premium payable for the Contract.

Premium Settlement Day The first Norwegian Bank Day following the trade in question.

Strike Price The Strike Price in NOK per underlying share contained in the Series Designation.Recalculation of the Strike Price may occur in certain cases in accordance with theRecalculation Rules for Norwegian Stock Contracts set out at Rule 4.5.17.


Lifetime Three, six and twelve months in accordance with Rule 4.5.4.


Listing of New Series Options Series will be listed for trading by Turquoise in March, June, September andDecember in accordance with Rule 4.5.4.



RULE BOOK

110

Series Designation Each Series shall be designated by a maximum of eleven symbols, where amaximum of five symbols designates the Underlying Stock, one symbol designatesthe Expiration Year, one symbol designates the Expiration Month and one symboldesignates the Option Type. The Strike Price shall also be designated in the SeriesDesignation. The use of the symbol X, Y or Z indicates that the Recalculation Ruleshave been applied to Contracts in the Stock Series in question.

Expiration Date The third Thursday of the Expiration Month of the Expiration Year, or where suchday is not a Norwegian Trading Day, the preceding Norwegian Trading Day.

Expiration Settlement Day The fourth Norwegian Bank Day after the Expiration Date.

Expiration Month The month indicated in the Series Designation.

Expiration Year The year indicated in the Series Designation.

Exercise A Standardised Norwegian Stock Options Contract may be exercised at any timeduring its Lifetime subject to Turquoise's rules relating thereto and subject to therestrictions specified in Rule 4.5.15

Corporate Actions The holder of a Call Option will only be recorded as a shareholder of an underlyingstock on the given Record Date for a specified corporate action in that underlyingstock if the option is exercised at least two Norwegian Trading Days prior to the ExDay for the underlying stock in question. Turquoise shall not accept anyresponsibility for failure of a Member to exercise an option within the required time.Adjustments made to derivative contracts due to corporate actions will be calculatedin accordance with Addendum to Rule 4.5.17.

Delivery A Standardised Norwegian Stock Options Contract is settled by delivery of theUnderlying Stock in accordance with Rule 4.5.13.

Exercise Settlement Payment of the Premium and of the Exercise Settlement Amount against delivery ofthe Underlying Stock shall occur in accordance with the instructions of theDesignated Clearing House pursuant to Rules 4.5.13 and 4.5.15.

Exercise Settlement Day The fourth Norwegian Trading Day following the day on which the Contract is traded.

Standard Exercise Norwegian Stock Options Contracts shall be subject to Standard Exercise inaccordance with Rule 4.5.16.


Contract Adjustment Norwegian Stock Options Contracts are subject to adjustment in the circumstancesprescribed in Rule 4.5.17

4.5.4 Listing of New Futures and Options Contracts

4.5.4.1 Turquoise will list Norwegian Stock Futures and Options Contracts in conjunction with OsloBørs in accordance with the following procedures. The Norwegian Stocks on which NorwegianStock Contracts are listed for trading at Turquoise are shown at the Norwegian Stock List onthe Turquoise website at www.tradeturquoise.com. The stocks shown in the Norwegian StockList are classified in one of two Groups as shown in the Norwegian Stock List.

4.5.4.2 Turquoise shall normally list Norwegian Stock Futures and Options Contracts three NorwegianTrading Days prior to the Expiration Date in each Expiration month according to the followingtwo Groups:

Contracts in Group 1 (DnB NOR ASA, Norsk Hydro ASA, Orkla ASA, Renewable Energy CorpASA, Statoil ASA, Telenor ASA, Yara International ASA) have a Lifetime of three months andwill be listed in every month and fall due for expiration in January, February, April, May, July,August, October and November. Twelve month contracts are listed in March, June, Septemberand December.

Contracts in Group 2 (Marine Harvest ASA, Norske Skogindustrier ASA, Petroleum Geo-Services ASA, Royal Caribbean Cruises Ltd, Subsea 7 S.A., Gjensidige Forsikring ASA, AkerSolutions ASA, Seadrill Ltd, Statoil Fuel & Retails ASA, Storebrand ASA, Tomra Systems ASA,TGS-Nopec Geophysical Company ASA) have a lifetime of six months and fall due forexpiration in March, June, September and December.







RULE BOOK

111

4.5.4.3 On the First Listing Day for a Norwegian Stock Options Series Turquoise shall list at least fiveSeries for each applicable Options Type.

4.5.4.4 For one Call and one Put Options Series, the Strike Price shall be set at the point inTurquoise's Scale of Strike Prices for the Contract in question which is closest to the lasttransaction price of the Underlying Stock at the close of trading at Oslo Børs on theimmediately preceding Norwegian Trading Day. Where there is no transaction price, the last

bid price shall be used instead. Where neither a last transaction price nor a bid price isrecorded for the immediately preceding Norwegian Trading Day, the latest availabletransaction price from the preceding day shall be used. For other Series, the Strike Pricesshall be set so that they are higher for at least one Call and one Put Options Series and lowerfor at least one Call and one Put Options Series than the first Strike Price.

4.5.4.5 The Strike Price for the second and third Series shall be set at the points in such Scale ofStrike Prices for Stock Contracts immediately above the first Strike Price. The Strike Price forthe other Series shall be set at the points in such scale immediately below the first Strike Price.

4.5.4.6 If during the Lifetime of a Norwegian Stock Options Contract the closing transaction price forthe Underlying Stock on Oslo Børs is above the second highest or below the second lowestStrike Price for Listed Series for such Contracts, at least one new Series for each applicableOptions Type will be listed by Turquoise on the next Norwegian Trading Day.

4.5.4.7 On listing new Series under this Rule, the Strike Prices for the newly listed Series will be set atthe appropriate point or points in Turquoise's Scale of Strike Prices for such Contracts.

4.5.4.8 Turquoise may depart from the procedures set out in this Rule 4.5.4 if it is satisfied that suchaction is justified in the particular circumstances.

4.5.5 Designation of Expiration Month

4.5.5.1 The Expiration Month for a Norwegian Stock Options Contract shall be designated as follows:


January A M

February B N

March C OApril D P

May E Q

June F R

July G S

August H T

September I U

October J V

November K W

December L X

4.5.5.2 The Expiration Month for a Norwegian Stock Futures Contract shall be designated as follows:

January M

February N

March O

April P

May Q

June R

July S

August T

September U



RULE BOOK

112

October V

November W

December X

4.5.5.3 The Expiration Year for Norwegian Stock Futures and Options Contracts shall be designatedby a number appearing before the designation of the Expiration Month for the Contract. The

number shall be the final digit of the year in question.

4.5.6 Payment of Fees and Premium

4.5.6.1 Fees in respect of Norwegian Stock Contracts are payable by Members in the amount and atthe time specified in Appendix A for the Contract in question. Such fees shall be paid to theDesignated Clearing House at the time specified in the relevant Settlement Statement.

4.5.6.2 The penalty fee for failure to perform delivery or settlement obligations in relation to aNorwegian Stock Contract at the prescribed time shall be payable to Turquoise or inaccordance with its instructions on the first Norwegian Bank Day after the date of the notice requiring payment of the said penalty fee issued to the Member by Turquoise.

4.5.7 Market Making Obligations

4.5.7.1 Market Makers who have agreed to act as such in respect of standardised Future and OptionsContracts based on Norwegian Products may elect to act in one of three categories and shallperform the obligations applicable to the market making category in which they have agreed toact set out below.

For the purposes of this Rule, “Norwegian Product” shall mean:

(i) any of the stocks shown in Turquoise‟s Norwegian Stock List for the time being; and

(ii) the OBX Index.

A Market Maker in Norwegian Products may elect to act as either:

(a) a Large Market Maker;

(b) a Small Market Maker; or

(c) a Market Maker in OBX Index Futures.

References in Part 4.3 of these Rules to a Market Maker shall be construed as references toLarge Market Makers, Small Market Makers and Market Makers in OBX Index Futurescollectively unless the context requires to the contrary.

The obligations of Large and Small Market Makers are set out in Rule 4.3.7.3 below.

The obligations of a Market Maker in OBX Index Futures are set out in Rule 4.3.7.3A below.

A Market Maker who has elected to be a Small Market Maker may also enter into anagreement to be a Market Maker in OBX Index Futures, and a Market Maker who has elected

to be a Market Maker in OBX Index Futures may also enter into an agreement to be a SmallMarket Maker.

4.5.7.2 Where a Market Maker operates more than one Market Maker Account in accordance with anarrangement made by it with Turquoise under Rule 2.5.6, the Market Maker shall make aseparate election for each such Account regarding the capacity in which it intends to act andthe Norwegian Products in which the applicable market making obligations are to beperformed. In such circumstances, the performance of the applicable market makingobligations shall similarly be assessed by reference to the Market Making Account in question.

4.5.7.3 A Large Market Maker shall provide quotes in five or more Norwegian Products. The specificproducts in which a Market Maker will be obliged to provide quotes shall be determined by theMarket Maker and Turquoise in accordance with the procedures published by Turquoise forsuch purposes by Turquoise and shall be confirmed in writing by Turquoise. Sucharrangements may only be varied with the prior consent in writing of Turquoise.

A Small Market Maker may, subject to the agreement of Turquoise, elect to act as a marketmaker in one or more Norwegian Products. Turquoise shall inform the Small Market Maker in



RULE BOOK

113

writing of the Norwegian Product(s) in which it has agreed to provide quotes. Sucharrangements may only be changed with the prior consent in writing of Turquoise.

A Market Maker acting as such in standardised Norwegian Products shall quote two way priceswithin the Prescribed Spread continuously in a minimum amount of twenty Contracts in each ofthe nearest two Expiration Months in the Norwegian Products for which it has agreed to act asa Norwegian Market Maker. In the absence of specific agreement to the contrary, such quotes

shall be provided in respect of:

(i) Options expiring in the next Expiration Month in a minimum of three Call and three PutOptions Series, such quotes to be provided for Call and Put Options in the Series that isat the money, in the first Series that is out of the money and in the first Series that is inthe money;

(ii) Options expiring in the second Expiration Month in a minimum of three Call and threePut Options Series, such quotes to be provided for Call and Put Options in each Seriesthat is at the money and in the first two out of the money Series; and

(iii) Futures expiring in the nearest two Expiration Months.

4.5.7.3A A Market Maker in OBX Index Futures shall provide continuous quotes in all listed OBX IndexFutures series. Any arrangements may only be varied with the prior consent in writing of

Turquoise.

4.5.7.4 A Market Maker shall provide quotes in respect of the Norwegian Products in which it acts assuch for a minimum period equivalent to 75% of Turquoise ‟s ordinary Trading Hours for suchproducts in each calendar month.

A Market Maker shall not be required to provide quotes in relation to any Series on a day whichis the Expiration Date for such Series. On any such Expiration Date, the Market Maker shall berequired to provide quotes in each of the next two Expiration Months after the month in whichsuch Expiration Date falls.

4.5.7.5 A Small Market Maker which performs its obligations to the satisfaction of Turquoise shall payfees in respect of the Norwegian Product(s) in which it acts as a market maker on the basisspecified in Rule 4.5.7A. The Small Market Maker will pay proprietary fees on all otherNorwegian Products.

A Large Market Maker which performs its obligations to the satisfaction of Turquoise shall payfees in respect of all Norwegian Product(s) on the basis specified in Rule 4.5.7A.

A Market Maker in OBX Index Futures which performs its obligations to the satisfaction ofTurquoise shall pay fees in respect of OBX Index Futures in which it acts as a market maker onthe basis specified in Rule 4.5.7A. A Market Maker in OBX Index Futures will pay proprietaryfees on all other Norwegian Products.

The performance by the Market Maker of its obligation to provide quotes in the NorwegianProducts in which it agrees with Turquoise to act as a Market Maker will determine theentitlement of the Market Maker to the benefits specified in Rule 4.1.11.

4.5.7.6 The Market Maker is obliged to start quoting within 15 minutes of the opening of the market, or

in the case of a suspension of trading, within 15 minutes of the re-opening of the market.Where the Market Maker‟s quote is matched in the Orderbook, the Market Maker must requotewithin three minutes of the trade.

4.5.7.7 A Norwegian Market Maker shall additionally be required to quote two way prices within thePrescribed Spread in Options and Futures Series for which they are not required to quotecontinuously as soon as possible following Turquoise requesting a quote.

For the purposes of this Rule 4.5.7.7, Norwegian Market Makers shall be required to providequotes upon request only in those instruments for which they are required to quotecontinuously.

All quotes provided by a Norwegian Market Maker in response to a request issued under thisRule 4.5.7.2 shall be in a minimum amount of twenty Contracts.



RULE BOOK

114

4.5.7.8 The Prescribed Spread for a quote for a standardised Norwegian Stock Future is as follows:

Bid PriceSpread (NOK)

Normal Market Fast Market

0 – 50 1 2

50.25 – 150 1.5 3

150.25 – 300 2 4

300.25 – 600 2.5 5

600.25 – 1000 3 6

More than 1000 3.5 7

4.5.7.9 The Prescribed Spread for a quote for a standardised Norwegian Option is as follows:

Bid PremiumSpread (NOK)


0 – 2 0.75 1.5

2.05 – 10 1.5 3

10.25 – 20 2.25 4.5

20.25 – 30 3 6

More than 30 3.75 7.5

4.5.7.10 Turquoise may vary the Prescribed Spread for quotes in a fast market if it considers that suchaction is justified in the circumstances. If it takes such action it will inform Norwegian MarketMakers promptly of the spread to be applied.

4.5.7.11 The quotes provided by the Market Maker are valid for that business day only.

4.5.7.12 Each Market Maker will be granted a total of twenty-five days per calendar year in relation toeach Norwegian Product in which it acts as a Market Maker on which it is not required to fulfilits obligations as a Market Maker in relation to the Norwegian Product in question as set out inthis Rule 4.3.7.3. Any such day is referred to in this Rule as an “Exempt Day”.

A Market Maker which wishes to nominate a trading day as an Exempt Day shall informTurquoise‟s Surveillance Department in writing three days in advance of the day in question.Turquoise shall confirm by notice in writing to the Market Maker that it will be exempt from theobligation to provide quotes in the Norwegian Product or Products in question on such day(s).In special circumstances, and at its discretion, Turquoise will grant an Exempt Day at shortnotice.

4.5.7.13 Where a Market Maker operates more than one Market Maker Account in accordance with anarrangement made by it with Turquoise under Rule 2.5.6, the Market Maker shall make aseparate election regarding such Exempt Days for each Market Maker Account that is used forthe registration of transactions in Norwegian Products.

4.5.7A Market Making Fees

4.5.7A.1 A Market Maker in Norwegian Products which performs its obligations as such to thesatisfaction of Turquoise shall pay fees in respect of transactions it effects in standardisedNorwegian Products on the basis set out at Appendix A. Such fees are referred to in this Part4.3 as “Market Maker Fees”.

The fees payable in respect of Norwegian Products by a Market Maker which performs itsquoting obligation under Rules 4.5.7.3, 4.5.7.3A and 4.5.7.4 to the satisfaction of Turquoiseshall be determined in accordance with Part 2 of Appendix A to these Rules.

4.5.7A.2 A Market Maker which performs its obligations to the satisfaction of Turquoise may qualify for adiscount on the standard rates of fees payable by Market Makers for the contracts in questionspecified in Appendix A.

4.5.7A.3 A Market Maker in Norwegian Products which has traded in excess of 450,000 contracts in a

calendar year shall be entitled to pay fees in respect of all further Norwegian Products that aretraded by it in the calendar year in question at the discounted rates specified in paragraph 2.3of Appendix A that is applicable to the Market Maker, having regard to the number of contractstraded by it in the calendar year in question and its quoting performance over such period.



RULE BOOK

115

4.5.7A.4 Where a Market Maker operates more than one Market Maker Account for the execution oftransactions in Norwegian Products in accordance with an arrangement made by it withTurquoise under Rule 2.5.6, the fees payable by the Market Maker in relation to suchtransactions in Norwegian Products shall be determined for each such Account by reference tothe number of transactions registered in the Account in question and the performance of theobligations of the Market Maker in relation to such Account.

4.5.8 Market Making: Sanctions

4.5.8.1 In this Rule 4.5.8, references to “Quoting Obligations” shall be construed as references tothe obligations to provide quotes in relation to Norwegian Products applicable to MarketMakers set out in Rule 4.5.7.

If a Large Market Maker, a Small Market Maker or A Market Maker in OBX Index FutureContracts fails properly to perform its obligations as such in relation to standardised NorwegianProducts, Turquoise shall have the right:

(i) to exclude the Market Maker temporarily from acting in such capacity in relation tosuch Contracts;

(ii) to terminate the Market Maker Agreement with immediate effect;

(iii) to require the Market Maker to pay fees in the manner prescribed in Rule 4.5.8.2below.

4.5.8.2 Turquoise shall maintain a record of the manner in which each Market Maker performs itsobligations as such in each calendar month.

A Market Maker which fails to perform its quoting obligations under Rules 4.5.7.3 and 4.5.7.4 tothe satisfaction of Turquoise shall be liable to pay fees in respect of the Norwegian Products inrespect of which it is eligible to pay Market Maker Fees at the higher rate applicable havingregard to the level of performance of such party in the monthly period in question as shown inparagraph 2.3 of Appendix A to these Rules.

Where a Market Maker fails to perform its obligations under Rules 4.3.7.3 and 4.5.7.4 in any

three months in a calendar year, Turquoise may suspend such party from acting as a MarketMaker for such period as it considers appropriate in the circumstances.

Where in any monthly period, a Market Maker provides quotes in the Norwegian Products inwhich it acts as a market maker for less than 25% of the normal Trading Hours of Turquoise forsuch Products in the period in question, Turquoise may suspend such party from acting as aMarket Maker in Norwegian Products for such period as it considers appropriate in thecircumstances.

Without prejudice to its general power to suspend the Market Maker Agreement under Rule4.5.8.1(ii) above, where a Market Maker fails to fulfil its obligations in any three months in acalendar year, the Member‟s right to act as a Market Maker shall be suspended for such periodas Turquoise considers appropriate in the circumstances.

Turquoise may also suspend a Market Maker from acting in such capacity at any time if it

considers that the Market Maker has abused its position as a Market Maker.

4.5.8.3 In determining whether a Market Maker has performed its obligations as such in relation tostandardised Norwegian Products on any day, Turquoise will have regard to its overallactivities as a Market Maker in such Contracts on the day in question.

Turquoise maintains an electronic record of the aggregate time on a Norwegian Bank Dayduring which a Market Maker provides quotes to satisfy its quoting obligations in respect ofeach series in which quotes are required. This record will be used to determine whether theMarket Maker in question has provided quotes for the minimum period specified in Rule4.5.7.4.

4.5.8.4 Where a Market Maker operates more than one Market Maker Account for the execution oftransactions in Norwegian Products in accordance with an arrangement made by it withTurquoise under Rule 2.5.6, Turquoise shall assess the performance of the applicable

obligations relating to market making in Norwegian Products separately for each such MarketMaker Account.



RULE BOOK

116

4.5.8.5 When extreme market conditions arise, Turquoise will issue a general notice to the marketdeclaring that there is a "fast market". In such cases the obligations of Market Makers will bemodified in accordance with Rule 4.5.7 or, in extreme circumstances, suspended asappropriate.

4.5.9 Orders

4.5.9.1 Orders relating to Norwegian Stock Futures and Options Contracts may be placed in the SingleOrder Market.

4.5.9.2 A Single Order consists of an offer to buy or sell the number of Norwegian Stock Contractsspecified in the Order. This number may be any whole number in excess of one. A Memberplacing a Single Order may stipulate that the Order may only be executed in its entirety. In theabsence of such stipulation, the offer may be accepted in any amount up to the specifiednumber. Where an Order is executed partially, the unfilled portion of the Order will remain inthe Orderbook.

4.5.9.3 Orderbook Orders, Market Orders and Non-standardised Combination Orders relating toNorwegian Stock Contracts may be placed as Single Orders and the Order must be executedin its entirety.


4.5.10.1 Where a Member enters into an off-exchange transaction in a standardised Norwegian StockContract with another Member or with a member of Oslo Børs, the Member shall submit aRequest for Registration relating to such transaction to Turquoise at the earliest opportunity if itwishes the transaction to be registered. Such Request for Registration shall:



4.5.10.2 A Request for Registration will only be considered for acceptance by Turquoise and theDesignated Clearing House if the counterparties to the off-exchange transaction submitidentical requests specifying the Contracts to be registered, the Accounts in which the Contract

is to be registered and the terms of the transaction in question to Turquoise and to Oslo Børsas appropriate; and

Such requests shall be submitted by telephone and confirmed by telefax or other means to theMarket Operations Department at Turquoise.


A Request for Registration of a Norwegian Stock Contract shall be considered for acceptanceby Turquoise and the Designated Clearing House in accordance with Rule 3.2 and thefollowing provisions of this Rule.

4.5.10.4 A Request for Registration of a Norwegian Stock Contract in respect of an off-exchange

transaction which has been concluded at a time when Turquoise is not open for trading suchContracts, will not be accepted by Turquoise and the Designated Clearing House unless theagreed price does not deviate from the average of the median of the bid and ask quotes for theSeries in question during the period of thirty minutes prior to the close of trading on the day inquestion or, in the case of a request submitted before the start of trading on any NorwegianTrading Day, the close of trading on the immediately preceding Norwegian Trading Day bymore than whichever is the greater of thirty per cent or NOK 2.

Where a Request for Registration of a Norwegian Stock Contract in respect of a Series forwhich bid and ask prices are not quoted at the time at which the Request is submitted,Turquoise shall obtain bid ask quotes for such Series in conjunction with Oslo Børs. Where inthe opinion of Turquoise and the Designated Clearing House acceptable quote is obtained, theRequest for Registration shall be accepted if it is within the spread of the quoted prices. IfTurquoise considers that an acceptable price has not been provided for such purposes theacceptance of the Request for Registration shall be determined at their discretion.

4.5.10.5 The acceptance of a Request for Registration submitted under this Rule is at the discretion ofTurquoise and the Designated Clearing House. Without limiting the generality of the foregoing,a Request for Registration shall not be accepted if such acceptance would not be conducive to



RULE BOOK

117

the maintenance of a proper market in the Product in question would not be consistent with theDesignated Clearing House‟s obligation to maintain a sound basis to its clearing services.

4.5.10.6 Where a Request for Registration of a Norwegian Stock Contract which is submitted by aMember during trading hours for such Contracts is accepted by Turquoise and the DesignatedClearing House, Turquoise shall arrange with the Designated Clearing House for the resultingRegistered Contract to be registered by the Designated Clearing House forthwith.

Where a Request for Registration is received and accepted by Turquoise and the DesignatedClearing House before 6.30 pm Oslo time on a Norwegian Trading Day, the Contract inquestion shall be registered by the Designated Clearing House on that day. Where a Requestfor Registration is received by Turquoise after such time, it shall, if accepted, be registered bythe Designated Clearing House on the next Norwegian Trading Day.



4.5.11.1 A Request for Re-Registration of a Norwegian Stock Contract made pursuant to Rule 3.4.2(vi)will not be considered by Turquoise and the Designated Clearing House unless it is receivedby electronic connection or other means no later than 30 minutes prior to the close of tradingfor Norwegian Stock Contracts on the Norwegian Trading Day following the day on which theContract in question is registered by the Designated Clearing House.

4.5.11.2 A Request for Re-Registration of a Norwegian Stock Contract made pursuant to Rule 3.4.2(i) to(v) inclusive will not be considered by Turquoise and the Designated Clearing House unless itis received by electronic connection or other means no later than 6.30 pm Oslo time on the lastNorwegian Trading Day prior to the Expiration Date for the Contract in question.

4.5.11.3 A Request for Re-Registration of a Norwegian Stock Contract shall specify the followingdetails:

(i) the Contracts to be re-registered;(ii) the Account of the transferor; and(iii) the Account of the transferee.

4.5.11.4 The acceptance of a Request for Re-Registration submitted under this Rule4.5.11 is at thediscretion of Turquoise and the Designated Clearing House.

4.5.11.5 Where a Request for Re-Registration is received and accepted by Turquoise and theDesignated Clearing House before 7.20 pm Oslo time on a Norwegian Trading Day, theContract in question shall be registered by the Designated Clearing House on that day. Wherea Request for Re-Registration is received by Turquoise after such time, it shall, if accepted, beregistered by the Designated Clearing House on the next Norwegian Trading Day.

4.5.11.6 Turquoise shall inform the Member or Members in question as soon as possible if a Requestfor Re-Registration submitted under this Rule is not accepted.


4.5.12.1 The provisions of Rule 2.16 concerning the cancellation of incorrect transactions shall beapplied in relation to Norwegian Stock Contracts in accordance with the following provisions ofthis Rule.

4.5.12.2 Turquoise will not direct that a Norwegian Stock transaction shall be cancelled in the absenceof the agreement of the Counterparty to the transaction unless the period between the time atwhich the transaction is effected and the time at which the request is submitted is less than tenminutes and unless the loss suffered by the member, as a consequence of the error in theexecution of the transaction, is NOK 1000 or more.

4.5.12.3 Turquoise will notify the Member or Members involved in the transaction of its decision in thecase of a request relating to Norwegian Stock transaction no later than 15 minutes beforetrading starts on the relevant Trading Day following the day on which the transaction inquestion was effected.

4.5.12A Norwegian Stock Contracts: Daily Cash Settlement



RULE BOOK

118

4.5.12A.1 Norwegian Stock Futures Contracts are subject to Daily Cash Settlement. The first such DailyCash Settlement shall be due for settlement on the first Norwegian Bank Day following theRegistration of the Contract. Thereafter, Daily Cash Settlement shall be effected on eachNorwegian Bank Day until the Expiration Date for the Contract in accordance with theprovisions of this Rule.

4.5.12A.2 On the transaction day, settlement shall take place in an amount corresponding to the

difference between the Daily Settlement Price on the transaction day and the futures price.After that settlement takes place in an amount corresponding to the difference between theDaily Settlement Price on the Mark-to-Market day and the Daily Settlement Price from theimmediately preceding Norwegian Bank Day. On the Expiration Date settlement shall takeplace in an amount corresponding to the difference between the average price for theUnderlying Stock and the Daily Settlement Price from the immediately preceding NorwegianBank Day. Delivery shall occur at the last paid price for the Underlying Stock.

4.5.12A.3 Daily Settlement Price: During the term of a Futures Contract, the Daily Settlement Price isnormally determined as the price for the Norwegian Futures Contract at 17.20 Oslo time on therelevant Norwegian Bank Day. Turquoise in conjunction with Oslo Børs will determine the pricefor the Futures Contract with reference to the bid and ask prices for the Future. In the eventthat bid and ask prices are unavailable, the average of the bid and offer prices for thecorresponding Norwegian stock forward will be used instead. In case none of these prices areavailable, Turquoise in conjunction with Oslo Børs may calculate the Daily Settlement Price by

using another method Daily Settlement Price for the Expiration Date is the volume weightedaverage price for the Underlying Stock calculated on the Expiration Date.

4.5.12A.4 In calculating the volume weighted average price on the Expiration Date for the UnderlyingStock, usually only transactions executed in the electronic trading system during normalTrading Hours on the Expiration Date shall be included. If no such transaction in a givenUnderlying Stock has been executed in the system that day, the latest paid price from theimmediately preceding Bank Day is used instead as the volume weighted average price.

4.5.12A.5 Turquoise shall issue Daily Settlement Statements to Members having registered positions inStock Futures Contracts no later than 8.00am on the following Norwegian Trading Day inrelation to each Norwegian Trading Day for the Norwegian Stock Futures Contract. The DailySettlement Statement shall show the Daily Settlement Sum for such settlement and payable inNorwegian Kroner

The Daily Settlement Sum shall be payable no later than 9.00 am time London time on the firstNorwegian Bank Day following the Norwegian Trading Day in question.

4.5.13 Settlement and Delivery of Norwegian Stock Contracts

4.5.13.1 The rights and obligations of a Member and Turquoise regarding the settlement of RegisteredContracts relating to Norwegian Stock Options and Stock Futures Contracts are set out in thefollowing provisions of this Rule 4.5.13.

4.5.13.2 If the Member holds a net sold position in a Norwegian Futures and Options Series, Turquoiseshall send to it a Delivery Instruction Note by means of the electronic connection with theMember normally prior to 22:00 London Time on the Expiration Date which shall specify theNorwegian Stocks to be delivered by the Member in settlement of its obligations in respect ofown account transactions and of transactions executed on behalf of a Client or customer

together with the settlement amount payable to the Member in respect thereof.

4.5.13.3 If the Member holds a net bought position in Norwegian Stock Futures and Options Series,Turquoise shall send to it a Delivery Instruction Note by means of the electronic connectionwith the Member normally prior to 22:00 London time on the Expiration Date which shallspecify the Norwegian Stocks to be delivered to the Member in settlement of its rights, togetherwith the related settlement amount.

4.5.13.4 Where a Member exercises a Norwegian Stock Option or where such Option is exercisedagainst the Member, Turquoise shall issue a Delivery Instruction Note normally prior to 22:00London time on the day on which the Exercise Order is accepted by Turquoise which shallspecify the Norwegian Stocks to be delivered by or to the Member in settlement of itsobligations in respect of own account transactions and of transactions executed on behalf of aClient or customer together with the settlement amount payable to or by the Member in respectthereof.

The Delivery Instruction Note issued by Turquoise to a Member which is required to deliverNorwegian Stock following the Exercise or Expiration of Norwegian Stock Options or FuturesContracts respectively shall specify the VPS Account to which the Member is required to



RULE BOOK

119

transfer the specified Norwegian stock. The Member shall ensure that the Norwegian Stock inquestion is credited to the specified VPS Account no later than the time specified in theDelivery Instruction Note.

All Settlement Delivery instructions by the Member to Turquoise‟s Designated Clearing Housein relation to Norwegian Stock delivery must have a specified Transaction Date of Exercise+1or Expiration Date+1 in order for the delivery to be made on the intended Settlement Date

unless otherwise notified by Turquoise‟s Designated Clearing House.

Where delivery of Norwegian Stock is to be made to a Member, the Member shall ensure thatthe correlative settlement amount is paid to the Designated Clearing House no later than theday specified in the Delivery Instruction Note. On performance of such obligations, theDesignated Clearing House shall arrange for the transfer of the relevant Norwegian Stock tothe VPS Account specified by the Member for such purposes.

Where a Member fails to deliver Norwegian Stock in accordance with the instructions ofTurquoise up to a period of five applicable Bank Days following the intended Settlement Day,the Designated Clearing House may at its sole discretion purchase or borrow the relevantNorwegian Stock to enable it to perform its obligations to the party entitled to receive suchStock. Where the Designated Clearing House takes such action, the Member which failed todeliver the Norwegian Stock at the required time shall be liable to the Designated ClearingHouse in respect of the costs incurred in borrowing or purchasing the Stock in question.

Where the Designated Clearing House has been obliged to borrow or purchase NorwegianStock in such circumstances, it may give notice to the party entitled to receive delivery of theStock that delivery may be delayed for a period not exceeding five Norwegian Trading Days.

4.5.13.5 The Member shall ensure that the information specified in the Delivery Instruction Note isaccurate in all respects and notify Turquoise of any discrepancy no later than 6.30 pm Oslotime on the Norwegian Trading Day after the date of the Delivery Instruction Note.

4.5.13.6 Where the Member is to deliver Norwegian Stock to the Designated Clearing House it shallensure that the said stock is deposited in the Member's Norwegian Securities Account no laterthan 10.00 am Oslo time two Norwegian Trading Days prior to the Expiration Settlement Dayfor the Contract in question.

4.5.13.7 The Member which is to receive Norwegian Stock as stated in the Delivery Instruction Notesent to the Member shall ensure that the settlement amount stated therein is deposited in theNorwegian Securities Account no later than 10.00 am Oslo time on the Expiration SettlementDay for the Contract in question.

4.5.13.8 A confirmation of the satisfactory completion of the transaction shall be given by the Custodianinvolved in the settlement procedures to Turquoise and the Designated Clearing House onlyand not to the Member.

4.5.13.9 If a Member alleges that delivery or settlement regarding Norwegian Stock Futures or Optionsis calculated or carried out in a defective manner, the Member must submit a claim in respectthereof to Turquoise no later than the fifth Norwegian Trading Day following the relevantsettlement day.

Protests concerning delivery or settlement made after such time will not be considered by

Turquoise. Turquoise shall calculate corrected delivery or settlement and shall notify theMember in question of the revised obligations where it considers that such action is required inrelation to a valid protest. The settlement day for corrected delivery or settlement is the thirdNorwegian Trading Day following the issue of such notice.

4.5.13.10 The time at which delivery of an Underlying Stock is to be effected following the Exercise orExpiration of a Norwegian Stock Contract may be modified where trading in such stock on theOslo Børs is suspended at the relevant time or Oslo Børs decides that such action is requiredin line with the principles set out in the Addendum to Rule 4.5.17. Turquoise shall informMembers if any such action is applied to a Norwegian Stock Contract.

4.5.14 Norwegian Stock Futures: Settlement Procedures

4.5.14.1 The rights and obligations of the Buyer and the Seller in respect of the settlement of aNorwegian Stock Futures Contract shall be performed in accordance with this Rule 4.5.14.

4.5.14.2 Norwegian Stock Futures Contracts are subject to Daily Cash settlement and settlement atExpiration.



RULE BOOK

120

4.5.14.3 Expiration Settlement of a Norwegian Stock Futures Contract comprises two elements:

(i) the delivery of the quantity of the Underlying Stock represented by the Contract inquestion by the Seller to the Buyer through the Norwegian Securities Registry againstpayment of the Fixing Price for such stock in accordance with Rule 4.5.14.5; and

(ii) the payment of the Expiration Settlement Amount by the Buyer or the Seller as the

case may be in accordance with Rule 4.5.14.6.

4.5.14.4 On the Expiration Date for a Norwegian Stock Futures Contract, Turquoise shall issue aDelivery Instruction Note to each Member holding one or more positions in an expiring FuturesSeries based on a Norwegian Stock showing the quantity of the Underlying Stock in question tobe delivered to or by the Member together with the correlative payment obligation in respect ofsuch settlement.

4.5.14.5 The Seller of a Norwegian Stock Futures Contract shall deliver the Underlying Stock in thespecified amount against payment in accordance with Turquoise‟s instructions no later than4.00pm on the fourth Norwegian Bank Day following the Contract‟s Expiration Date.

The Buyer of a Norwegian Stock Futures Contract shall pay the Stock Delivery SettlementAmount to the Seller against the delivery of the underlying stock on the fourth Norwegian BankDay following the Contract‟s Expiration Date. The Stock Delivery Settlement Amount is

determined by reference to the Fixing Price for the Underlying Stock for the Futures Contracton its Expiration Date.

4.5.14.6 The Expiration Settlement Amount for a Norwegian Stock Futures Contract is determined byreference to the difference between the Futures Contract Price agreed upon by thecounterparties to the Contract and the Fixing Price for its Underlying Stock on the ExpirationDate for the Contract.

If the Fixing Price is lower than the Futures Contract Price, the Expiration Settlement Amountshall be payable to the Seller. If the Fixing Price is higher than the Futures Contract Price, theExpiration Settlement Amount shall be payable to the Buyer.

The Expiration Settlement Amount is due and payable no later than 4.00pm on the fourthNorwegian Bank Day following the Expiration Date for the Contract in question.

4.5.15 Exercise of Norwegian Stock Options

4.5.15.1 Norwegian Stock Options are American Style and may accordingly be exercised by the Holderat any time during the Lifetime of the Option. The right to exercise a Norwegian Stock Optionmay be suspended by Turquoise in the circumstances where Oslo Børs takes correspondingaction in line with the principles described in the Addendum to Rule 4.5.17. Turquoise shallinform Members if any such restrictions are applied in relation to a Norwegian Stock Contract.Norwegian Stock Options are also subject to Standard Exercise in accordance with Rule4.5.16.

4.5.15.4 Where the Holder of a Norwegian Stock Option wishes to exercise it, it shall submit anExercise Order to Turquoise providing full details of the Option in question.

4.5.15.5 Turquoise will accept Exercise Orders relating to Norwegian Stock Options Contracts between

the hours of 9.30 am and 6.30 pm Oslo time on each Norwegian Trading Day. If an ExerciseOrder is received by Turquoise after 6.30 pm Oslo time on a Norwegian Trading Day, suchOrder shall take effect on the next Norwegian Trading Day.

4.5.15.6 An Exercise Order relative to a Norwegian Stock Option which is received by Turquoise after6.30 pm Oslo time on the Expiration Date for such Contract is void.

4.5.15.7 On receiving a valid Exercise Order, Turquoise shall inform the Member which submitted it thatit has been accepted and shall select at random a correlative Norwegian Stock Option positionto be exercised against. Turquoise shall also inform the Designated Clearing House of suchExercise so that the necessary action may be taken in relation to the Registered Contracts inquestion.

4.5.15.8 On Exercise of a Norwegian Stock Option in accordance with this Rule, Turquoise shall issuean Exercise Settlement Statement confirming the amount of shares to be delivered to the

Member specified in such note against payment by it of the Exercise Settlement Amountspecified therein.



RULE BOOK

121

4.5.15.9 On Exercise of a Norwegian Stock Option, the Holder of a Call Option or the Writer of a PutOption shall be entitled to receive delivery of the Underlying Stock in the quantity representedby the exercised Option against payment of the Exercise Settlement Amount for such Contract.

4.5.15.10 The Exercise Settlement Amount shall be determined by multiplying the Strike Price for theStock Options Contract on the day on which the Exercise Order is registered by the quantity ofthe Stock represented by the exercised Option.

4.5.15.11 The Exercise Settlement Amount for a Norwegian Stock Options Contract shall be payable inNorwegian Kroner.

4.5.15.12 The Exercise Settlement Amount for a Norwegian Stock Options Contract shall be due forsettlement and the correlative obligation to deliver the Underlying Stock shall be due forperformance on the fourth Norwegian Bank Day following the day on which the Exercise Orderin question has been registered by Turquoise or, in the case of an Options Contract which isexercised pursuant to the Standard Exercise procedures, on the fourth Norwegian Bank Dayfollowing the Contract's Expiration Date.

4.5.16 Standard Exercise of Norwegian Stock Options

4.5.16.1 Norwegian Stock Options Contracts will be subject to Standard Exercise in accordance withthe following procedures.

4.5.16.2 On the Expiration Date for a Norwegian Stock Option the base price for the Underlying Stock inquestion will be determined by Oslo Børs. This base price shall be calculated by dividing theturnover in Norwegian Kroner for qualifying transactions in such stock by the number of sharesof that type traded in such transactions on Oslo Børs on such Expiration Date. For thesepurposes, however, a transaction at a price which is outside the spread for such stock at thetime the transaction is effected shall not be regarded as a qualifying transaction and will not betaken into account.

4.5.16.3 If Oslo Børs considers that the official turnover in an Underlying Stock is insufficient or thatother factors render the procedures for determining the Stock‟s base price set out inRule4.5.16.2 inappropriate, the base price shall be determined by Oslo Børs by such othermethod as it considers appropriate.

4.5.16.4 Turquoise will use the base price determined by Oslo Børs for each Underlying Stock toidentify the Norwegian Stock Options registered in Members‟ Accounts which will be subject toStandard Exercise.

A Call Option Series which has an Exercise Price more than 1 per cent below the base pricefor the Underlying Stock on the, calculated in the manner described above, will be subject toStandard Exercise.

A Put Option Series which has an Exercise Price more than 1 per cent above the base price forthe Underlying Stock on the, calculated in the manner described above, will be subject toStandard Exercise.

4.5.16.5 In calculating the base price of an Underlying Stock for the purposes of this Rule, Turquoisewill normally use official trade information published by Oslo Børs on its information system,MAINS. In the event that the required information is not published by Oslo Børs on the

Expiration Date for a Norwegian Stock Option Series, however, alternative trade informationwill be used. The method of determining the base price of the relevant Underlying Stock maybe varied in such cases. In such circumstances, Turquoise will inform Members of thealternative information or mode of calculation used.

4.5.16.6 At about 5.30 pm Oslo time on the Expiration Date for a Norwegian Stock Option, Turquoisewill send to Members holding positions in such Options a list of the relevant Series expiring thatday which will be subject to Standard Exercise in accordance with the above procedures. AllCall Options and all Put Options shown on such list will be exercised by Turquoise unless awritten objection from the Holder of any such Option is received by Turquoise within ninetyminutes of the close of trading in Norwegian Stock Contracts at Turquoise on such day.

4.5.17 Recalculation of Norwegian Stock Contracts

4.5.17.1 The terms of Norwegian Stock Futures and Options Contracts are subject to adjustment in

accordance with the following provisions of this Rule 4.5.17.

If the share capital of a company on which a Norwegian Stock Contract is based is amended ina material way which affects the underlying economic value of Futures and options contracts



RULE BOOK

122

based on such stock, Oslo Børs will effect a recalculation of the Futures and options contractsbased on such Underlying Stock in accordance with its rules governing such matters. In suchcircumstances Turquoise will effect a recalculation of its Norwegian Stock Contracts in thesame manner and at the same time as Oslo Børs adjusts its corresponding contracts.

4.5.17.2 The circumstances in which Oslo Børs effects a recalculation of its Norwegian Stock Contractsare shown in the translation of the relevant rule of Oslo Børs which forms the Addendum to this

Rule 4.5.17.

Addendum to Rule 4.5.17

A.2.2.1 Introductory provisions regarding contract adjustment.

(1) Oslo Børs shall determine which adjustment alternative shall be employed in the event the rules allow forseveral adjustment alternatives. Where special cause so requires, Oslo Børs may also expand or modify thecalculation periods and time of entry into force of an adjustment pursuant to the rules set forth below.

(2) Where Oslo Børs determines that an adjustment of Norwegian derivative contracts pursuant to the rules setforth below would result in an unreasonable result, or where a change in the share capital which is not governedby the rules set forth below is imminent, Oslo Børs may establish other adjustment regulations.Except where the contrary is indicated, the contract adjustment will be made on the ex-date.

(3) Adjustments may not result in an increase in the Exercise Price or Futures Price other than in connection witha reverse split as described in A.2.2.4.

(4) Oslo Børs and Turquoise will give notice to their respective members of the adjustment to the Futures andOptions Contracts affected by the recalculation.

Recalculated exercise and futures prices are rounded-off to two decimal places, whereupon the integers 1, 2, 3,and 4 are rounded downwards and the integers 5,6,7,8 and 9 are rounded upwards.

Recalculated contract sizes are rounded-off to the nearest whole integer, whereupon decimal figures of 1, 2, 3,and 4 are rounded downwards and decimal figures of 5, 6, 7, 8, and 9 are rounded upwards. Adjustment factorsare rounded-off to six decimal places. Where recalculation is carried out regarding a previously recalculated

contract, rounding-off shall only be carried out after all calculations have been made.

(5) In the event of a change in the currency in which the underlying Product is listed, Oslo Børs may decide toconvert existing derivative contracts to derivative contracts listed in the new currency. The conversion to the newcurrency shall be carried out by converting the exercise price, option premium and futures price, as well as anyother monetary values, to the currency of the underlying instrument. The conversion of existing derivativecontracts shall be carried out in accordance with conversion rates determined by Oslo Børs.

A.2.2.2 Recalculation following Bonus Issues

(1) In conjunction with bonus issues of shares, the Exercise Price or the Futures Price as well as the number ofshares covered by the contract or the number of contracts shall be adjusted in accordance with Alternative 1below where the company issues a whole number of shares of the same class as the outstanding shares prior tothe bonus issue. In all other circumstances, adjustment shall be carried out pursuant to alternative 2 below.

Alternative 1

Pursuant to this alternative, the number of contracts and the Exercise Price or Futures Price isadjusted. The adjusted number of contracts is calculated in accordance with the following:

cum

excumex

n

n*KK

exK= Recalculated number of Contracts

cumK= Previous number of Contracts

exn = Number of shares following the bonus issue

cumn= Number of shares prior to the bonus issue



RULE BOOK

123

Alternative 2

Pursuant to this alternative, the number of shares covered by the contract and the Exercise Price or FuturesPrice is adjusted. The number of shares covered by the contract is calculated in accordance with the following:

cum

excumexn

n*NN

exN= Recalculated number of shares covered by the Contracts

cumN= Previous number of shares covered by the Contracts

exn= Number of shares following the bonus issue

cumn= Number of shares prior to the bonus issue

(2) In both cases, the adjusted Exercise Price or Futures Price is calculated according to the following:

ex

cumcumex

n

n*XX

exX= Recalculated Exercise Price or Futures Price

cumX= Previous Exercise Price or Future Price

cumn= Number of shares following the bonus issue

exn= Number of shares prior to the bonus issue

(3) Where, in conjunction with a bonus issue of shares, shares of a class other than the underlying shares aredistributed, corresponding principles will be applied by Oslo Børs (the provisions of A.2.2.3 (2) will similarlyapply).

A.2.2.3 Recalculation following stock splits and division into several stock classes

(1) In conjunction with a stock split which does not involve a change in the total aggregate share capital for theunderlying shares, the Exercise Price or the Futures Price as well as the number of contracts shall be adjusted inaccordance with the provisions A.2.2.2 governing adjustments in conjunction with bonus issues.

(2) In conjunction with a division of the underlying shares into several classes of shares which does not involve achange in the aggregate share capital, all classes of shares after the division shall constitute the underlyingshares in their respective proportions, provided all classes of shares are registered in VPS.

(3) In such circumstances, the Expiration Settlement Price for the Contract will be determined as set out in thesection entitled “Expiration Settlement Price and in accordance with A.2.2.15 (2) and A.2.2.16 (2).

(4) Recalculations are implemented from and including the ex-date.

A.2.2.4 Recalculations in the event of a reverse stock split

In conjunction with a reverse split in which a reduction in the number of shares is effected which does not involvea change in the share capital for the underlying shares, the Exercise Price or the Futures Price as well as thenumber of shares covered by the contract shall be adjusted in accordance with the provisions of A.2.2.2governing adjustments in conjunction with bonus.The adjustments are executed from and including the ex-date

A.2.2.5 New issues of the same class of shares with pre-emptive rights for the shareholders

(1) In conjunction with new issues of the same class of shares with pre-emptive rights for the shareholders inwhich the shares are be paid for in cash at a subscription price which is less than a volume weighted average

price for the underlying share on the ex-date calculated in accordance with the provisions set out below, theExercise Price or the Futures Price as well as the number of shares covered by the contract or the number ofcontracts shall be adjusted in accordance with one of the following alternatives.

Alternative 1



RULE BOOK

124

Pursuant to this alternative, the number of contracts and the Exercise Price or Futures Price is adjusted.

The Exercise Price and Futures Price are adjusted in accordance with the following:

A

XX

cumex

exX= Recalculated Exercise price or futures price

cumX= Previous Exercise price or futures price

A = Adjustment factor

The share's theoretical value after the issue is calculated as follows:

A*KK cumex

exK= Recalculated Number of Contracts

cumK= Previous number of Contracts


The adjustment factor is calculated in accordance with the following:

ex

vwapcum

PPA

A = Adjustment factorvwapcumP

= The share‟s volume-weighted average price prior to the issue, cf. (2)

exP = The share‟s theoretical value after the issue

The share‟s theoretical value after the issue is calculated as follows:

newcum

newvwapcumcum

exnn

)E*n()P*n(P

exP = The share‟s theoretical value after the issue

cumn = The number of outstanding shares in the share type prior to the issue

vwapcumP = The share‟s volume-weighted average price prior to the issue, cf. (2).

newn = The number of new shares

E= The price of the shares in the issue

Alternative 2

Pursuant to this alternative, the number of shares covered by the contract and the Exercise Price or Futures

Price are adjusted.

The adjusted exercise price and Futures price as well as the adjustment factor are calculated in accordance withAlternative 1.



RULE BOOK

125

The number of shares covered by the contract is calculated according to the following:

A*NN cumex

exN = Recalculated Number of Contracts cumN = Previous recalculated number of Contracts

A = Adjustment Factor

(2)The stock‟s volume-weighted average price before the issue is calculated from the trading prices quoted onthe last trading day before the ex-date (calculation period) in accordance with the following rules:

a) The calculation for Norwegian underlying stocks (volume-weighted average prices) willinclude only automatically matched trades on Oslo Børs.

b) Where special cause so requires, Oslo Børs may extend the calculation period and includeadditional qualifying criteria for the transactions and may deviate from the stated calculationmethod.

(3) Alternatively, Oslo Børs may effect an adjustment by multiplying the Exercise Price and the Futures Price bythe number of shares before and after all contract adjustments.

In the event an options contract is subject to Exercise or the Expiration Day takes place on such a day that sharedeliveries take place prior to the required recalculation, Oslo Børs shall be entitled to determine that both theunderlying shares and the allocated pre-emptive rights or paid up interim shares shall constitute the underlyingassets, provided that all instruments are registered with VPS. The principles set out in the second paragraph ofthe section entitled “Expiration Settlement Price” shall, in such context, be applied mutatis mutandis. The

provisions of A.2.2.15 (2) are similarly applicable.

A.2.2.6 Contract adjustments in the event of preferential rights issues with subscription of newconvertible bonds, bonds with the right to purchase common stocks or other stock types

(1) In conjunction with the issue of convertible debentures, debentures with subscription rights for new shares orother shares, with shareholders‟ pre-emptive rights where payment is made in cash, the Exercise Price and theFutures Price shall be adjusted in accordance with the provisions set forth below. The term "other shares" meansshares belonging to another class or shares of the same class which Oslo Børs deems not to be equivalent to theunderlying shares. Contract adjustment becomes effective commencing on the Norwegian Trading Day after theex-date.

(2) The Exercise Price and the Futures Price shall be adjusted in accordance with the following:

Alternative 1

Pursuant to this alternative, the exercise price or futures price is adjusted as follows:

T X X cumex

ex X

= The recalculated Exercise or Futures Price

cum X = The Exercise or Futures Price prior to the adjustment

T = a calculated value of the pre-emptive rights which vest in the owner of the share.

The value of the pre-emptive rights pursuant to the issue (T) shall be calculated in accordance with the following:



RULE BOOK

127

(1) In conjunction with de-mergers or issues with pre-emptive rights for the shareholders regarding instrumentsother than those described in the two preceding sections at A.2.2.5 and A.2.2.6, the terms and conditions for thederivatives contracts shall be adjusted in accordance with Alternative 1 or 2 below.

Alternative 1 Commencing on the ex-date, both old shares and new instruments shall comprise the underlying assets for thecontracts. Oslo Børs shall determine the number of old shares and new instruments which shall be covered by acontract. The above-stated amount shall, following rounding-off, correspond to the proportion between old sharesand new instruments pursuant to the terms and conditions for the offer. Prices in conjunction with share deliveryare established in accordance with the regulations set forth below .

The exercise price futures price, contract size and number of derivatives contracts shall continue unchanged.

Such a decision may only be taken where the new shares are registered in VPS and listed, or are anticipated tobe listed within the immediate future, on Oslo Børs and where, in the opinion of Oslo Børs, satisfactory liquiditycan be anticipated and that the derivatives contracts will comprise a satisfactory number of shares.

Alternative 2:

Commencing on the Norwegian Trading Day immediately after the ex- date, the Exercise price and the Futuresprice shall be adjusted in line with the principles applied in relation to a new issue of the same class of sharesgiving pre-emptive rights to shareholders set out above. in accordance with A.2.2.6 (2), Alternative 1.

Alternative 3: If a shareholder is to receive shares in a company other than that to which the underlying shares relate andwithout consideration, Oslo Børs may determine that each originally held derivative contract shall be converted toseparate derivative contracts with the original shares and the new shares as the underlying asset respectively inaccordance with the specific terms and conditions set forth below.

Such a decision may only be taken where the new shares are registered in VPS and listed, or are anticipated tobe listed within the immediate future, on Oslo Børs and where, in the opinion of Oslo Børs, satisfactory liquiditycan be anticipated and that the derivatives contracts will comprise a satisfactory number of shares.

The Exercise Price and the Futures Price for the originally held contracts shall be adjusted in accordance with thefollowing:

cumvwapcum

vwapex

ex X*P

uPX

exX = The adjusted Exercise Price or Futures Price for the contract held originally

cumX = The Exercise Price or Future Price prior to the adjustment

vwapexP = The share's volume-weighted average price on the ex- date

vwapcumP = The share's volume-weighted average price on the day before to the ex- date

u= Dividends which are distributed during the period for calculation of vwapexP

The exercise price or futures price for the new derivative contracts is determined as follows:

xexcumnew n*)XX(X

newX= The adjusted Exercise Price or Futures Price for the new contracts

exX= The adjusted Exercise Price or Futures Price for contracts held originally

cumX= The non-adjusted Exercise Price or Futures Price for contracts held originally

xn = The number of shares held originally which are required in order to purchase one new financial instrument

The number of shares covered by the new derivatives contracts is calculated in the following manner:



RULE BOOK

128

x

cumex

n

NN

exN = The recalculated number of shares covered by the Contract

cumN = The number of shares previously covered by the Contractxn = The number of shares held originally which are required in order to purchase one new financial

instrumentThe volume-weighted average prices are determined in accordance with the provisions of A.2.2.6 (3) and (4).

The contract adjustments are executed on the trading day after the ex-date.

Alternative 4

This alternative provides for the exercise price or futures price and the contract size to be adjusted as follows:

A

XX cumex

A*NN cumex


exX= Adjusted exercise price or price for the original derivative contracts

cumX= Exercise price or price before adjustment

exN= Adjusted contract size

cumN= Contract size before adjustment

The adjustment factor is calculated as follows:

uP

P

A vwapex

vwapcum

vwapcumP

= The stock‟s volume-weighted average price before the ex-date, cf. A.2.2.6 (3)vwapexP

= The stock‟s volume-weighted average price on the ex-date, cf. A.2.2.6 (4)

u = Dividend in the calculation period forvwapexP

, cf. A.2.2.6 (4)

Option contracts may not be exercised in the calculation period up to and including the date when contractadjustment is performed. If the expiration date of a derivative contract falls within this period, the expiration dateshall be brought forward to the last trading day before the start of the period.

The contract adjustments are applied on the trading day following the ex-date.

Alternative 5:

Contract adjustments shall take place in accordance with the provisions of a), b), or c) below.

a) With effect from and including the ex-date, both the original underlying stocks and the new financialinstruments shall be underlying instruments for the derivative contract. Oslo Børs stipulates the numberof original stocks and new financial instruments to which the derivative contracts shall apply. Thisnumber shall, after rounding, correspond to the ratio of the original stocks to the new financialinstruments after the decision. Trading amounts for stock settlements are determined in accordancewith the provisions of Alternative 3.

b) With effect from and including the ex-date, the exercise price and futures price shall be adjusted inaccordance with the following formula:

FXX cumex

exX= Adjusted exercise price or /futures price



RULE BOOK

129

cumX= Exercise price or futures price before adjustment

F = Value of the stockholder‟s preferential right

The value of the stockholder‟s preferential right is calculated in accordance with the following formula:

x

newvwapx

n

EPF

F = Value of the stockholder‟s preferential right vwapxP = The volume-weighted average price for the new financial instruments, cf. A.2.2.5 (2)

newE = The subscription price for the new financial instruments

xn = The number of original stocks required to subscribe for the new financial instrument

c) With effect from and including the trading day after the ex-date, the exercise prices and futures pricesare adjusted in accordance with the principles described in A.2.2.5, adapted as appropriate.

(2) If option contracts are exercised or if the expiration date of derivative contracts is such that settlement willtake place before a decision as stated in (1) above has been made, Oslo Børs may decide that both allottedpreferential rights or interim certificates for issued financial instruments, and the original underlying stocks, shallbe underlying instruments. The provisions of A.2.2.15 (2) and A.2.2.16 (2) are similarly applicable.

A.2.2.8 Dividends

(1) Adjustments will be carried out following the rules in class a) or class b) below. The exercise and futuresprices are adjusted with effect from and including the ex-date

a) On payment of a dividend to the stockholders in excess of 5% of the calculated stock value(excess dividend), the calculations shall be as follows:

5%

vwap

cum

o5%

vwap

cum

DP

DDPA


vwapcumP = The stock‟s volume-weighted average price before the ex-date

%D5 = Dividend (5% ofvwapcumP

)

oD = Excess dividend (dividend that exceeds 5% ofvwapcumP

)

A*XX cumex

exX= Adjusted exercise price or futures price

cumX= Exercise price or futures price before adjustment




RULE BOOK

130

A

NN cumex

exN = Adjusted contract size

cumN = Contract size before adjustment


b) Fully Adjusted Dividend

On payment of a dividend to the stockholders, the whole dividend amount shall be adjustedfor. Derivatives governed by this rule are listed in the quotation list (available on the OsloBørs website at Appendix B2) and are recognized by the letters AD in the seriesdesignation, for instance ABCAD9100. Oslo Børs will consider which derivatives are to beincluded in this class on a semi-annually basis or when needed. The calculations shall beas follows:

vwapcum

vwapcum

P

DP A


= The stock‟s volume-weighted average price before the ex-dateD = Dividend

The exercise and futures prices are adjusted as in a).

(2) The stock value in (1) is calculated in accordance with the principles, duly adapted, for volume-weightedaverage price as described in A.2.2.5 (2).

A.2.2.9 Reduction of share capital

(1) If the share capital is reduced in conjunction with a repayment to shareholders, the Exercise price and theFutures price shall be adjusted in accordance with the following:

vwapcum

vwapcum

P

bP A


= The stock‟s volume-weighted average price before the ex-dateb = Amount repayable per stock

A*XX cumex

Xex = Adjusted exercise price or futures priceXcum = Exercise price or futures price before adjustmentA = Adjustment factor

A

NN cumex

Nex = Adjusted contract sizeNcum = Contract size before adjustmentA = Adjustment factor



RULE BOOK

131

(2) The contract adjustments take effect from and including the ex-date.

A.2.2.10 Compulsory redemption, liquidation or insolvency

If an underlying stock is subject to compulsory redemption, liquidation or insolvency, Oslo Børs determines a newExpiration Day or a new form for Settlement and Delivery regarding the derivative contracts cf. also theprovisions of A.2.2.12.

A.2.2.11 Merger

If a company whose shares are an Underlying Stock for a Norwegian Stock Contract, resolves to merge withanother company which shall be the acquiring company, Oslo Børs may determine to convert existing derivativecontracts to derivative contracts with the merged company as the new underlying share. Oslo Børs shallcalculate a new exercise price and number of shares by adapting the provisions of A.2.2.5. appropriately, but byusing the conversion ratio as the adjustment factor. If the acquiring company is not listed on Oslo Børs, OsloBørs may determine a new Expiration Day or a new form for Settlement and Delivery regarding the derivativecontracts. cf. also the provisions of A.2.2.12.

A.2.2.12 Other contract adjustments

Provided special cause exists, Oslo Børs may resolve to impose a temporary prohibition on Exercise, to changethe Expiration Day or the form for Settlement and Delivery or to resolve that Cash Settlement may only takeplace based upon an Expiration Settlement Price determined by Oslo Børs.

A.2.2.13 Contract adjustments in the event of suspension or deletion of underlying stocks for Norwegianderivative contracts

(1) The following shall apply following a suspension in trading in the underlying shares by Oslo Børs.

a) The Expiration Day for the derivative contracts will not be changed, unless otherwise providedpursuant to this section.

b) Standard Exercise will not be applied and Exercise must consequently be registered manually. OsloBørs may impose a prohibition on Exercise during the entire period in which trading is suspended, or apart thereof.

c) Settlement of Norwegian Stock Futures contracts and delivery of underlying shares shall be settled bydelivery of the shares in exchange for the Futures price, cf. A.2.1.2 (4).

d) Registration of the share settlement in Oslo Børs electronic trading system is postponed until the firsttrading day the share is readmitted for quotation. Share Delivery shall take place on the third NorwegianTrading Day after the day on which the share is once again listed for trading on Oslo Børs.

(2) Oslo Børs may resolve to change the Expiration Day or may resolve that only Cash Settlement may beexecuted following de-listing or long-term suspensions in trading of the underlying share. Oslo Børs shalldetermine the Expiration Settlement Price in such circumstances.

A.2.2.14 Expiration settlement price

(1) The Expiration Settlement Price for Norwegian derivative contracts is calculated by Oslo Børs as a volume-weighted average price in respect of the automatically matched trades in the electronic orderbook in the shareson Oslo Børs on the Expiration Day.

(2) Where a contract adjustment has been made in accordance with A.2.2.3 (2), A.2.2.5 (4), A.2.2.6 (6) or A.2.2.7and results in both the original shares and the new instruments qualifying as underlying instruments to thederivative contracts, the Expiration Settlement Price shall be calculated in the following manner:

Fixing value = kO + n1 * k1 + n2 * k2......

n1,2= the original number of shares

kO = the volume-weighted average price for automatically matched trades in the electronic orderbook in theoriginal share



RULE BOOK

132

k1,2, = the volume-weighted average price for automatically matched trades in the electronic orderbook in thenew share

Oslo Børs will determine the Expiration settlement price if the new share are not listed on Oslo Børs.

(3) Oslo Børs may depart from the above rules and may establish another Expiration Settlement Price wherespecial cause exists, e.g. where Oslo Børs believes that the turnover basis is insufficient.

(4) The daily fixing of stock futures is calculated as the average of the bid and offer prices. If these prices arenot available, the average of the bid and offer prices for the corresponding stock forward will be used. Incase none of these prices are available or the average price is considered unsuitable, Oslo Børs willestablish a fixing price.



RULE BOOK

133

PART 4.6 FUTURES AND OPTIONS CONTRACTS BASED ON THE OBX INDEX

4.6.1 Introductory

4.6.1.1 Turquoise provides a combined market in OBX Contracts in conjunction with Oslo Børs.Theses arrangements are governed by a Co-operation Agreement entered into by Turquoisewith Oslo Børs and are designed to ensure that members of each trading venue mayparticipate equally in the markets of these Contracts. Turquoise has adopted rules which areconsistent with the rules of Oslo Børs governing OBX Contracts. Trading in the combinedmarket in OBX Contracts will be conducted on an anonymous basis so that Members will notbe aware of the identity of their trading counterparty or the trading venue of which it is amember. The Designated Clearing House will be responsible for the clearing and settlement ofOBX Contracts entered into by Members of Turquoise.

The arrangements for the clearing of contracts in the combined market in OBX Contracts aregoverned by a Clearing Co-operation Agreement entered into by the Designated ClearingHouse with Oslo Clearing.

4.6.1.2 The Contract Specifications for OBX Contracts listed by Turquoise and all rules andprocedures relating specifically to the trading, clearing or settlement of such Contracts are set

out in this Part 4.6.

4.6.1.3 The rules and procedures set out in this Part 4.6 apply to the following Contracts based on theOBX Index:

OBX FuturesOBX Options

and references to “OBX Contracts” in this Part4.6 shall be construed as references to ea ch ofthe above Contracts.

4.6.1.4 OBX Futures Contracts are subject to Daily Cash Settlement and to cash settlement onExpiration or when a Closing Transaction is effected. OBX Options Contracts which areexercised are subject to cash settlement. The procedures governing settlement of OBXFutures and Options Contracts are set out in Rules 4.6.14 to 4.6.18.

All obligations to make cash payments under the settlement procedures for OBX Contractsshall be effected by way of the PPS arrangements established by the Designated ClearingHouse.

All payments required to be made under the settlement procedures set out in Rules 4.6.14 to4.6.18 shall be made in accordance with the instructions of the Designated Clearing House.Such payments shall be made in NOK. Turquoise will issue Daily Cash Settlement Statementsand Expiration Settlement Statements showing the sum due to or payable by the Member. Inthe absence of manifest error, Turquoise‟s Settlement Statements shall be final and binding.

4.6.1.5 The OBX Index is described more fully in the Conditions for the OBX Index of Oslo Børs andcan be found on http://www.oslobors.no/ob_eng/Oslo-Boers/Regulations/Derivatives-rules.

4.6.1.6 The OBX Index is calculated continuously during the day on each Norwegian Trading Day by

Oslo Børs by way of automated data retrieval. In the event of computer failure or lack ofinformation from Oslo Børs other sources of information and other methods for the calculationand distribution of the OBX Index Value may be adopted. As a result of this, the frequency ofcalculations and reports may be altered.

4.6.1.7 Save where there is an express indication to the contrary, all references to time in this Part 4.6shall be construed as references to Oslo time.

4.6.1.8 The application and interpretation of this Part 4.6 shall be subject to Norwegian law.



"Closing Settlement" in relation to an OBX Futures Contract, means the process of cashsettlement effected for such Contracts following the execution of a Closing transaction;

http://www.oslobors.no/ob_eng/Oslo-Boers/Regulations/Derivatives-rules






RULE BOOK

134

"Closing Settlement Amount" means the amount payable to or by a Member in relation to aClosing Settlement;

"Closing Transaction" in relation to an OBX Futures position, means a transaction whichliquidates an existing futures position by registration of an equal and opposite position;

"Conditions for the OBX Index" means the rules governing the composition of the OBXIndex, the calculation of the Index Value, and adjustments thereto and other similar factorsrelating to the OBX Index which have been adopted by Oslo Børs and can be found onhttp://www.oslobors.no/ob_eng/Oslo-Boers/Regulations/Derivatives-rules as amended fromtime to time;

"Daily Cash Settlement" in relation to an OBX Futures Contract, means the process of cashsettlement effected for such Contracts on each Norwegian Trading Day during its lifetime;


"Daily Settlement Price" in relation to an OBX Futures Contract, means the value certified assuch by Oslo Børs on each Norwegian Trading Day as being the value of the OBX Index at theclose of trading at Oslo Børs on such day;

"Daily Settlement Statement" in relation to an OBX Futures Contract, means the note issuedby Turquoise showing the amount payable to or by a Member on Daily Cash Settlement of theContract in question;

"Exercise Order" means an instruction given by the Holder of an OBX Option to Turquoisepursuant to Rules4.6.17 and4.6.18 requesting the Exercise of the Option in question;

"Exercise Settlement Amount" means the monetary amount due to or payable by a Memberon Exercise of an OBX Option Contract as specified in the Exercise Settlement Statement;

"Exercise Value" in relation to an OBX Option, means the Strike Price for such Contractmultiplied by the Index Multiplier.

"Expiration Day" in relation to an OBX Contract, means the third Thursday in the ExpirationMonth for such Contract, or, if that day is not a Norwegian Trading Day, the immediatelypreceding Norwegian Trading Day;

"Expiration Month" means the month designated by Turquoise as the month in which suchSeries will expire;

"Expiration Settlement Amount" means the monetary amount due to or payable by aMember on expiration of an OBX Futures Contract as specified in the Settlement Statement;

"Expiration Settlement Day" in relation to an OBX Futures Contract, means the firstNorwegian Bank Day after the Expiration Day for the Contract in question;

"Expiration Settlement Value" in relation to an OBX Contract, means the value certified assuch by Oslo Børs in accordance with Rule 4.6.16;

"Expiration Year" means the year designated by Turquoise as the year in which the Contractin question will expire;

"First Daily Cash Settlement" in relation to an OBX Futures Contract entered into by aMember, means the first settlement carried out following registration of the Contract inquestion;

"First Listing Day" in relation to an OBX Series, means the day on which such Series is firstlisted by Turquoise;

"Norwegian Bank Day" means a day other than a Saturday or a Sunday or other publicholiday on which banks in Norway are generally open for business;

"Norwegian Trading Day" means a day other than a Saturday or Sunday on which the Oslo

Stock Exchange is generally open for trading;

"OBX Contracts" means standardised Futures and Options Contracts listed by Turquoisewhich are based on the OBX Index, the terms of which are in accordance with the Contract






RULE BOOK

135

Specifications for such Contracts and "OBX Option" and "OBX Future" shall be construedaccordingly;

"OBX Expiration Value" means the average of the OBX Index Values for the Expiration Dayfor an OBX Contract, calculated in accordance with the Conditions for the OBX Index;

"OBX Index" means the Norwegian Stock Index described more particularly in the Conditions

for the OBX Index;

"OBX Index Stock" means a stock which is included in the OBX Index for the time being;

"OBX Market Maker" means a Member which has agreed to act as a market maker in respectof OBX Futures and Options Contracts;

"OBX Options Series" means OBX Options having the same Expiration Day Expiration Month,Expiration Year and the same Exercise Price and "Series" shall be construed accordingly;

"Opening Transaction" means an OBX Futures transaction which is not a ClosingTransaction;

"Premium Settlement Day" in relation to an OBX Option, means the first Norwegian BankDay following registration;

"Registered Price" in relation to an OBX Futures Contract means the price at which theContract in question is traded;

"Settlement Statement" means:

(i) in relation to an OBX Futures Contract the note issued by Turquoise showing therights and obligations of the Counterparties to such Contract with regard to theassociated cash payments following its Expiration; and

(ii) in relation to an OBX Options Contract, the note issued by Turquoise showing therights and obligations of the Counterparties to such Contract with regard to theassociated cash payments following its Exercise.


4.6.3.1 Contract Specifications: Standardised OBX Futures

Type of Contract Standardised Futures Contracts with Expiration Settlement and Daily CashSettlement.

Contract Index The OBX Index.

Index Multiplier NOK 100 per Index Point.


0.10 of an Index Point, equivalent to NOK 10, where the Futures price is less than1000

0.25 of an Index Point, equivalent to NOK 25, where the Futures price is greaterthan or equal to 1000.

Lifetime Three and six months.

Closing Closing transactions may be executed on any Norwegian Trading Day up to andincluding the Expiration Day.

Last Day for Trading The Expiration Day.

Listing of New Series Futures Contracts are listed in each calendar month on the First Listing Day.

Series Designation Each OBX Futures Contract shall be designated by a maximum of eleven symbols,where a maximum of four symbols designates the Contract Index, one symbol

designates the Expiration Year, a maximum of four symbols designates the FuturesPrice and one symbol designates the Expiration Month.

Initial Daily Settlement The first Norwegian Bank Day following Registration.



RULE BOOK

136

Daily Settlement Cash Settlement on each Norwegian Bank Day based on the Daily Settlement Priceof the Contract calculated on the preceding Norwegian Trading Day in accordancewith Rule 4.6.14.

Expiration Settlement Value

Determined in accordance with Rule 4.6.16.

Expiration Day The third Thursday of the Expiration Month of the Expiration Year, or where suchday is not a Norwegian Trading Day, the preceding Norwegian Trading Day.






Expiration Settlement Day The first Norwegian Bank Day following the Expiration Day.


4.6.3.2 Contract Specifications: Standardised OBX Options

Type of Contract Standardised Options Contracts with Cash Settlement on Expiration.


Type Calls and Puts.

Contract Index The OBX Index.

Index Multiplier NOK100 per Index Point.


For Options with a Premium below NOK 0.1: 0.01 of an Index Point;For Options with a Premium from NOK 0.1 to NOK 3.95: 0.05 of an Index Point;For Options with a Premium from NOK 4 to NOK 7.90: 0.10 of an Index Point.For Options with a premium of NOK 8 or above: 0.25 of an Index Point.

Premium The amount in Norwegian Kroner agreed to by the parties as the premium payablefor the Contract multiplied by the Index Multiplier.

Premium Settlement Day The first Norwegian Bank Day following Registration.

Strike Price The index value contained in the Series Designation.


Lifetime Three and six months.

Closing Closing transactions may be executed on any Norwegian Trading Day up to andincluding the Expiration Day for the Contract.

Last Day for Trading The Expiration Day for the Series in question.

Listing of New Series The third Norwegian Trading Day prior to the Expiration Day in each month.



RULE BOOK

137

Series Designation Each Series shall be designated by a maximum of eleven symbols, where amaximum of four symbols designates the Contract Index, one symbol designates theExpiration Year, one symbol designates the Expiration Month and a maximum offour symbols designates the Strike Price. The use of the symbol X indicates that theContracts in the OBX Series in question have been adjusted in accordance with theConditions for the OBX Index.

Expiration Settlement Value

The average index value for the Expiration Day calculated in accordance with Rule4.6.16.

Expiration Day The third Thursday of the Expiration Month or where such day is not a NorwegianTrading Day, the preceding Norwegian Trading Day.



Expiration Settlement Payment of the Expiration Settlement Amount shall occur on the ExpirationSettlement Day in accordance with Turquoise's instructions.


The first Norwegian Bank Day following the Expiration Day.

Exercise OBX Options are subject to exercise in accordance with Rule 4.6.17.

Standard Exercise OBX Options which are In the Money at Expiration are subject to Standard Exercisein accordance with Rule 4.6.18.


4.6.3.3 Deleted

4.6.4 Listing of New OBX Contracts

4.6.4.1 On the third Norwegian Trading Day prior to the Expiration Date for OBX Contracts in eachcalendar month, Turquoise shall list OBX Futures Contracts with a Lifetime of three months.

4.6.4.2 Turquoise lists standardised OBX Options Series having Lifetimes of three months. NewOptions Series with a Lifetime of three months are listed on the third Norwegian Trading Dayprior to the Expiration Date for OBX Contracts in each month. On the First Listing Day for anOBX Options Series Turquoise shall list at least five Call Options Series and five Put OptionsSeries. The equivalent contracts with a lifetime of six months are also listed every thirdcalendar month.

4.6.4.3 For one Call and one Put Options Series, the Strike Price shall be set at the point inTurquoise's scale of Strike Prices for OBX Contracts which is closest to the value of the OBXIndex at the close of trading on Oslo Børs on the immediately preceding Norwegian TradingDay. For other Series, the Strike Price shall be set so that it is higher for at least one Call and

one Put Options Series and lower for at least one Call and one Put Options Series than the firstStrike Price.

The Strike Price for the second Series shall be set at the point in such scale immediately abovethe first Strike Price. The Strike Price for the third Series shall be set at the point in such scaleimmediately below the first Strike Price.

4.6.4.4 If the final value of the OBX Index at the end of a Norwegian Trading Day is higher than thesecond highest or lower than the next lowest Strike Price at least one new Call and one newPut Options Series will be listed above the previously highest or below the previously lowestStrike Price, respectively, for Series having the same Expiration Month. Such listing shall beeffected on the next Norwegian Trading Day.

4.6.5 Deleted


4.6.6.1 The Expiration Month for an Listed Series shall be designated in accordance with the followingprovisions of this Rule.



RULE BOOK

138

4.6.6.2 The Expiration Month for an OBX Futures Contract shall be designated as follows:

January A

February B

March C

April DMay E

June F

July G

August H

September I

October J

November K

December L

4.6.6.3 The Expiration Month for an OBX Options Contract shall be designated as follows:


January A M

February B N

March C O

April D P

May E Q

June F R

July G S

August H T

September I U

October J V

November K W

December L X


4.6.7.1 Fees in respect of OBX Contracts are payable by Members in the amount and at the timespecified in Appendix A for the Contract in question.

Clearing fees for OBX Contracts are payable on the first Norwegian Bank Day followingRegistration of a Contract. Such fees shall be paid to the Designated Clearing House at thetime specified in the relevant statement issued to the Member by the Designated ClearingHouse.

4.6.7.2 The penalty fee for failure to perform settlement obligations in relation to an OBX Contract atthe prescribed time shall be payable to Turquoise or in accordance with its instructions on thefirst Norwegian Bank Day after the date of the notice requiring payment of the said penalty feeissued to the Member by Turquoise.

4.6.8 Market Making Obligations, Market Making Fees, Market Making Sanctions

4.6.8.1 The provisions of Rules 4.5.7, 4.5.7A and 4.5.8 shall apply to the provision of quotes by MarketMakers in relation to OBX Futures and Options.

4.6.8.2 Notwithstanding Rule 4.6.8.1, the following specific obligations apply in relation to OBX Futuresand Options:

4.6.8.3 The Prescribed Spread for a quote for a standardised OBX Future is as follows:



RULE BOOK

139

Bid Price Spread (NOK)


0 – 150 0.6 1.2

150.10 – 350 0.9 2

350.10 – 500 1.3 3

500.10 –

700 2 4700.10 – 850 2.5 5

850.10 - 1000 3 7

More than 1000 4 8

4.6.8.4 A Market Maker acting as such in standardised OBX Futures and Options shall quote two wayprices within the Prescribed Spread continuously in a minimum amount of one hundredContracts in each of the nearest two Expiration Months and a minimum of fifty Contracts in thethird nearest Expiration Month in the OBX Index products for which it has agreed to act as aNorwegian Market Maker.

4.6.9 Deleted

4.6.10 Orders

4.6.10.1 Orders relating to Futures and Options Contracts based on the OBX Index may be placed inthe Single Order Market.

4.6.10.2 A Single Order consists of an offer to buy or sell the number of OBX Contracts specified in theOrder. This number may be any whole number in excess of one. A Member placing a SingleOrder may stipulate that the Order may only be executed in its entirety. In the absence of suchstipulation, the offer may be accepted in any amount up to the specified number. Where anOrder is executed partially the unfilled portion of the Order will remain in the Orderbook.

4.6.10.3 Price quotations for OBX Futures and Options Contracts normally relate to one-hundredth of a

Contract and are quoted in Index Points. The minimum price movements are detailed in therelevant Contract Specifications at Rule 4.6.3


4.6.11.1 Where a Member enters into an off-exchange transaction in an OBX Contract with anotherMember or with a member of Oslo Børs, the Member shall submit a Request for Registrationrelating to such transaction to Turquoise at the earliest opportunity if it wishes the transactionto be registered. Such Request for Registration shall:



4.6.11.2 A Request for Registration shall only be considered for acceptance by Turquoise and theDesignated Clearing House if the counterparties to the off-exchange transaction submitidentical requests specifying the Contracts to be registered, the Accounts in which the Contractis to be registered and the terms of the transaction in question to Turquoise and to Oslo Børs inquestion.


A Request for Registration of an OBX Contract shall be considered for acceptance byTurquoise and the Designated Clearing House in accordance with Rule 3.2 and the followingprovisions of this Rule.

4.6.11.4 A Request for Registration of an OBX Contract in respect of an off-exchange transaction whichhas been concluded at a time when Turquoise is not open for trading OBX Contracts, will notnormally be accepted by Turquoise and the Designated Clearing House unless the agreedprice does not deviate from the average of the median of the bid and ask quotes for the Series



RULE BOOK

140

in question during the period of thirty minutes prior to the close of trading on the day inquestion or, in the case of a request submitted before the start of trading on the morning of aNorwegian Trading Day, the close of trading on the immediately preceding Norwegian TradingDay for the Product in question by more than whichever is the greater of thirty per cent or 2NOK.

Where a Request for Registration of an OBX Contract is submitted in respect of a Series for

which bid and ask prices are not quoted at the time, Turquoise shall obtain bid and ask quotesfor such Series in conjunction with Oslo Børs as it considers appropriate. Where in the opinionof Turquoise an acceptable quote is obtained, the Request for Registration will be accepted byTurquoise and the Designated Clearing House if its price is within the spread of the quotedprices. If Turquoise considers that an acceptable quote has not been provided for suchpurposes, the acceptance of the Request for Registration shall be determined at theirdiscretion.

4.6.11.5 The acceptance of a Request for Registration submitted under this Rule is at the discretion ofTurquoise and the Designated Clearing House. Without limiting the generality of the foregoing,a Request for Registration shall not be accepted if such acceptance would not be conducive tothe maintenance of a proper market in the Product in question or would not be consistent withthe Designated Clearing House‟s obligation to maintain a sound basis to its clearing services.

4.6.11.6 Where a Request for Registration of an OBX Contract which is submitted by a Member during

trading hours for such Contracts is accepted by Turquoise and the Designated Clearing House,Turquoise shall arrange with the Designated Clearing House for the resulting RegisteredContract may be registered by the Designated Clearing House forthwith.

Where a Request for Registration relating to an OBX Contract is submitted by a Member afterthe close of trading in such Contracts on a Norwegian Trading Day, the Contract in questionshall be registered by the Designated Clearing House on that day if it is received and acceptedby Turquoise and the Designated Clearing House before 6.30pm Oslo time. Where a Requestfor Registration is received by Turquoise after such time, it shall, if accepted, be registered bythe Designated Clearing House on the next Norwegian Trading Day.



4.6.12.1 A Request for Re-Registration of an OBX Contract made pursuant to Rule 3.4.2(vi) will not beconsidered by Turquoise and the Designated Clearing House unless it is received by electronicconnection or other means no later than 30 minutes prior to the close of the clearing system forthe OBX Contract on the Norwegian Trading Day following the day on which the Contract inquestion is registered by the Designated Clearing House.

4.6.12.2 A Request for Re-Registration of an OBX Contract made pursuant to Rule 3.4.5.2(i) to (v)inclusive will not be considered by Turquoise and the Designated Clearing House unless it isreceived by electronic connection or by other means no later than 6.00 pm Oslo time on thelast Norwegian Trading Day prior to the Expiration Date for the Contract in question.

4.6.12.3 A Request for Re-Registration of an OBX Contract shall specify the following details:


4.6.12.4 The acceptance of a Request for Re-Registration submitted under this Rule 4.6.12 is at thediscretion of Turquoise and the Designated Clearing House.

4.6.12.5 Where a Request for Re-Registration is received and accepted by Turquoise and theDesignated Clearing House before 6.00 pm Oslo time on a Norwegian Trading Day, theContract in question shall be registered by the Designed Clearing House on that day. Where aRequest for Re-Registration is received by Turquoise after such time, it shall, if accepted, beregistered by the Designated Clearing House on the next Norwegian Trading Day.

4.6.12.6 Turquoise shall inform the Member or Members in question as soon as possible if a Requestfor Re-Registration submitted under this Rule is not accepted for Re-Registration.



RULE BOOK

141


4.6.13.1 The provisions of Rule 2.14 concerning the cancellation of incorrect transactions shall beapplied in relation to OBX Contracts in accordance with the following provisions of this Rule.

4.6.13.2 Turquoise will not direct that an OBX transaction shall be cancelled in the absence of theagreement of the Counterparty to the transaction unless the period between the time at which

the transaction is effected and the time at which the request is submitted is less than tenminutes and unless the loss suffered by the Member, as a consequence of the incorrecttransaction not being cancelled, is NOK 1000 or more.

4.6.13.3 The Fair Market Spread for OBX Futures and Options Contracts is as follows:

Quoted Bid or Offer (Index Points)

Maximum Spread for Quotes

(Index Points)

Maximum permitted deviation from Bid and Offer points of the Fair

Market Spread

10 or less 2 1

10.01 – 20 3 1.5

20.01 – 30 4 2

more than 30 6 3

4.6.13.4 The Price Adjustment Range for OBX Contracts is as follows:

Quoted Bid or Offer (Index Points)

Prescribed Spread for Quotes

(Index Points)


10 or less 2 1

10.01 – 20 3 1.5

20.01 – 30 4 2

more than 30 6 3

4.6.13.5 Turquoise will notify the Member or Members involved in the transaction of its decision in the

case of a request relating to an OBX Contract no later than 8.00am on the Norwegian TradingDay following the day on which the transaction in question was effected.

4.6.14 Daily Cash Settlement

4.6.14.1 OBX Futures Contracts are subject to Daily Cash Settlement. The first such Daily CashSettlement shall be due for settlement on the first Norwegian Bank Day following theRegistration of the Contract. Thereafter, Daily Cash Settlement shall be effected on eachNorwegian Bank Day until the Expiration Day for the Contract in accordance with the provisionsof this Rule.

4.6.14.2 The First Daily Settlement Price for an OBX Futures Contract shall be determined by referenceto the difference between the Registered Price for the Contract in question and the DailySettlement Price for the Contract on the day on which the Contract is registered at the

Designated Clearing House.

4.6.14.3 The Daily Settlement Amount for an OBX Futures Contract (other than the First Daily CashSettlement Price) shall be determined by reference to the difference between the DailySettlement Price for the OBX Futures Contract on the Norwegian Trading Day in question andthe Daily Settlement Price for the immediately preceding Norwegian Trading Day for suchContract.

4.6.14.4 Turquoise shall publish the Daily Settlement Price for each Listed OBX Futures Contract on theNorwegian Trading Day following the day to which the Daily Settlement Price relates.

4.6.14.5 Where the Daily Settlement Price for an OBX Futures Contract on a Norwegian Trading Day ishigher than:

(i) on the First Daily Cash Settlement, the Registered Price for the Contract; or

(ii) on each subsequent Daily Cash Settlement, the Daily Cash Settlement Price for theimmediately preceding Norwegian Trading Day for such Contract



RULE BOOK

142

the Daily Settlement Amount for such Settlement shall be payable to the buyer.

Where the Daily Settlement Price for an OBX Futures Contract on a Norwegian Trading Day islower than:

(i) on the First Daily Settlement, the Registered Price for the Contract; or

(ii) on each subsequent Daily Settlement, the Daily Settlement Price for the immediatelypreceding Norwegian Trading Day for such Contract

the Daily Settlement Amount for such Settlement shall be payable to the seller.

4.6.14.6 Turquoise shall issue Daily Settlement Statements to Members having registered positions inOBX Futures Contracts no later than 8.00am on the following Norwegian Trading Day inrelation to each Norwegian Trading Day for the relevant OBX Futures Contract. The DailySettlement Statement shall show the Daily Settlement Amount for such settlement and payablein Norwegian Kroner.

The Daily Settlement Amount shall be payable no later than 9.00 am time London time on thefirst Norwegian Bank Day following the Norwegian Trading Day in question.

4.6.15 Closing Transactions

4.6.15.1 Where bought and sold positions in OBX Futures Contracts are registered in an Account at theDesignated Clearing House, the positions will be closed out in accordance with the provisionsof this Rule 4.6.15.

4.6.15.2 Where both the Opening Transaction and the Closing Transaction are registered on the sameday, cash settlement between the Designated Clearing House and the Member shall beeffected by reference to the difference between the Futures Contract Prices for the twotransactions. Where the Futures Contract Price for the Contract bought by the Member ishigher than the Futures Contract Price for the Member‟s sold Contract, the Closing SettlementAmount shall be payable by the Member. Where the Futures Contract Price for the Contractbought by the Member is lower than the Futures Contract Price for the Member‟s sold Contract,the Closing Settlement Amount shall be payable to the Member.

4.6.15.3 Where the Opening Transaction and the Closing Transaction are registered on differentNorwegian Trading Days, the Closing Settlement between the Designated Clearing House andthe Member shall be effected by reference to the difference between the Daily Settlement Pricefor the Opening Transaction on the immediately preceding Norwegian Trading Day and theFutures Contract Price for the Closing Transaction. Where the Daily Settlement Price orFutures Contract Price (as the case may be) for the Member‟s bought position is higher thanthe Daily Settlement Price or Futures Contract Price for the Member‟s sold position, theClosing Settlement Amount shall be payable by the Member. Where the Daily SettlementPrice or Futures Contract Price (as the case may be) for the Member‟s bought position is lower than the Daily Settlement Price or Futures Contract Price for the Member‟s sold position, theClosing Settlement Amount shall be payable to the Member.

4.6.15.4 The Closing Settlement Amount shall be payable to or by the Designated Clearing House onthe first Norwegian Bank Day following the day on which the Closing Transaction is registeredat the Designated Clearing House.

4.6.16 OBX Futures Contracts: Expiration Settlement

4.6.16.1 OBX Futures Contracts are subject to cash settlement on Expiration in accordance with theprovisions of this Rule.

4.6.16.2 The Expiration Settlement Amount for an OBX Futures Contract shall be determined byreference to the difference between the Daily Settlement Price for such Contract on the daybefore its Expiration Day and its Expiration Settlement Value.

4.6.16.3 The payment of the Expiration Settlement Amount shall be due on the Expiration SettlementDay for the OBX Futures Contract in question.

4.6.16.4 Where the Expiration Settlement Value for an OBX Futures Contract is higher than the Daily

Settlement Price for such Contract on the day before its Expiration Day, the ExpirationSettlement Amount shall be payable to the Buyer and by the Seller.



RULE BOOK

143

Where the Expiration Settlement Value for an OBX Futures Contract is lower than the DailySettlement Price for such Contract on the day before its Expiration Day, the ExpirationSettlement Amount shall be payable by the Buyer and to the Seller.

The Expiration Settlement Value for OBX Futures Contracts is calculated by Oslo Børs inaccordance with the principles set out in this Rule. Oslo Børs publishes the ExpirationSettlement Value of the OBX Index that is to be used as the basis for cash settlement of OBX

Contracts which expire on the Expiration Day in question on the Norwegian Trading Dayimmediately following the Expiration Day. Turquoise shall notify all Members of the determinedExpiration Settlement Price of the OBX Index. The published Expiration Settlement Value isfinal and binding.

Turquoise may defer its Expiration Settlement procedures for OBX Futures Contracts if similarcircumstances to those specified above occur which prevent settlement being effected at thenormal time. Turquoise shall inform Members at the earliest opportunity if any suchcircumstances occur.

A standardised OBX Futures Contract is an agreement to buy or sell the value of the ContractIndex on the Expiration Day to be settled in accordance with the rules regarding cashsettlement below. The agreed Futures Contract Price is determined when the transaction iseffected at Turquoise.

4.6.16.5 All obligations to make cash payments under the OBX Futures Settlement Procedures shall beeffected by way of the PPS arrangements established by the Designated Clearing House forsuch purposes. Such payments shall be effected in accordance with the instructions issued byTurquoise.

4.6.16.6 All payments required to be made under the settlement procedures set out in Rules 4.6.14 toRules 4.6.18 shall be made in accordance with Turquoise's instructions. Such payments shallbe made in NOK. Turquoise will issue Daily Cash Settlement Statements and ExpirationSettlement Statements showing the sum due to or payable by the Member no later than thetime specified in the Settlement Statement. In the absence of manifest error, Turquoise'sSettlement Statements shall be final and binding.

4.6.16.7 The Expiration Settlement Value for an OBX Futures Contract is calculated in accordance withthe following provisions of this Rule.

The OBX Index Value is calculated in accordance with the following formula:

0

101

MC

MC I I

1I = New index value

0I = Index value at the close of the preceding Trading Day

1MC = Index group‟s market capitalisation at the time of calculation

0MC = Index group‟s adjusted market capitalisation at the close of the preceding

Trading Day.

The Market Capitalisation of the OBX Index for the purposes of determining the ExpirationSettlement Value is calculated by reference to the volume weighted average of theautomatically matched trades in the electronic orderbook of each OBX Index Stock on Oslo

Børs on the Expiration Day.

The formula used by Oslo Børs for such purposes is:

i AI J i PI of sum MC

i PI = volume weighted average of the official turnover of the index share i

i AI = number of shares issued in the share class i

J = adjustment factor resulting from capital alterations

If Oslo Børs considers that it is not possible to make a satisfactory calculation of the ExpirationSettlement Value in accordance with the above mentioned principles as a result of theinadequate level of trading on the Expiration Day, the officially registered traded prices of eachOBX Index on the last Norwegian Trading Day prior to the Expiration Day on which Oslo Børs

considers the level of trading to be adequate shall be used in the calculation of the ExpirationSettlement Value.



RULE BOOK

144

If Oslo Børs considers the price of an index share to be influenced so that a representativefixing value cannot be calculated, the volume weighted average of trading prices of the indexshare from the last Norwegian Trading Day on which Oslo Børs considers the level of trading tobe adequate shall be used in the calculation.

If all the shares included in the index group are suspended from trading on the Expiration Day,the Expiration Settlement Value shall be calculated from the prices on the first Trading Day

after the end of the suspension, and the Expiration Day will be changed to this day.


4.6.17.1 Standardised OBX Options are European Style and are accordingly only subject to Exercise onExpiration.

4.6.17.2 OBX Options are also subject to Standard Exercise in accordance with Rule4.6.18.Accordingly, an OBX Option held by a Member the Exercise of which would result in theExpiration Settlement Amount for such Contract being payable to that Member will be subjectto Standard Exercise provided that such Expiration Settlement Amount is greater than the feespayable by the Member on Exercise of the Contract in question.


4.6.17.4 An Exercise Order relative to an OBX Option which is received by Turquoise after 6.30 pmOslo time on the Expiration Day for such Contract is void.

4.6.17.5 On receiving a valid Exercise Order, Turquoise shall inform the Member which submitted it thatit has been accepted and shall select at random a correlative OBX Options position to beexercised against. Turquoise shall also inform the Designated Clearing House of suchExercise so that the necessary action may be taken in relation to the Registered Contracts inquestion.

4.6.17.6 On Exercise of an OBX Options Contract in accordance with this Rule, Turquoise shall issuean Exercise Settlement Statement confirming the cash payment which such Member is entitledto receive or is obliged to make as the case may be.

4.6.17.7 On Exercise of an OBX Option, the Exercise Settlement Amount for such Contract shall bepayable to the Holder of a Call Option or the Holder of a Put Option and shall be payable bythe Member whose position has been exercised against pursuant to this Rule 4.6.17.

4.6.17.8 The Exercise Settlement Amount shall be determined by multiplying the amount by which theStrike Price for the OBX Option Contract in question exceeds the Exercise Settlement Price onthe Expiration Day for such Contract by the Index Multiplier.

4.6.17.9 The Exercise Settlement Amount for an OBX Option Contract shall be due for settlement onthe first Norwegian Bank Day following the Contract's Expiration Day.

4.6.18 Options: Standard Exercise

4.6.18.1 OBX Options Contracts will be subject to Standard Exercise in accordance with the following

procedures.

4.6.18.2 Standard Exercise will be applied to all OBX Options Contracts the exercise of which wouldresult in a positive cash payment to the Member entitled to exercise such Option. Accordingly:

(i) a Call Option Series which has a Strike Price which is less than the ExerciseSettlement Price on the Expiration Day, calculated in the manner described inRule4.6.17 will be subject to Standard Exercise.

(ii) a Put Option Series which has a Strike Price which is above the Exercise SettlementPrice on the Expiration Date, calculated in the manner described in Rule4.6.17, will besubject to Standard Exercise.

In applying these Standard Exercise procedures, Turquoise does not take the fees payable bythe Member in question in respect of such Exercise into account.

4.6.18.3 At about 6.00 pm Oslo time on the Expiration Day for an OBX Option, Turquoise will send toMembers holding positions in such Options a list of the relevant Series expiring that day which



RULE BOOK

145

will be subject to Standard Exercise in accordance with the above procedures. All Call Optionsand all Put Options shown on such list will be exercised automatically by Turquoise.

Turquoise shall inform the Designated Clearing House of all positions that will be subject toStandard Exercise so that the Designated Clearing House may take the necessary action inrelation to the Registered Contracts in question.

4.6.18.4 The Exercise Settlement Amount for an OBX Contract which is subject to Standard Exercise inaccordance with this Rule shall be determined in the manner provided for in Rule 4.6.17.9.

4.6.19 OBX Composition and Related Matters

4.6.19.1 The responsibility for the calculation of the OBX Index, the determination of the composition ofthe OBX Index, the distribution of OBX Index Values, the determination of the ExpirationSettlement Value of the OBX Index and dealing with all objections to such matters rests withOslo Børs.

Where a Member of Turquoise wishes to object to any such issue, it shall inform Turquoise ofits grounds of complaint. Turquoise shall refer the matter to Oslo Børs which shall resolve thematter in accordance with its established procedures outlined in its rules governing suchmatters.

4.6.19.2 The rules of Oslo Børs which govern the above mentioned matters can be found onhttp://www.oslobors.no/ob_eng/Oslo-Boers/Regulations/Derivatives-rules;

Addendum to Rule 4.6.19:

The Rules for the Construction and maintenance of the OBX contains the basis for calculation of theOBX Index, including the rules how adjustments shall be made in issue, corporate restructuring, etcand under what circumstances shares can be excluded upon calculation of the index. The conditionsfor the OBX can be found at http://www.oslobors.no/ob_eng/Oslo-Boers/Regulations/Derivatives-rules.











RULE BOOK

146

PART 4.7 FUTURES AND OPTIONS CONTRACTS BASED ON THE FTSE 100 INDEX

4.7.1 Introductory

4.7.1.1 The product specifications for Index Futures Contracts and Index Options Contracts (the“Derivative Contracts”) based on the FTSE 100 Index, listed by Turquoise, and all rules andprocedures relating specifically to the trading, clearing and settlement of such DerivativeContracts are set out in this Part 4.7.

4.7.1.2 These Derivative Contracts are offered for trading on Turquoise during Trading Hours on UKTrading Days.

4.7.1.3 The FTSE 100 Index is described in the Ground Rules for the management of the FTSE 100Index and is available from www.ftse.com/Indices.

4.7.1.4 The FTSE 100 Index is licensed to Turquoise by FTSE International Limited in its capacity asthe Index Provider and calculated continuously during the day on each UK Trading Day byFTSE International Limited (both “FTSE”) in its capacity as the Index Calculator for the FTSE100 Index. In the event of computer failure or lack of information the frequency of calculationsand reports may be altered.

4.7.1.5 All references to time in this Part 4.7 shall be construed as references to London time unlessindicated otherwise.

4.7.1.6 The application and interpretation of this Part 4.7 shall be governed by English law and theCourts of England and Wales shall have exclusive jurisdiction to determine any dispute arisingout of or in connection with this Part 4.7



4.7.2.2 In relation to Derivative Contracts (Futures Contracts and Option Contracts)

“Clearing Application” means the application used by Members to perform back office

functions on Turquoise (also referred to as BCS Application);

“Contract” means the individual traded unit of a Derivative;

“Closing Settlement” means the process of cash settlement effected for derivative Contractsfollowing the execution of a Closing Transaction;;

"Closing Settlement Amount" means the amount payable to or by a Member in relation to aClosing Settlement;

"Closing Transaction" means the closing of a position in a Derivatives Contract;

“Daily Settlement Price” means the price against which a Future Contract is settled at theend of each UK Trading Day or the price against which American style Option Contracts areearly exercised; “Derivatives” means an Option or a Future;

“Expiration” means the moment that a Derivatives Contract ceases to exist, and therefore isno longer tradable;

“Expiration Day” is the date on which Expiration occurs;

“Expiration Settlement Amount” means the monetary amount due to or payable by aMember on Expiration of a Derivatives Contract as specified in the statement for the Contractin question; these statements are made available to Members through the Clearing Applicationeach Trading Day

“Expiration Settlement Price” in relation to a Derivative Contract, means the price againstwhich Derivative Contracts are settled upon Expiration;

“Expiration Year” means the year in which Expiration occurs.







RULE BOOK

147

“FTSE 100 Index” (and the FTSE 100 Index compilation and calculation methods) isdescribed more particularly in the conditions for the FTSE 100 Index which are set out atwww.ftse.com/Indices as amended from time to time;

“Index” means (a) a nominated sector of share issuance, (b) a list of shares in such sector(the “constituent shares”); and (c) the algorithm in accordance with which prices of suchconstituent shares are combined to generate a single figure which is calculated by the Index

Provider or the Index Calculator, as the case may be (an “Index figure”) and publishe d fromtime to time;

“Index Calculator” or “Index Provider” means the organisation that has responsibility forprovision and/or the calculation of the Index in accordance with its Rules;

“Listing Day” means the date on which a Derivative Contract is first listed by Turquoise;

“Opening Transaction” means the opening of a position in a Derivatives Contract;

“Open position” means a position that has not been closed;

“Registration” means the entering into the system of a trade that was bilaterally negotiatedaway from Turquoise;

“Series” means a Derivative Contract;

“Settlement” means the process of moving cash and/or the physical underlying (whereapplicable) between Members, normally resulting from trading activities such as Assignment,Exercise, Opening Transactions, Closing Transactions, etc;

“Settlement Day” means the day on which cash and/ or stock is moved between Members.For FTSE100 Derivatives Contracts, this is the first UK Trading Day following the Trade Day orExpiration Day;

“Trading Hours” means the time during which Derivative Contracts are available for tradingas further detailed in the relevant contract specifications;

“Trade Day” means the date on which a Contract is traded (“T”);

“Trading Day” means a day other than a Saturday or a Sunday or other holiday on whichbanks in the United Kingdom are generally open for business as published in Turquoise‟strading and settlement calendar on its website at www.tradeturquoise.com;

“Underlying” means the Index, commodity, share or any other financial instrument on which aDerivative Contract is based;

4.7.2.3 In relation to Futures Contracts only

"Daily Cash Settlement" means the process of cash settlement effected for such FutureContracts on each UK Trading Day during its lifetime in accordance with Rule 4.7.11; "Daily Settlement Amount" means the amount payable to or by a Member in relation to each

Daily Cash Settlement;

“Fair Value” means the theoretical Daily Settlement Price calculated using the followingelements: the closing value of the FTSE 100 Index as calculated by FTSE International eachUK Trading Day at 16:35 following the closing auction on the London Stock Exchange,applicable interest rate, dividend amount and ex dividend day;

“Future Contract” means a Contract that confers an obligation to trade the Underlying at apre-defined price on a pre-defined date in the future;

“Future Price” means the level (price) at which the counterparties agree to trade on Expiration;

4.7.2.4 In relation to Option Contracts only

“Assignment” means the act effective on the seller (the “Writer”) of an Option Contractwhere the buyer (the “Holder”) has exercised its right to Settlement under the terms of theOption Contract and the seller must deliver on those terms.










RULE BOOK

148

“At-The-Money” means an Options Contract whose strike price is equal to the spot price at agiven point in time (e.g. at Expiration);

“Call Option” means an Option Contract that gives the buyer the right but not the obligation tobuy the Underlying at the agreed price from the seller;

“End of Day Price” means price used to calculate theoretical value of OptionContractpositions in order to facilitate the margining process at the clearing level. This price iscalculated in accordance with standard Black Scholes options pricing model(www.tradeturquoise.com);

“Exercise” means the act whereby the buyer (the “Holder”) of an Options Contract choosesto exercise its right to buy or sell the Underlying to the seller (the “Writer”) under the terms ofthe Option Contract and will receive Settlement on those terms.

“Exercise Fee” means the fee charged by Turquoise for exercising and being assigned. Thisfee is charged to both counterparties in line with all other types of fee;

“Exercise Settlement Price” means the price of the Underlying (the “Spot Price”), againstwhich an Option Contract is exercised; on Expiration this Exercise Settlement Price shall beequal to the Expiration Settlement Price, on all other UK Trading Days, it shall be equal to the

Daily Settlement Price

“Exercise Settlement Amount” means the monetary amount due to or payable by a Member on Exercise of an Options Contract as specified in the relevant statement.

“Exercise Window” means the period of time during which Options Contracts areautomatically exercised in accordance with the particular Option Contract specifications;

“In-the-Money” means an Options Contract that would result in a profit to the buyer ifexercised at that moment;

“Options Contract” means a Contract that confers the right but not the obligation to trade theUnderlying at a pre-defined price on a pre-defined date in the future;

“Out-Of-The-Money” means an Options Contract that would result in a loss to the buyer ifexercised at that moment in time;

“Premium” means the level (price) at which an Option Contract is valued and is payable bythe buyer to the seller upon completion of a trade. This payment secures the right to buy or theright to sell at the Strike Price on Exercise;

“Premium Settlement Day” means the date on which the Premium is settled;

“Put Option” means a Derivative Contract that gives the buyer the right but not the obligationto sell the Underlying at the agreed price to the seller;

“Strike Price” means the price at which an Option Contract will be settled if exercised. Theright to buy or sell at the Strike Price is secured by the payment of a Premium on the TradeDay.







RULE BOOK

149

4.7.3 Standardised FTSE 100 Index Futures Contract Specifications

Type of Contract Index Futures Contract -

Contract Underlying The FTSE 100 Index

Index Multiplier GBP 10 per Index point

Tick Size (Minimum PriceMovement)

0.5 points

Quotation display Index points

Daily SettlementPrice

The closing value of the FTSE 100 Index as calculated by FTSE each UK TradingDay at 16:35 following the closing auction on the London Stock Exchange. Thisvalue is adjusted by Turquoise to reflect Fair Value and rounded to two decimalplaces.

Last Trading Day The Expiration Day

Listing Day The Monday preceding the Expiration Day each month.Where this is not a normal UK Trading Day, the preceding UK Trading Day shall beused.

Series Designation Each series on the Turquoise derivatives platform is designated by a maximum ofeight symbols where; a maximum of six symbols designates the ContractUnderlying, one symbol designates the Expiration Year and one symboldesignates the Expiration Month.

ExpirationSettlement Price

The value of the FTSE 100 expiry Index as calculated by FTSE at 10:15am on theExpiration Day or as soon as reasonably practicable, following the intraday auctionon the London Stock Exchange (http://www.londonstockexchange.com/traders-and-brokers/rules-regulations/exchange-delivery-settlement-price.htm) (plus up to30 seconds random interval and any price monitoring extensions or market orderextensions in any of the constituent stocks). Turquoise shall take this value andround to the nearest 0.5 index points to establish the Expiration Settlement Price.

Expiration Day The third Friday in the Expiration Month.Where this is not a normal UK Trading Day, the preceding UK Trading Day shall beused.

Expiration Months March, June, September, December.

Lifetime One year lifetime

Expiration Year The year indicated in the Series designation

Expiration

Settlement Amount

As indicated on the statement

ExpirationSettlement Day

First UK Trading Day following the Expiration Day

Settlement Style Cash settled

Trading Hours 08:00 – 16:30 London time07:30 – 17:30 London time phone reporting of block tradesOn Expiration Day, trading finishes as soon as reasonably practicable after10:15am once the Expiration Settlement Price of the Index has been determined



RULE BOOK

150

4.7.4 Standardised FTSE 100 Index Options Contract Specifications

Type of Contract European style Index Options Contract

Contract Underlying FTSE 100 Index

Index Multiplier GBP 10 per Index point

Tick Size (Minimum PriceMovement)

0.5 points

Quotation display Premium in Index points

End of Day Price Price used to calculate theoretical value of Option Contract positions in order tofacilitate the margining process at the clearing level. This price is calculated inaccordance with standard Black Scholes options pricing model(www.tradeturquoise.com);.

Daily Settlement Price The closing value of the FTSE 100 Index as calculated by FTSE each UK TradingDay at 16:35 following the closing auction on the London Stock Exchange. Thisvalue is rounded to the nearest 0.5 index points.

Last Trading Day The Expiration Day

Listing Day The Monday preceding the Expiration Day each month.Where this is not a normal UK Trading Day, the preceding UK Trading Day shall beused.

Series Designation Each series on the Turquoise derivatives platform is designated by a maximum ofeight symbols where; a maximum of six symbols designates the ContractUnderlying, one symbol designates the Expiration Year and one symboldesignates the Expiration Month. Remaining numeric characters in the series codeindicate the Strike Price of the Option Contract.

ExpirationSettlement Price

The value of the FTSE 100 expiry Index as calculated by FTSE at 10:15am on theExpiration Day or as soon as reasonably practicable, following the intraday auction

on the London Stock Exchange (http://www.londonstockexchange.com/traders-and-brokers/rules-regulations/exchange-delivery-settlement-price.htm) (plus up to30 seconds random interval and any price monitoring extensions or market orderextensions in any of the constituent stocks). Turquoise shall take this value andround to the nearest 0.5 index points to establish the Expiration Settlement Price.

Expiration Day The third Friday in the Expiration Month.Where this is not a normal UK Trading Day, the preceding UK Trading Day shall beused.

Expiration Months March, June, September, December, plus front two non-quarterly months

Lifetime Two-year lifetime for quarterly Options ContractsThree-month lifetime for all other Options Contracts

Expiration Year The year indicated in the Series designation

ExpirationSettlement Amount

As indicated on the statement

ExpirationSettlement Day

First UK Trading Day following the Expiration Day

Settlement Style Cash settled

Exercise Window 18:10 - 18:40 London Time on the Last Trading Day only

Automatic Exercise Rule Applicable to all Series that are In-The-Money







RULE BOOK

151

Trading 08:00 – 16:30 London time

07:30 – 17:30 London time phone reporting of block trades

On Expiration Date, trading finishes as soon as reasonably practicable after10:15am once the Expiration Settlement Price of the Index has been determined

4.7.5 Changing of the Listing or Expiration Day of a Series

4.7.5.1 Turquoise reserves the right to adjust either of the Listing Day or the Expiration Day in respectof any given Series where such adjustment is deemed necessary in the interest of the market.Members shall be informed in advance via a market notice of any such intended adjustment.

4.7.5.2 For newly listed Options Contracts Turquoise shall list Call Options and Put Options inaccordance with the Strike Price Generation document published on the Turquoise website(www.tradeturquoise.com).


4.7.6.1 The Expiration Month for Derivative Contracts shall be designated as follows:

MonthsFuturesContracts

Options Contracts

Call Options Put Options

January - A M

February - B N

March H C O

April - D P

May - E Q

June M F R

July - G S

August - H T

September U I UOctober - J V

November - K W

December Z L X


4.7.7.1 Fees are payable by Members in the amount and at the time specified in the TurquoiseDerivatives Tariff (Fee) Schedule published on the Turquoise website(www.tradeturquoise.com), as amended from time to time.

4.7.7.2 Details of any fee incentive programs or temporary adjustments to any fees shall be notified toMembers by way of a market notice and corresponding update to the Tariff Schedule on theTurquoise website.

4.7.8 Orders

4.7.8.1 A single order consists of an offer to buy or sell the number of Derivative Contracts specified inthe order.


4.7.9.1 This service is available in accordance with Rules 2.9 to 2.12.

4.7.10 Rules for Non-Standardised Contracts (tailor made contracts)

4.7.10.1 Such Non-Standardised Contracts are available in accordance with Rule 2.13.

4.7.11 Market Making

4.7.11.1 All details covering market making activity are outlined in Rule 2.5 and in the “Market Making”document on the Turquoise website.











RULE BOOK

152

4.7.12 Expiration Settlement Price

4.7.12.1 Members shall be aware that the Expiration Settlement Price may vary from that trading day‟shighs and lows.

4.7.12.2 Turquoise shall notify all Members of the determined Expiration Settlement Price in question

via a market notice.

4.7.13 Statements

4.7.13.1 Detailed statements/ reports in relation to account/ position activity referred to in the Rulesbelow are available to Members through the Clearing Application. These statements includeinformation that show the amounts due to or payable by the Member.

4.7.13.2 The statements are available normally no later than 10:00pm on each UK Trading Day.



RULE BOOK

153

4.7.14 Index Futures Contracts: Expiration and Settlement

4.7.14.1 A Futures Contract is an agreement to buy or sell an Underlying on the Expiration Day and tobe settled in accordance with the Rules regarding Cash Settlement. The agreed Futures Priceis the amount the buyer agrees to pay for an Underlying on Expiration Day.

4.7.14.2 Daily Cash Settlement of an Index Futures Contract shall be effected in accordance with the

Daily Cash Settlement procedures set out in Rule 4.7.14 on each UK Trading Day prior to theExpiration Day.

Expiration Settlement of an Index Futures Contract shall be effected as a final Daily CashSettlement on the Expiration Settlement Day for such Contract in accordance with theprocedures specified in Rule 4.7.14.

4.7.14.3 All obligations to make cash payments under the procedures governing Daily Cash Settlementor Expiration Settlement of Index Futures Contracts shall be effected by way of the ProtectedPayment System (PPS) arrangements established by the Designated Clearing House for suchpurposes. Such payments shall be effected in accordance with the instructions issued by theDesignated Clearing House.

4.7.14.4 All payments required to be made under the settlement procedures shall be made inaccordance with instructions issued by the Designated Clearing House. Such payments shall

be made in the currency of the Index Futures Contract.

4.7.15 Index Futures Contracts: Daily Cash Settlement

4.7.15.1 Index Futures Contracts are subject to Daily Cash Settlement. The first Daily Cash Settlementshall be due on the first UK Trading Day following the Registration of the Index FuturesContract. Thereafter, Daily Cash Settlement shall be effected on each UK Trading Day untilthe Expiration Day for the Index Futures Contract in accordance with the provisions of thisRule.

4.7.15.2 During the term of an Index Futures Contract, the Daily Settlement Price shall normally bedetermined in accordance with the process provided for in the relevant Contract specification.

4.7.15.3 The First Daily Settlement Amount for an Index Futures Contract shall be determined by

reference to the difference between the Future Price for the Index Futures Contract in questionand the Daily Settlement Price for the Index Futures Contract on the UK Trading Day on whichthe Index Futures Contract is registered by the Designated Clearing House.

4.7.15.4 Where the Future Price for such Index Futures Contract is higher than the Daily SettlementPrice on the UK Trading Day in question, the First Daily Settlement Amount shall be payableto the seller.

Where the Future Price for such Contract is lower than the Daily Settlement Price on the UKTrading Day in question, the First Daily Settlement Amount shall be payable to the buyer.

4.7.15.5 The Daily Settlement Amount for an Index Futures Contract (other than the First DailySettlement Amount) shall be determined by reference to the difference between the DailySettlement Price for the Index Futures Contract on the UK Trading Day in question and theDaily Settlement Price for the immediately preceding UK Trading Day for such Index Futures

Contract.

4.7.15.6 Where the Daily Settlement Price for an Index Futures Contract on a UK Trading Day is higherthan the Daily Settlement Price for the immediately preceding UK Trading Day for suchContract the Daily Settlement Amount shall be payable to the buyer.

Where the Daily Settlement Price for an Index Futures Contract on a UK Trading Day is lowerthan the Daily Settlement Price for the immediately preceding UK Trading Day for such IndexFutures Contract, the Daily Settlement Amount shall be payable to the seller.

4.7.15.7 The Daily Settlement Amount shall be payable on the first UK Trading Day following the UKTrading Day in question in accordance with the instructions of the Designated Clearing House.

4.7.16 Index Futures Contracts: Closing Transactions

4.7.16.1 Open positions in Index Futures Contracts registered in an account at the Designated ClearingHouse will be closed out in accordance with the provisions of this Rule.



RULE BOOK

154

4.7.16.2 Where both the Opening Transaction and the Closing Transaction are registered on the sameUK Trading Day, cash Settlement between the Designated Clearing House and the Membershall be effected by reference to the difference between the Futures Price for the twotransactions.

Where the Futures Price for the Member‟s bought Contract is higher than the Futures Price forthe Member‟s sold Contract, the Closing Settlement Amount shall be payable by the Member.

Where the Future Price for the Member ‟s bought Contract is lower than the Future Price forthe Member‟s sold Contract, the Closing Settlement Amount shall be payable to the Member.

4.7.16.3 Where the Opening Transaction and the Closing Transaction are registered on different UKTrading Days, the Closing Settlement between the Designated Clearing House and theMember shall be effected by reference to the difference between the Daily Settlement Price forthe immediately preceding UK Trading Day and the Future Price for the Closing Transaction.

4.7.16.4 The Closing Settlement Amount shall be payable to or by the Designated Clearing House onthe first UK Trading Day following the day on which the Closing Transaction is registered atthe Designated Clearing House.

4.7.17 Index Options Contracts: Exercise

4.7.17.1 European style Options Contracts are only subject to automatic Exercise on Expiration.

4.7.17.2 American style Options Contracts are subject to automatic Exercise on Expiration but mayalso be exercised on any UK Trading Day during the lifetime of the Options Contract.

4.7.17.3 All Options Contracts are subject to automatic Exercise provided that they are In-the-Moneyon Expiration. Option Contracts At-The-Money and Out-Of-The-Money are not subject toautomatic Exercise and will expire worthless, unless Exercise is expressly requested as perRule 4.7.17.5

Exercise Window / manualExercises

Option style Exercise Open Close

American style

Any UK Trading Day from Trade Day until

the UK Trading Day before Expiration Day 07:30 18:00European style and

American styleExpiration Day only 18:10 18:40

All times are London times

4.7.17.4 On Expiration Day, at the start of the Expiration Window, a report detailing all the OptionsContracts subject to automatic Expiration shall be made available in the clearing system.

4.7.17.5 Where the holder of an Option Contract wishes to exercise an Option if possible (as per thetable above), it shall exercise such Option Contract via the BCS clearing application.

4.7.17.6 This request must be submitted during the relevant Exercise Window as per the table abovefor the Option Contract in question.

4.7.17.7 On Exercise of an Option Contract, the Exercise Settlement Amount will be indicated on thestatements made available to Members in accordance with Rule 4.7.13.

4.7.17.8 If the Option Contract is a Put Option, the Exercise Settlement Amount shall be determined bymultiplying the amount by which the Strike Price for the Options Contract in question exceedsthe Exercise Settlement Price for such Options Contract by the Index Multiplier and thenumber of Option Contracts.

4.7.17.9 If the Option Contract is a Call Option, the Exercise Settlement Amount shall be determined bymultiplying the amount by which the Strike Price for the Options Contract in question is belowthe Exercise Settlement Price for such Options Contract by the Index Multiplier and thenumber of Option Contracts.

4.7.17.10 The Exercise Settlement Amount for an Options Contract shall be due for Settlement on thefirst UK Trading Day following the Contract's Expiration Day.



RULE BOOK

155

PART 5 DEFAULT RULES

5.1 Definitions and Interpretation

In this Part 5:

"Account" means an Account opened in accordance with the LCH Regulations;

"Declared a defaulter" in relation to a Member or a designated non-member, means declareda defaulter under Rule 5.4.1 or deemed to have been declared a defaulter by virtue of Rule5.4.2;

"Default" or "in default" in relation to a Member or designated non-member, means that anevent or circumstance referred to in Rules 5.3 or 5.4.1 has occurred in respect of such Memberor designated non-member;

"Defaulter" means a Member or designated non-member whom Turquoise has declared adefaulter;

"Default Rules" has the meaning ascribed to it in Part 1;

"Default Settlement Amount" means the amount arrived at on each account drawn up underRule5.5.6 by, on each such account, aggregating all settlement amounts credited and allsettlement amounts debited to such account and setting-off the aggregated amounts of suchcredits against the aggregated amount of such debits;

"designated non-member" means a person designated or a person falling within a descriptionof persons designated from time to time by Turquoise as a person or persons in respect ofwhom action may be taken under Rules 5.4 and 5.5;

"Market Maker" has the meaning given in Part 1;

"Associated Clearing House" means any clearing house which Turquoise designates as suchfrom time to time;

"Member" has the meaning given in Part 1;

"Market Contract" for the purposes of these Default Rules means a Futures Contract or anOptions Contract or any other Contract, whether platform traded or a bilateral Contractreported to Turquoise in accordance with its Rules for Cleared Only Contracts, registeredunder the terms of the Rules of Turquoise and the Clearing House Regulations including,without limitation, the default Rules incorporated in the Clearing House Regulations;

Every Market Contract is a „market contract‟ on Turquoise under section 155(2)(a) of theCompanies Act 1989. The principals to each such Market Contract are the Member, or theMember‟s General Clearing Member, and the Designated Clearing House. The DesignatedClearing House enters into each such contract for the purpose of the provision of clearingservices to Turquoise. Every Market Contract is also a market contract at the DesignatedClearing House under section 155(3) of the Companies Act 1989.

"Relevant office-holder" has the meaning given in section 189 of the Companies Act 1989;

"Settlement amount" in relation to an unsettled Market Contract means the amountdetermined as being due to or from the Designated Clearing House in accordance with theDefault Rules or, where applicable, the corresponding provisions of the Rules governing theunsettled Market Contract in question;

"Unsettled Market Contract" means a Market Contract in respect of which the rights andliabilities of the parties thereto have not been discharged whether by performance, compromiseor otherwise.

5.2 Application

5.2.1 Rules 5.4, 5.5 and all other provisions of the Default Rules other than Rule 5.14 shall apply toMembers and designated non-members who are defaulters.

5.2.2 The provisions of the Default Rules other than Rules 5.4 and 5.5 shall apply to Members anddesignated non-members who are not defaulters.



RULE BOOK

156

5.2.3 This Part 5 is without prejudice to, but in the case of any conflict takes precedence over, anyother provisions of these Rules or of any other rules or the terms of any other agreement whichprovide for the settlement of Market Contracts whether on a default or otherwise.

5.3 Events of Default

5.3.1 If:

(a) a Member or designated non-member fails to fulfil any obligations arising fromFutures and Options Contracts registered in his Account whether arising under theseRules or otherwise: or

(b) a Member is in breach of these Rules, the Membership Agreement (whereapplicable), the Market Maker Agreement (where applicable) or any other rules orregulations from time to time applicable to trading in and/ or clearing of the Contractsor any other contracts made with Designated Clearing House or any other agreemententered into between Turquoise and a Member relating thereto or to the provision oftrading and clearing services by Turquoise or fails to pay any sums due to Turquoisepursuant to the Rules or any other such agreements, rules or regulations; or

(c) a Member or designated non-member fails to pay any sum due and payable or isotherwise in default under the terms of any agreement; or

(d) a Member or designated non-member generally not paying its debts as such debtsbecome due, or admitting its inability to pay its debts generally or becoming or beingdeemed to have become unable to pay its debts within the meaning of section 123 ofthe Insolvency Act 1986, or making a general assignment for the benefit of creditorsor any proceedings being instituted or steps being taken by or against a Member or adesignated non-member seeking to adjudicate it bankrupt or insolvent, or seekingliquidation, winding-up, re-organisation, dissolution, administration, arrangement,adjustment, protection, relief or composition of it or its debts under any law relating tobankruptcy, insolvency or re-organisation or relief of debtors, or seeking the entry ofan order for relief or the appointment of a receiver, administrative receiver, liquidator,provisional liquidator, administrator, trustee or other similar official for it or for anysubstantial part of its revenues and assets (except, in each case, for the purpose of a

reconstruction or amalgamation by a member, the terms of which have previouslybeen approved by Turquoise in writing); or

(e) a Member or designated non-member taking any corporate action or other step toauthorise, institute or commence any of the actions referred to in paragraph (d)above; or

(f) an execution distress sequestration attachment or other process being levied orenforced against a Member or designated non-member or against any substantial partof its revenues and assets and not being discharged within seven days of being solevied or enforced; or

(g) any event occurs or proceedings are brought in respect of a Member or designatednon-member analogous to any of those referred to in paragraphs (d) to (f) inclusive inany jurisdiction outside England and Wales; or

(h) a Member or designated non-member being in breach of the terms of its membershipof, or being refused an application for or being suspended or expelled frommembership of, a regulatory body or being in breach of the rules of a regulatory bodyto which he is subject or a regulatory body taking or threatening to take any action inrelation to the member or designated non-member under the Financial Services andMarkets Act 2000 or taking or threatening to exercise its powers under its rules torestrict or prohibit the Member or designated non-member from entering intotransactions or carrying on its business or dealing with its assets; or

(i) any licence authorisation consent or registration at any time necessary to enable aMember or designated non-member to comply with its obligations to Turquoise or toany other Member or designated non-member or to carry on its business in thenormal course being revoked, withheld or materially modified or failing to be grantedor perfected or ceasing to remain in full force and effect; or

(j) a Member becoming or being declared in default under the default rules of anyRecognised Investment Exchange or Multilateral Trading Facility or a RecognisedClearing House or being declared in breach of the terms of membership of, or being



RULE BOOK

157

suspended or expelled from membership of, any recognised, designated or overseasinvestment exchange or clearing house or any Associated Clearing House or OsloBørs or any action being taken by any such body in relation to such Member which issimilar to the action which may be taken by Turquoise under this Rule; or

(k) any other event or circumstance arising or occurring which may give grounds for

Turquoise to determine in its opinion that a Member may not (or may be or becomeunable to) perform or comply with its obligations under one or more Market Contracts;or

(l) a Member fails to provide Collateral to the Designated Clearing House as required bythe Rules or the LCH Regulations; or

(m) Turquoise considers it necessary or desirable to take action under this Part 5 for itsown protection

then, on the occurrence of any such event, Turquoise shall (subject to Rules 5.2 and 5.8) beentitled without giving notice to the Member or designated non-member in question to take atits absolute discretion any one or more of the steps set out in this Part 5.

5.3.2 A Member shall notify Turquoise immediately if any of the events referred to in paragraphs (a)

to (m) of Rule 5.3.1 occur in relation to it and shall respond promptly to all enquiries or requestsfor information made by Turquoise pursuant to the Default Rules.

5.4 Declaration of Member or Designated Non-Member to be a Defaulter

5.4.1 Subject to Rule 5.4.2, in the event of a Member or designated non-member appearing toTurquoise to be unable, or to be likely to become unable, to meet his obligations in respect ofone or more Market Contracts, Turquoise may, in its absolute discretion and without givingprior notice to such Member or designated non-member, if it considers such action to beappropriate in the interests of Turquoise and/ or its marketplace, declare such Member or suchdesignated non-member to be a defaulter.

5.4.2 Turquoise may be directed by the FSA pursuant to the provisions of Section 166 of theCompanies Act 1989 to take action or not to take action in respect of a Member or designated

non-member under these Default Rules. If Turquoise is directed by the FSA pursuant to theaforesaid provisions to take one or more of the steps referred to in Rule 5.5 in relation to aMember or designated non-member, that Member or designated non-member shall (if notalready declared a defaulter) be deemed to be declared a Defaulter under Rule 5.4.1.

5.4.3 As soon as reasonably practicable after a Member or designated non-member has beendeclared a defaulter, Turquoise shall take steps to bring this to the attention of:

(i) the defaulter;

(ii) such other persons as it thinks fit.

5.4.4 Without prejudice to the generality of Rule 5.4.1, Turquoise may take the occurrence of any ofthe events set out in Rule 5.3 as grounds for forming the view that a Member or designatednon-member appears to be unable or is likely to become unable to meet his obligations in

respect of one or more Market Contracts.

5.5 Default Proceedings in respect of a Defaulter

5.5.1 Subject to Rule 5.4.1, Turquoise shall, in its absolute discretion, immediately following or at anytime after a Member or designated non-member has been declared a defaulter take any one ormore of the steps referred to in Rule 5.5.2 in order:

(i) that the rights and liabilities between the defaulter and the Designated Clearing Houseunder all Unsettled Market Contracts to which the defaulter is a party as principal aredischarged pursuant to Rule 5.5.5 and a settlement amount (if any) payable by oneparty to the other is determined in respect of each such Contract in accordance withthis Rule 5.5;

(ii) for there to be certified by or on behalf of Turquoise, the net sum (if any) due to orfrom the defaulter as determined in accordance with Rule 5.5.6 or that no such sum isdue, as the case may be.



RULE BOOK

158

5.5.2 The steps referred to in Rule 5.5.1 are to implement or to direct that there be implemented anyone or more of the steps set out in Rules 5.7 to 5.13 inclusive or any other steps set out inthese Rules, or to implement or direct that there be implemented any provision of the rulesgoverning other financial products handled by Turquoise or the terms of any other agreementbetween Turquoise and the defaulter as in the circumstances appear to it best calculated tocomplete the process set out in Rule 5.5.1.

5.5.3 Where in accordance with Rule 5.5.2 above, Turquoise implements or directs that there beimplemented any one or more of the steps set out in Rules .7 to 5.13 inclusive in respect of aMarket Contract, the settlement amount (if any) for such Contract shall be determined in themanner prescribed in the Rule or Rules under which such steps have been taken. Indetermining the settlement amount Turquoise shall take into account any arbitration, award or judgement obtained in respect of any proceedings arising from any dispute, claim or othermatter concerning any such Market Contract. The settlement amount so determined byTurquoise shall be final, conclusive and binding. The defaulter shall be liable to pay or shall beentitled to receive, as the case may be, the settlement amount so determined in respect ofeach such Contract.

5.5.5 The rights and liabilities of the defaulter under a Contract to which he is party as principal andwhich is the subject of one or more steps taken under Rule 5.5.1 shall be discharged upon thelater of the completion of the steps taken under such Rule with respect to such Contract or the

making of any arbitration, award or judgement resulting from any proceedings beingcommenced in respect of any dispute, claim or matter arising out of or in connection with suchContract.

5.5.6 An account shall be drawn up under which all settlement amounts owed to or by the defaulterin respect of Market Contracts to which the defaulter is party as principal shall be credited ordebited, as appropriate so as to produce the Default Settlement Amount payable by or to thedefaulter on the Account.

5.5.8 Turquoise shall be entitled in its discretion and without notice to the defaulter to make anycurrency conversions which Turquoise considers necessary or desirable for the purposes ofthese Default Rules at such rate or rates as Turquoise may reasonably determine.

5.6 Default by a Member or Designated Non-Member who is not declared a Defaulter

5.6.1 If any of the events set out in Rule 5.3.1 or any other event or circumstance occurs in relationto a Member or a designated non-member where such Member or designated non-member isnot declared a defaulter, Turquoise shall be entitled to take any one or more of the followingsteps in relation to the Member or designated non-member in question without giving notice tosuch party:

(i) terminate all outstanding registered Contracts pursuant to Rule 5.8; or

(ii) exercise its rights under Rule 5.12.

5.7 Defaulter also declared to be in default by the Designated Clearing House

5.7.1 In the event that the defaulter is also declared to be in default by the Designated Clearing

House any Unsettled Market Contracts will be dealt with in accordance with the default LCHRegulations with such rules having priority over these Default Rules.

5.7.2 For the avoidance of doubt, Rule 5.7.1 does not preclude Turquoise from taking any actionwhich Turquoise may be required or deems necessary to take either under these Default Rulesor in order to assist the Designated Clearing House in dealing with Unsettled Market Contractsunder its default rules.

5.7.3 The Designated Clearing House may delegate to Turquoise the performance of any function inrespect of Unsettled Market Contracts which the Designated Clearing House may be requiredor deem necessary to exercise under the default LCH Regulations.

5.7.4 Any Unsettled Market Contract dealt with in accordance with the default LCH Regulationsunder this Rule 5.7 will be deemed to have been dealt with in accordance with these DefaultRules.

5.8 Termination of Futures and Options Transactions



RULE BOOK

159

5.8.1 In the circumstances described in this Part 5, Turquoise may at such times and at suchtransaction prices as it may at its absolute discretion determine, buy or sell as many Futures,or Options Contracts, from or to the relevant Member, as Turquoise considers necessary andto close any of the outstanding Contracts of such Member. Any such Contract entered into byTurquoise shall be entered into it by it for the account of the Member in question. Thesettlement amount for a Contract closed-out under this Rule shall be:

(i) in the case of a Futures Contract, the difference between the Daily Settlement Sumfor the most recent Daily Cash Settlement and the agreed Futures Contract Price atwhich the closing-out Contract was made, or where the closing-out Contract iseffected prior to the First Daily Cash Settlement for the contract in question, thedifference between the agreed Futures Contract Price and the agreed FuturesContract Price at which the closing-out Contract was made; or

(ii) in the case of an Options Contract, if the Premium under such Contract is due butunpaid, the difference between such Premium and the Premium payable in respect ofthe closing-out Contract or, if the Premium under such Contract has been paid, thePremium payable in respect of the closing-out;

5.8.2 In addition, Turquoise is entitled prematurely to make cash settlement of registered FuturesContracts. Where in relation to such Contracts the Member is a seller, Turquoise shall beentitled to register a new Contract with the Member as buyer that is equivalent in all material

respects to such existing Contract. Where in relation to such Contracts the Member is a buyer,Turquoise shall be entitled to register a new Contract with the Member as seller equivalent inall material respects to such existing Contracts. Any sum credited pursuant to action takenunder this Rule may be applied towards satisfaction of any amount due or payable by theMember to the Designated Clearing House.

5.8.3 The settlement amount for a Contract terminated under this Rule shall be the differencebetween, in the case of each Contract which is cash-settled under such Rule, the agreedContract Price under the Contract settled under such Rule and the agreed Contract Priceunder the new Contract entered into under such Rule. Each such settlement amount shall becredited or debited to the relevant Account as appropriate.

5.9 Exercise of Options

5.9.1 In the circumstances described in this Part 5, Turquoise may on behalf of the Member inquestion exercise any American Style Option held by the Member as buyer.

5.9.2 Any such exercise on behalf of a Member shall be deemed to have been effected by suchMember.

5.9.3 Turquoise may exercise an American Style Option held by it as buyer against such Member.

5.10 Non-fulfilment of Delivery

5.10.1 If a Member who has sold a Futures Contract, has written a Call Option and has receivednotice that exercise has been demanded, or has exercised a Put Option and fails to provideDeliverable Stock, Deliverable Bonds or Deliverable Bills as the case may be in accordance

with Turquoise's instructions and these Rules, Turquoise may require payment by the Memberof the difference between the cost to Turquoise of acquiring the relevant Stock, Bonds or Billsas the case may be and the Strike Price or the agreed Futures Contract Price for the number ofshares, bonds or bills as the case may be underlying the Futures or Options Contract, and orthe cost to Turquoise of borrowing the relevant Stock, Bonds or Bills as the case may beand/or a special set fee for non-fulfilment of delivery determined by Turquoise and Turquoiseshall be entitled to retain for its own account sums received by it on the Exercise SettlementDay or Expiration Settlement Day (as appropriate) in relation to delivery of the relevant Stock,Bonds, Bills or as the case may be. In cases of non-fulfilment of delivery to Turquoiseresulting in Turquoise being unable to deliver promptly to the Member entitled to receivedelivery from Turquoise, the special set fee for non-fulfilment of delivery shall, if charged byTurquoise, be transferred in full to the Member not receiving prompt delivery from Turquoisedue to such non-fulfilment.

5.10.2 The settlement amount in respect of each Contract in respect of which Turquoise takes action

under this Rule shall be the difference between the cost to Turquoise of acquiring such Stock,



RULE BOOK

160

Bonds, Bills as the case may be and the agreed Futures Contract Price or the Strike Price, asthe case may be, under such Contract and or the cost to Turquoise of borrowing the relevantProduct and or a special set fee for non-fulfilment of delivery as determined by Turquoise.

5.10.3 Deleted

5.11 Sale of Stock, or Deliverable Instruments

5.11.1 If a Member, who is due to receive the underlying Product in question pursuant to a FuturesContract or has written a Put Option and received notice that Exercise has been demanded orhas exercised a Held Call Option, in accordance with these Rules, does not pay on theExercise Settlement Day or the Expiration Settlement Day (as appropriate) for the Stock,Deliverable Instruments as the case may be related to the Options or the Futures or Contract ,Turquoise is entitled to sell the relevant Product if held by the Designated Clearing House. Ifthe amount received from such a sale is less than the agreed Futures Contract Price or theStrike Price as stated in the Option for the number of products underlying the relevantContract, Turquoise is entitled to require payment by the Member of the difference between theamount received and the agreed Futures Contract Price or the Strike Price of the relevantContract.

5.11.2 The settlement amount in respect of a Contract in respect of which Turquoise takes actionunder this Rule shall be the difference between the Strike Price or, as the case may be, theagreed Futures Price and the amount received by Turquoise for such Product (if less than suchagreed Futures Price or Strike Price).

5.12 Other Actions

5.12.1 Notwithstanding the specific provisions of this Part 5, Turquoise may in the circumstancesdescribed in Rule 5.6 take any action it deems necessary for the protection of Turquoise in thename of and at the expense of the relevant Member.

5.13 Prohibition on Further Trading

5.13.1 In addition to any steps taken under this Part 5, Turquoise may also prohibit a defaulter fromfurther trading or registering Contracts with Turquoise.

5.14 Settlement of Open Contracts

5.14.1 On the occurrence of any event referred to in Rule 5.3.1 (d) to (g) inclusive and Rule 5.3.1 (i) inrelation to a Member, Turquoise may by notice in writing to such party or to the Broker of thecustomer or client in question require settlement of all Contracts registered in the Account orAccounts in question to take place in accordance with this Rule 5.14 on the default settlementdate which for this purpose shall be the date on which such notice is given. On the occurrenceof any of the events set out in Rule 5.3.1 (d), (e) or (g) Turquoise and the Member shallautomatically become obliged to settle all Contracts registered in the relevant Account orAccounts in accordance with this Rule 5.14 on the default settlement date which for thispurpose shall be the first London Bank Day after the date of the order or resolution for winding

up of the defaulter or other relevant event. In these circumstances each Contract shall besettled forthwith by the establishment of the settlement amount in respect of such Contract inaccordance with Rule 5.14.2 and by payment in the manner provided for in Rule 5.14.3.

5.14.2 The settlement amount in respect of each open Contract for the purposes of this Rule shall becalculated by Turquoise whose calculation in the absence of manifest error shall be conclusive.With respect to each open Contract Turquoise shall calculate the difference between:

(i) the value at the agreed Options Contract the value of the Option at the Premium forsuch Option as stated in the Contract or the value of the Futures Contract at the lastsuccessfully settled Daily Settlement Price; and

(ii) the value of the Futures Contract at the official quotation as at close of trading on thedefault settlement date for such Futures Contract as published by Turquoise, or in thecase of an Options Contract, the value of the Option at the official quotation as atclose of trading on the default settlement date for such Option as published byTurquoise, such official quotation being in the case of a Futures Contract or anOptions Contract either the published bid or the published offer price as Turquoise inits absolute discretion may determine to be appropriate.



RULE BOOK

161

5.14.3 In the case of an open Contract under the terms of which the Member is a buyer, if the value ofthe Futures Contract or the Options Contract calculated under Rule 5.14.2(i), is less than itsvalue calculated under Rule 5.14.2(ii), or in respect of an open Contract under the terms ofwhich the Member is seller, if the value of the Futures Contract or Options Contract calculatedpursuant to Rule 5.14.2(i) is greater than its value calculated pursuant to Rule 5.14.2(ii), theMember shall be entitled to receive (subject to Turquoise's rights of set-off under Rule1.8) an

amount equal to the difference between the two values.

5.14.4 In respect of an open Contract under the terms of which the Member is a seller, if the value ofthe Futures Contract or the value of the Option calculated under Rule 5.14.2(i) is less than itsvalue calculated under Rule 5.14.2(ii) or in respect of an open Contract under the terms ofwhich the Member is the buyer, the value of the Futures Contract or value of the Optioncalculated under Rule 5.14.2(i) is greater than its value calculated under Rule 5.14.2(ii) theMember shall pay to Turquoise an amount equal to the difference between the two values.

5.14.5 Turquoise and the Member hereby agree that the amount payable under this Rule 5.14represents a reasonable pre-estimate of the loss which would have been suffered as a result ofthe occurrence of the events specified in any of paragraphs (d) to (i) of Rule 5.3 and is not apenalty. No proof of evidence of actual loss may be required in respect of such amount. Suchamount represents the amount which would have been payable as damages as aconsequence of such loss from the other party.

5.15 Procedures

5.15.1 Turquoise may from time to time prescribe procedures for the purposes of these Default Rulesand to provide for the manner in which its rights or obligations under the Companies Act 1989or the Financial Services and Markets Act 2000 in relation to such rules or proceedings may beexercised by or on behalf of Turquoise.

5.15.2 Turquoise may from time to time prescribe procedures for the designation of persons asdesignated non-members, for reviewing or withdrawing any such designation and for notifyingpersons of such designation, or the withdrawal of such designation. Such procedures shallensure that:

(i) no person or description of persons shall be so designated or remain designated if the

failure by such person or description or persons to meet its obligations in respect ofone or more Market Contracts would be unlikely adversely to affect the operation ofTurquoise's Market;

(ii) a person so designated or a person within the description of persons in question isnotified promptly that it or the description of persons in question has been designatedor that the designation of such person or description of person has been withdrawn;

(iii) where a description of persons is so designated or such designation withdrawn,procedures are in place to enable Turquoise to ascertain which persons fall withinsuch description for the time being. Turquoise shall publish its procedures for thedesignation of persons or descriptions of persons from time to time.

5.15.3 The defaulter shall co-operate fully at all times with Turquoise and shall promptly provide suchinformation as Turquoise or its employees or agents may request in connection with the

implementation by Turquoise of these Default Rules or the exercise by it of its rights or thefulfilment by it of its obligations under the Companies Act 1989 or the Financial Services andMarkets Act 2000 in respect of such Rules.

5.16 Delegation of Functions

5.16.1 Turquoise may from time to time appoint one or more persons to perform on its behalf any ofthe functions which it may be required or deem necessary to exercise under these DefaultRules and may engage the services of any professional adviser to advise or assist Turquoisewith regard thereto.

5.16.2 The Designated Clearing House may be appointed under rule 5.16.1.

5.17 Costs

5.17.1 The defaulter shall be liable to indemnify Turquoise in respect of Turquoise's costs, chargesand expenses in taking any action under the Default Rules, including the costs of any person



RULE BOOK

162

appointed to perform functions on behalf of Turquoise pursuant to Rule 5.16 or anyprofessional adviser engaged pursuant to Rule 5.16.

5.18 Co-operation with Other Bodies

5.18.1 Turquoise may pass on any details of or other information in its possession relating to a

Member or designated non-member or its Market Contracts to the Secretary of State, to theFSA, to any Recognised Investment Exchange or Recognised Clearing House or regulatorybody, or to any other exchange or clearing house approved under the Companies Act 1989 forthe purposes of Part VII of that Act, or to any relevant office-holder or any other authority orbody having responsibility for any matter arising out of, or in connection with, the default of aMember or designated non-member and otherwise co-operate with such persons in connectionwith such default.



RULE BOOK

163

PART COR 1 INTRODUCTION

COR 1.1 Introduction and Status of Cleared Only Contracts

COR 1.1.1 Turquoise provides a trade matching service in relation to the Cleared Only Contracts whichare reported to it in accordance with these Rules for Cleared Only Contracts.

Turquoise does not provide facilities for the trading of Cleared Only Contracts. Transactions inCleared Only Contracts are conducted on a bilateral basis and may be reported to Turquoisefor trade matching in accordance with the provisions of these Rules for Cleared OnlyContracts. Where matched Trade Reports are received by Turquoise, it will forward therelevant particulars to the Designated Clearing House so that the Designated Clearing Housemay determine whether to enter into Registered Contracts with the Member or Members inquestion on the terms specified in the Trade Reports.

All such Registered Contracts will be entered into by the Designated Clearing House asprincipal in accordance with and subject to its Regulations.

COR 1.1.2 The Contract Specifications for Cleared Only Contracts in respect of which Members maysubmit Trade Reports are set out at Rules COR 3.1, COR 4.1, COR 5.1 and COR 6.1;

The rules relating to the submission of Trade Reports relating to Cleared Only Contracts andother rules of general application to such Contracts are set out in Part COR 2.

The Contract Specifications for and rules relating specifically to Cleared Only Contracts basedon an International Order Book Depositary Receipt (IOB DR) and the FTSE Russia IOB Indexare set out in COR 3.

The Contract Specifications for and rules relating specifically to Cleared Only Contracts basedon UK Stock are set out in Part COR 4.

The Contract Specifications for and rules relating specifically to Cleared Only Contracts basedon Norwegian Stock and the OBX Index are set out in Part COR 6.

COR 1.1.3 The rules and procedures set out in these Rules for Cleared Only Contracts apply to the

following Contracts:

(i) Cleared Only IOB DR Futures;(ii) Cleared Only IOB DR Options;(iii) Cleared Only FTSE Russia IOB Index Futures;(iv) Cleared Only FTSE Russia IOB Index Options(v) Cleared Only Norwegian Stock Futures based on a stock listed in the Norwegian

Stock List;(vi) Cleared Only Norwegian Stock Options based on a stock listed in the Norwegian

Stock List;(vii) Cleared Only OBX Index Futures;(viii) Cleared Only OBX Index Options;

and references in these Rules for Cleared Only Contracts to "Cleared Only Contracts" shallbe construed as references to each of the above Contracts unless the context requires to the

contrary.

COR 1.1.4 The application and interpretation of this Part COR shall be governed by English law and theCourts of England and Wales shall have exclusive jurisdiction to determine any dispute arisingout of or in connection with this Part COR.

COR 1.1.5 Save where there is an express indication to the contrary, all references to time in these Rulesfor Cleared Only Contracts shall be construed as references to London time.

COR 1.1.6 Deleted



RULE BOOK

164

COR 1.2 Definitions

COR 1.2.1 In this Part of these Rules unless the contrary intention appears the following terms andexpressions shall have the meaning ascribed thereto:

"Cleared Only Call Option" means an Option under which the Holder on exercise of the Optionhas the right in respect of an Option based on Norwegian Stock, or an International Order Book

Depositary Receipt to buy the Contract Base against the right to receive the Premium;

"Cleared Only Contract" means a standardised or non-standardised Futures Contract orOptions Contract of the type described in these Rules for Cleared Only Contracts based on aCleared Only Product which is reported by Turquoise to the Designated Clearing House forRegistration in the Account of the Member and "Cleared Only Future" and "Cleared OnlyOption" shall be construed accordingly.

"Cleared Only Product" means any of the following:

(i) an IOB DR Futures;(ii) an IOB DR Options;(iii) a FTSE Russia IOB Index Futures;(iv) a FTSE Russia IOB Index Options;(v) a Norwegian Stock Futures based on a stock listed in the Norwegian Stock

List;(vi) a Norwegian Stock Options based on a stock listed in the Norwegian Stock

List;(vii) an OBX Index Futures;(viii) an OBX Index Options

"Cleared Only Put Option" means an Options Contract under which the Holder on exercise ofthe Option has the right in respect of an Option based on Norwegian Stock, or an InternationalOrder Book Depositary Receipt to sell the Contract Base against the right to receive thePremium;

“Cleared Only IOB DR Future” means a non-standardised Futures Contract based on a DRlisted in the Turquoise IOB DR List (as published on the Turquoise website) entered into on theterms of the Contract Specification at Rule COR.3.1.1;

“Cleared Only IOB DR Option” means a non-standardised Option Contract based on a DRlisted in the Turquoise IOB DR List (as published on the Turquoise website) entered into on theterms of the Contract Specification at Rule COR.3.1.2;

“Cleared Only FTSE Russia IOB Index Futures” means a non-standardised Futures Contractbased on the FTSE Russia IOB Index entered into on the terms of the Contract Specification atRule COR.3.1.3;

“Cleared Only FTSE Russia IOB Index Options” means a non-standardised Options Contractbased on the FTSE Russia IOB Index entered into on the terms of the Contract Specification atRule COR.3.1.4;

“Cleared Only Norwegian Stock Futures” means a non-standardised Futures Contract basedon a stock listed in the Turquoise Norwegian Stock List entered into on the terms of the Contract

Specification at Rule COR 6.1.1;

“Cleared Only Norwegian Stock Option” means a non-standardised Option Contract based ona stock listed in the Turquoise Norwegian Stock List entered into on the terms of the ContractSpecification at Rule COR 6.1.2;

“Cleared Only OBX Index Futures” means a non-standardised Futures Contract based on theOBX Index entered into on the terms of the Contract Specification at Rule COR 6.1.3;

“Cleared Only OBX Index Options” means a non-standardised Options Contract based on theOBX Index entered into on the terms of the Contract Specification at Rule COR 6.1.4;

"Contract Base" means the, Norwegian Stock, OBX Index, International Order Book DepositaryReceipt (IOB DR) or the FTSE Russia IOB Index on which the Contract in question is based;

"Delivery Payment Sum" means the sum designated as such by Turquoise as being due to theparty making delivery of the Product in question;



RULE BOOK

165

"Delivery Settlement Day" means the third Wednesday of the Expiration Month, or if such day isnot an applicable Bank Day, the next applicable Bank Day;

“Exercise Settlement Statement” in relation to a Cleared Only Options Contract, shall meanthe statement issued by Turquoise following Exercise of such Option showing the rights andobligations of the parties to such Contract following its Exercise;

“Exercise Settlement Amount" in relation to an Options Contract which has been exercised,means the amount specified as such by Turquoise in the relevant Settlement Statement issuedby it, such amount being determined:

(i) for a Cleared Only IOB DR Contract, in the manner specified in Rule 4.1.18;

(ii) for a Cleared Only FTSE Russia IOB Index Contract in the manner specified in Rule4.2.17.

(iii) in relation to a Cleared Only Norwegian Stock Futures Contract, in the mannerspecified in Rule 4.5.15;

(iv) for a Cleared Only OBX Index Contract in the manner specified in Rule 4.6.17;

"Expiration Date" in relation to a Cleared Only Contract, means the last day on which Futures

Contracts or Options Contracts in a particular series will be accepted for registration by theDesignated Clearing House or any applicable Associated Clearing House as indicated in theProduct Specification for the product in question;

“Expiration Delivery Settlement Price (EDSP)” means the closing price as determined by theLondon Stock Exchange (LSE) in accordance with the LSE‟s “Guide to Trading Services” on theExpiration Date. The EDSP as applied by Turquoise shall normally be rounded to 2 decimalplaces unless Turquoise provides otherwise;

"Expiration Settlement Amount" for a Cleared Only Future Contract or Futures Contract shallmean the amount specified as such by Turquoise in the relevant Expiration SettlementStatement issued by it, such amount being:

(i) in relation to a Cleared Only IOB DR Futures Contract, the amount determined inaccordance with Rule 4.1.17

(iii) in relation to a Cleared Only FTSE Russia IOB Index Future Contract, the amountdetermined in accordance with Rule 4.2.16;

(ii) in relation to a Cleared Only Norwegian Stock Futures Contract, the amount determinedin accordance with Rule 4.5.14;

(iii) in relation to a Cleared Only OBX Futures Contract, the amount determined inaccordance with Rule 4.6.16;

“Expiration Settlement Day” in relation to a Cleared Only Future Contract shall mean the dayspecified by Turquoise as the day on which Expiration Settlement of the Contract in question isto be effected;

"Expiration Settlement Statement” in relation to a Cleared Only Futures Contract, shall meanthe statement issued by Turquoise specifying the amount due to or payable by a Member onExpiration Settlement of the Contract in question;

“Expiration Settlement Sum" for a Cleared Only Future Contract shall mean the sum specifiedas such by Turquoise in the relevant Settlement Statement issued by it for the relevantexpiration,

"First Listing Day" in relation to a Cleared Only Contract means the first day on which FutureContracts or Options Contracts in a particular series may be reported to Turquoise in accordancewith these Rules;

"Registered Contract" means a Cleared Only Contract registered in an Account at theDesignated Clearing House in accordance with its Regulations and the details specified in aTrade Report of a transaction in a Cleared Only Product submitted to Turquoise in accordance

with these Rules and "Contract" shall be construed accordingly;

"Registration" means the process applied by the Designated Clearing House for recordingCleared Only Contracts in the Account specified by the relevant Member or in the appropriate



RULE BOOK

166

Account of its General Clearing Member in accordance with the Clearing House Regulationsfollowing confirmation given by Turquoise to the Designated Clearing House that matching TradeReports have been submitted to Turquoise;

"Registration Day" in relation to a Cleared Only Contract, means the day on which suchContract is registered by the Designated Clearing House in accordance with its Regulations;

"Request for Re-registration" means a request in the form prescribed by Turquoise for the timebeing submitted by a Member seeking the Re-registration of one or more Registered Contracts;

"Re-registration" means the process applied by the Designated Clearing House for transferringa Registered Contract from one Account to another Account pursuant to a Request for Re-registration submitted to Turquoise in accordance with these Rules;

"Re-registration Fee" means the fee payable on Re-registration of a Contract pursuant to RuleCOR 2.3;

“Settlement Statement” means an Exercise Settlement Statement or an Expiration SettlementStatement collectively;

“Trade Matching” means the process applied by Turquoise and, where appropriate, Oslo Børswhereby reports submitted by their respective Members relating to a transaction in a Cleared

Only Contract are matched in accordance with these Rules;

“Trade Report” means a report in the form specified by Turquoise submitted by a Member toTurquoise in accordance with these Rules;

COR 1.2.2 Terms which appear in these Rules for Cleared Only Contracts with initial capital letters andwhich are not defined in this Rule COR 1.2 shall have the meaning given to the term in Rule1.2unless the context otherwise requires.

PART COR 2 TRADE MATCHING

COR 2.1 Trade Reports Concerning Cleared Only Contracts

COR 2.1.1 Where a Member enters into a transaction in a Cleared Only Contract with another Member orwith a member of an Associated Clearing House, the Member shall report such transaction toTurquoise in order that such transaction may be reported by Turquoise for Registration at theDesignated Clearing House. The Report submitted by the Member to Turquoise in suchcircumstances shall:

(i) specify the Cleared Only Contract which forms the subject of the transaction; and

(ii) identify the counterparty to such transaction, the Series, the agreed price, the numberof contracts involved in the transaction and the Account at the Designated ClearingHouse in which the Cleared Only Contract will be Registered.

COR 2.1.2 A Trade Report relating to a Cleared Only Contract shall only be considered for acceptance byTurquoise if:

(i) the counterparties to the transaction submit identical notices specifying the Contractsto be registered, the Accounts in which the Contract is to be registered and the termsof the transaction in question to Turquoise or to Turquoise and to the relevantAssociated Clearing House as appropriate;

(ii) the size of the transaction and the Member‟s overall position in the Contract inquestion does not exceed any limits applied by the Designated Clearing House for thetime being.

COR 2.1.3 The Member shall submit the Trade Report to Turquoise for matching as soon as possible afterthe transaction has been concluded. Where Turquoise is satisfied that it is appropriate to doso, it shall forward the information specified in the Trade Report to the Designated ClearingHouse to enable Registration of a Contract between the Designated Clearing House and theClearing Member in question in accordance with the Clearing House Regulations to beeffected.

COR 2.1.4 The acceptance of a Trade Report submitted under this Rule is at the discretion of Turquoise.



RULE BOOK

167

COR 2.1.5 The Registration of a Cleared Only Contract shall be effected by the Designated ClearingHouse in accordance with Rule COR 2.2 and the Clearing House Regulations. All suchmatters shall be determined at the sole discretion of the Designated Clearing House.

Where the Designated Clearing House is informed by Turquoise that a Trade Report has beenreceived and accepted by Turquoise before the relevant deadline specified in Rule COR 2.1.6

and agrees to enter into a Registered Contract pursuant to such Trade Report, the Contract inquestion shall be registered by the Designated Clearing House on that day. Where a reportrelating to the acceptance by Turquoise of the Trade Report is received by the DesignatedClearing House after such time, the Contract in question shall be considered for Registrationby the Designated Clearing House on the next Bank Day.

COR 2.1.6 The normal trade reporting hours for Cleared Only Contracts are as follows:

I. For Cleared Only Contracts based on the IOB DR and the FTSE Russia IOB Index -normally between 7.30 am and 5.30 pm London time for an existing series on an IOBTrading Day; between 7.30 am and 5.30 pm London time for a new series. On certain daysdesignated by Turquoise as half trading days, the trade reporting hours shall be from 7.30am to 1.00 pm London time.

II. for Cleared Only Contracts based on Norwegian Stock or the OBX Index – normally between

8.00 am and 5.30 pm London time on a Norwegian Bank Day.

Turquoise shall inform Members in writing of any days on which the restricted trade reportinghours will apply.

COR 2.1.7 Turquoise shall inform the Member or Members in question as soon as possible if a TradeReport submitted under this rule is not accepted for Registration by the Designated ClearingHouse.

COR 2.2 Registration of Cleared Only Contracts

COR 2.2.1 Where matching Trade Reports relating to a transaction in a Cleared Only Contract aresubmitted to Turquoise, or in the case of a transaction entered into by a Member with a

member of an Associated Clearing House, such Reports are submitted to Turquoise and theAssociated Clearing House in question, Turquoise shall, subject to Rule COR 2.1, confirm thedetails specified in the Trade Reports to the Designated Clearing House in order to enable theRegistration of the Cleared Only Contract in question to be effected in accordance with theClearing House Regulations. The decision to enter into any such Registered Contractfollowing the receipt of such Trade Reports shall be at the discretion of the DesignatedClearing House. Any such Registered Contract shall be entered into by the DesignatedClearing House at the time that such matched trades are recorded in its clearing system.

Where pursuant to the procedures set out in this Rule, a Registered Contract is registered bythe Designated Clearing House, Turquoise shall confirm such fact and the terms of suchRegistered Contract by notice to the Member which submitted the Trade Report in question.

Where for any reason the submission of a Trade Report does not result in the Registration of aRegistered Contract by the Designated Clearing House, Turquoise shall inform the Member

which submitted the Trade Report of that fact and the reasons therefore forthwith.

COR 2.2.2 On Registration of a Cleared Only Contract the Designated Clearing House enters into aRegistered Contract so that:

(i) where a party is the seller in the transaction in question the Designated ClearingHouse shall enter into a Registered Contract as buyer from the Clearing Memberresponsible for the settlement of Contracts effected by such party; and

(ii) where a party is the buyer in the transaction in question the Designated ClearingHouse shall enter into a Registered Contract as seller to the Clearing Memberresponsible for the settlement of Contracts effected by such party.

As a party to such Registered Contracts, the Designated Clearing House is responsible for theperformance of its obligations to the Clearing Member in question.

COR 2.2.3 If the counterparty to the transaction in question entered into by a Member is a member of anAssociated Clearing House, the Designated Clearing House shall enter into a Balance Contract



RULE BOOK

168

with identical economic content with the Associated Clearing House which will in turn enter intoa contract as buyer or seller as the case may be with its member.

COR 2.2.4 Where a Trade Report submitted to Turquoise in accordance with this Rule relates to anOptions transaction in a Cleared Only Contract in a Series which is on the opposite side to anexisting Registered Contract in the same Series which has previously been registered in the

Account of such Clearing Member, the transaction in question shall be reported by Turquoiseto the Designated Clearing House for Registration as a Closing Transaction unless theMember, on submitting the Trade Report, gives express notice to the contrary to Turquoise.On registration of a transaction as a Closing Transaction, the rights and obligations of theClearing Member in respect of the exercise of the Options in question shall cease.

COR 2.2.5 Members should note that the Designated Clearing House enters into Registered Contractsonly in the circumstances prescribed in the Clearing House Regulations. The DesignatedClearing House maintains a neutral position at all times by entering into matching contracts asbuyer and seller contemporaneously.

COR 2.2.6 Members should note that in accordance with the Clearing House Regulations, the DesignatedClearing House may decline to enter into a Registered Contract or to cancel a RegisteredContract where it is required to take such action in order to comply with Applicable Laws orRegulations or any order or direction given by or a requirement imposed by any relevant

regulator or pursuant to the rules of any such regulator.

In such circumstances Turquoise shall take the necessary steps in conjunction with theDesignated Clearing House. Where any such action is taken, Turquoise may at its solediscretion effect such Transactions in the name of and for the account of the Member to whomsuch law, regulation, order, direction or requirement applies as may be necessary in order toensure that following such action and the Registration of the resulting Registered Contracts atthe Designated Clearing House, the balanced position of the Designated Clearing House ismaintained.

COR 2.3 Requests for Re-Registration

COR 2.3.1 A Request for Re-registration of all or certain specified Cleared Only Contracts registered in aClearing Account at the Designated Clearing House may be submitted to Turquoise in

accordance with the following provisions of this Rule.

COR 2.3.2 A Request for Re-registration may be submitted to Turquoise on the grounds that:

(i) the Member has decided to use the services of a General Clearing Member andseeks the Re-registration of Contracts registered in its Account to the Account of theGeneral Clearing Member;

(ii) the Member has decided to terminate its existing arrangements with a GeneralClearing Member and seeks the Re-registration of Contracts registered in the Accountof such General Clearing Member pursuant to the execution of transactions by suchMember to the Account of the Member or the Account of another General ClearingMember whose services the Member has decided to use;

(iii) the Registered Contracts to which the Request relates were effected on behalf of a

Client who has requested that its positions be transferred to another Broker;

(iv) the Registered Contracts to which the Request relates were effected on behalf of aMember as a Client of a Broker, and the Member has requested that the positions inquestion be transferred to its Proprietary Account;

(v) the Re-registration is requested following the transfer of the business of the transferorMember to the transferee Member or other similar event; or

(vi) that the Registration of the Contract in the Account in question was the result of anerror.

COR 2.3.3 A Request for Re-registration shall be submitted to Turquoise by way of the Member‟selectronic connection or in writing and shall be signed by a person authorised in that regard onbehalf of both the transferor and the transferee. Any Request which seeks the Re-registration

of a Contract to or from a Client Account shall not be considered unless the Memberrequesting Re-registration provides satisfactory confirmation that the Clients affected therebyhave consented to the Re-registration.



RULE BOOK

169

COR 2.3.4 A Request for Re-registration which seeks the Re-registration of a Registered Contract to orfrom the Clearing Account of a General Clearing Member (other than a Clearing Account usedsolely for the Registration of positions entered into by such General Clearing Member on itsown account) shall be submitted to Turquoise by way of the Member‟s electronic connection or by submitting a duly completed request in writing in the form specified by Turquoise by both theGeneral Clearing Member and the Member affected by such Request.

COR 2.3.5 Where the Contract in question is also listed by Oslo Børs, a Request for Re-registration mayseek Re-registration of all or certain specified Norwegian Stock or OBX Index Contracts to acustomer Account held by a member of Oslo Børs for the customer in question PROVIDEDTHAT the acceptance of any such request shall be subject to the specific approval ofTurquoise, the Designated Clearing House and Oslo Børs and further that no such requestshall be considered unless satisfactory confirmation is provided to Turquoise, the DesignatedClearing House and Oslo Børs that the customer affected thereby has consented to the Re-registration.

COR 2.3.6 A Request for Re-registration shall provide the information specified in and shall be submittedby the time prescribed in the section of Part 4 of these Rules applicable to the Contract inquestion.

COR 2.3.7 All Requests for Re-registration will be considered at the discretion of Turquoise and the

Designated Clearing House.

Turquoise will inform the Member which submitted the Request for Re-registration of thedecision with regard to the Request as soon as practicable following receipt of the Request.The decision of Turquoise and the Designated Clearing House in this respect shall be final andbinding.

Where a Request for Registration is accepted, Turquoise shall arrange for the terms of anyRegistered Contract affected by such decision to be amended by the Designated ClearingHouse.

A Re-registration fee will be payable in respect of all Contracts which are re-registered inaccordance with this Rule.

COR 2.3.8 A Request for Re-Registration relating to a Cleared Only Contract made pursuant to RuleCOR 2.3.2(vi) will not be considered by Turquoise and the Designated Clearing House unlessit is received no later than 11.00 am London time on the applicable Bank Day for the contract inquestion following the day on which the Trade Report relating to the Contract in question wassubmitted to Turquoise;

COR 2.3.9 Where a Request for Re-Registration is received and accepted by Turquoise and theDesignated Clearing House within the relevant deadline for trade reporting specified in therespective Contract Specification, the Cleared Only Contract in question shall be re-registeredby the Designated Clearing House subject to its Regulations on that day. Where a request forRe-Registration is received by Turquoise after such time, it shall, if accepted, be Re-registeredon the next Bank Day except where the request for Re-registration was submitted on theExpiration Date for the Contract in question.

COR 2.3.10 The procedures for Re-registration set out in this Rule shall not be applied in connection with

the amendment of an error or omission in the registration of a transaction or the terms thereof.Such matters are subject to the rule governing Protests at Rule3.3.

COR 2.4 Deleted COR 2.5 Delivery and Settlement of Cleared Only Contracts - General

COR 2.5.1 The provisions governing the Settlement of Cleared Only Contracts which have been acceptedfor Registration by the Designated Clearing House are set out as follows:

(i) rules relating to the settlement of International Order Book Depositary Receipt andFTSE Russia IOB Index Contracts are at Rules COR 3.2 and COR 3.3 respectively;

(ii) rules relating to the settlement of Norwegian Stock Contracts and OBX IndexContracts are at Rules COR 6.2 and COR 6.3 respectively;



RULE BOOK

170

COR 2.5.2 All payments required to be made on Expiration Settlement of a Cleared Only Contract shall bemade in accordance with the Designated Clearing House‟s instructions. Such payments shallbe made in the currency specified by the Designated Clearing House. Turquoise will issue aSettlement Statement showing the sum due to or payable by the Member no later than 3.00 pmLondon time on the first applicable Bank Day after the Expiration Date.

COR 2.5.3 References to "Settlement" in these Rules for Cleared Only Contracts shall be construed as

references to Expiration Settlement or to Exercise Settlement as the context may require.

COR 2.6 Fees: General

COR 2.6.1 The fees payable in respect of Cleared Only Contracts are shown in the Schedule of Fees atAppendix A.



RULE BOOK

171

PART COR 3 CLEARED ONLY CONTRACTS BASED ON THE INTERNATIONAL ORDER BOOK DEPOSITARY RECEIPT (“IOB DR”) AND THE FTSE RUSSIA IOB INDEX

COR 3.1 Contract Specifications

COR 3.1.1 Contract Specifications: Cleared Only Contracts-IOB DR Futures

These contracts are traded on a bilateral basis. Turquoise does not provide trading facilities forsuch contracts. Turquoise provides Trade Matching services for these contracts in conjunctionwith Associated Clearing Houses. The Designated Clearing House and, where applicable, anAssociated Clearing House clear the contracts registered with them as central clearingcounterparties to their respective members.

Type of Contract Non-Standardised Futures Contracts with Daily Cash Settlement and Delivery of theUnderlying DR.

Contract Base The DR listed on the IOB on which the Future is based and which is shown inTurquoise‟s IOB DR List as published on the Turquoise website.


Contract Size Normally one hundred DRs of the Underlying DR except where shown on the IOBDR List. Recalculation of the number of DRs represented by a Contract can occur incertain cases in accordance with the Recalculation Rules for IOB DR Contracts setout at Rule 4.1.20.

Lifetime As determined by the parties subject to a maximum of two years.

Trade Reporting All transactions to be reported to Turquoise and, where applicable, an AssociatedClearing House. Reported trades can be registered with values including up to 4decimal places.

Last day for Trade

Reporting

The Expiration Date.

Designation of Cleared Only IOB DR Futures Contracts

Each Cleared Only IOB DR Futures Contract shall be designated by a maximum oftwenty symbols, where a maximum of five symbols designates the Underlying DR,one symbol designates the Expiration Year, two symbols designate the day of themonth and one symbol designates the Expiration Month. The use of the symbol X, Yor Z indicates that the Recalculation Rules have been applied to the Contract inquestion.

Expiration Date The parties to a Cleared Only IOB DR Futures Contract may determine its ExpirationDate, Month and Year provided that such day is an IOB Trading Day. In the eventthat there is a prolonged trading halt or suspension of trading in the Underlying DR,or a prolonged breakdown of the IOB Trading system on the Expiration Date for theseries in question the Expiration Date may be postponed until the following IOBTrading Day, if, in the opinion of Turquoise, such action is in the interests of the

market generally.Following certain re-calculation events, the Expiration Date may be moved forwardin time.

Daily Settlement A Cleared Only IOB DR Futures Contract is settled on each IOB Bank Day asspecified in Rule 4.1.15.


Expiration Delivery Settlement Price (EDSP)

The closing price as determined by the LSE in accordance with its Guide to TradingServices on the Expiration Date rounded to 2 decimal places (with numbers from 0to 4 being rounded down and numbers from 5 to 9 being rounded up.

Expiration Settlement Payment of the Expiration Settlement Amount shall occur in accordance with the

instructions of Turquoise pursuant to Rules 4.1.16 and 4.1.17.

Trade Reporting Hours As specified in COR 2.1.6 of these rules.



RULE BOOK

172

COR 3.1.2 Contract Specifications: Cleared Only Contracts-IOB DR Options


Type of Contract Non-Standardised Options Contracts with Delivery.



Contract Base The DR listed on the IOB on which the Option is based and which is shown in theTurquoise IOB DR List as published on the Turquoise website.


Contract Size Normally one hundred DRs of the Underlying DR except where shown on the IOB DRList. Recalculation of the number of shares represented by a Contract can occur incertain cases in accordance with the Recalculation Rules for IOB DR Contracts set outat Rule 4.1.20.

Lifetime As determined by the parties, subject to a maximum of two years.

Premium The amount agreed to by the parties as the premium payable for the Contract multipliedby the number of DRs represented by the Contract.

Premium Settlement Day The first IOB Bank Day following registration.

Strike Price The parties to a Cleared Only IOB DR Options Contract may select its Strike Price.

Trade Reporting All transactions to be reported to Turquoise and where applicable an AssociatedClearing House. Reported trades can be registered with values including up to 4decimal places.

Last day for Trade Reporting


Designation of Cleared Only IOB DR Option Contracts

Each Cleared Only IOB DR Option Contract shall be designated by a maximum oftwenty symbols, where a maximum of five symbols designates the Underlying DR, onesymbol designates the Expiration Year, two symbols designates the day of the month,one symbol designates the Expiration Month and Option Type, a number of symbolsdesignates the Strike Price to two decimal places and one symbol designates the OptionStyle. The use of the symbol X, Y or Z indicates that the Recalculation Rules have beenapplied to the Contract in question.

Expiration Date The parties to a Cleared Only IOB DR Options Contract may determine its Expiration

Date, Month and Year provided that such day is an IOB Trading Day. In the event thatthere is a prolonged trading halt or suspension of trading in the Underlying DR, or aprolonged breakdown of the IOB Trading system on the Expiration Date for the series inquestion the Expiration Date may be postponed until the following IOB Trading Day, if,in the opinion of Turquoise, such action is in the interests of the market generally.Following certain re-calculation events, the Expiration Date may be moved forward intime.

Exercise A European Style Cleared Only IOB DR Options Contract may only be exercised on theExpiration Date for such Contract subject to Rules .1.18 and 4.1.19.

Delivery A Cleared Only IOB DR Options Contract is settled by delivery of the Underlying DR inaccordance with Rules 4.1.17.

Exercise Settlement Payment of the Premium and of the Exercise Settlement Amount against delivery of theUnderlying DR shall occur in accordance with the instructions of Turquoise.



RULE BOOK

173

Exercise Settlement Day

The third IOB Bank Day following the day on which the Exercise Order is received byTurquoise or the day on which Standard Exercise of the Contract is effected inaccordance with Rule 4.1.19.

Standard Exercise A Cleared Only DR Options Contract shall be subject to Standard Exercise inaccordance with Rule 4.1.19.


COR 3.1.3 Contract Specifications: Cleared Only Contracts-FTSE Russia IOB Index Futures


Type of Contract Non-Standardised Futures Contracts with Expiration Settlement and Daily Cash

Settlement.

Contract Base The FTSE Russia IOB Index.


Lifetime As determined by the parties subject to a maximum of two years.

Trade Reporting All transactions to be reported to Turquoise and, where applicable, an AssociatedClearing House.



Designation of Cleared Only FTSE Russia IOB Index Futures Contracts

Each Cleared Only FTSE Russia IOB Index Futures Contract shall be designated bya maximum of twenty symbols, where a maximum of six symbols designates theContract Index, one symbol designates the Expiration Year, two symbols designatethe Expiration Date, two symbols designates the day of the month and one symboldesignates the Expiration Month.

Expiration Date The parties to a Cleared Only FTSE Russia IOB Index Futures Contract maydetermine its Expiration Date, Month and Year provided that such day is an IOBTrading Day.

Daily Settlement Daily Settlement on each IOB Bank Day as specified in Rule 4.2.14.


Expiration Settlement Payment of the Expiration Settlement Amount shall occur in accordance with theinstructions of Turquoise pursuant to Rule 4.2.16.


COR 3.1.4 Contract Specifications: Cleared Only Contracts-FTSE Russia IOB Index Options


Type of Contract Non-Standardised Options Contracts with Cash Settlement.



RULE BOOK

174



Contract Base The FTSE Russia IOB Index.


Lifetime As determined by the parties, subject to a maximum of two years.

Premium The amount agreed to by the parties as the premium payable for the Contractmultiplied by the Index Multiplier.

Premium Settlement Day The first IOB Bank Day following registration.

Strike Price The parties to a Cleared Only FTSE Russia IOB Index Options Contract may select itsStrike Price.

Trade Reporting All transactions to be reported to Turquoise and where applicable an AssociatedClearing House.



Designation of Cleared Only FTSE Russia Index Option Contracts

Each Cleared Only FTSE Russia IOB Index Option Contract shall be designated by amaximum of twenty symbols, where a maximum of five symbols designates theUnderlying DR, one symbol designates the Expiration Year, two symbols designatesthe day of the month, one symbol designates the Expiration Month and Option Type, anumber of symbols designates the Strike Price to two decimal places and one symboldesignates the Option Style. The use of the symbol X, Y or Z indicates that theRecalculation Rules have been applied to the Contract in question.

Expiration Date The parties to a Cleared Only FTSE Russia IOB Options Contract may determine itsExpiration Day, Month and Year provided that such day is an IOB Trading Day.

Exercise A European Style Cleared Only FTSE Russia Index Options Contract may only beexercised on the Expiration Day for such Contract subject to Rules 4.2.17 and 4.2.18.

Expiration Settlement Payment of the Exercise Settlement Amount shall occur on the Expiration SettlementDay in accordance with the instructions of the Designated Clearing House.

Exercise Settlement Date


Standard Exercise A Cleared Only FTSE Russia Index Options Contract shall be subject to StandardExercise in accordance with Rule 4.2.18.


COR 3.2 Settlement and Delivery of Cleared Only IOB DR Contracts: General andApplication of Rules in Part 4.1

COR 3.2.1 The settlement of Cleared Only Futures and Cleared Only Options based on one of the IOBDR listed in the IOB DR List on exercise or expiration is performed by the delivery of theUnderlying DR against the payment of the Exercise Settlement Amount in the case of aCleared Only Options Contract and the Expiration Settlement Amount in the Case of a ClearedOnly Futures Contract. The rights and obligations of a Member concerning the delivery of theUnderlying DR following the exercise or expiration of any such Contract shall be performed bymeans of the Designated Settlement Venue‟s system in accordance with instructions issued byTurquoise relative thereto. The Member shall make arrangements with a nominee holding anaccount at the Designated Settlement Venue to act on its behalf in relation to such deliverieswhere necessary.

COR 3.2.2 The provisions of the following Rules, namely:

(i) Rule 4.1.1 – IOB DR - Introductory;



RULE BOOK

175

(ii) Rule 4.1.16 - Settlement and Delivery of IOB DR and UK Stock Options Contracts

(iii) Rule 4.1.17- IOB DR Futures: Expiration Settlement Procedures;

(iv) Rule 4.1.18 - Exercise of IOB DR Options;

(v) Rule 4.1.19 – Standard Exercise of IOB DR Options

(v) Rule 4.1.20 - Recalculation of IOB DR Contracts

shall apply equally to the settlement and delivery of Cleared Only Contracts based on IOB DR.

COR 3.3 Settlement of Cleared Only FTSE Russia IOB Index Contracts: General andApplication of Rules in Part 4.2

COR7.3.1 The settlement of Cleared Only Futures and Options based on the FTSE Russia IOB Index onExercise or Expiration is performed by the payment of the Exercise Settlement Sum in the caseof a Cleared Only Options Contract

Cleared Only Futures based on the FTSE Russia IOB Index are subject to Daily CashSettlement.


(i) Rule 4.2.12 – Expiration Settlement Price;

(ii) Rule 4.2.13 – Expiration Settlement – FTSE Russia IOB Index Futures Contracts;

(iii) Rule 4.2.14 – Daily Cash Settlement : FTSE Russia IOB Index Futures Contracts;

(iv) Rule 4.2.15 – Closing Transactions : FTSE Russia IOB Index Futures Contracts;

(v) Rule 4.2.16 – FTSE Russia IOB Index Futures Contracts : Expiration Settlement;

(vi) Rule 4.2.17 – Options: Exercise;

(vii) Rule 4.2.18 – Options: Standard Exercise;

shall apply equally to the settlement and delivery of Cleared Only Futures and OptionsContracts based on the FTSE Russia IOB Index.



RULE BOOK

176

PART COR 4 DELETED

PART COR 5 DELETED



RULE BOOK

177

PART COR 6 CLEARED ONLY CONTRACTS BASED ON NORWEGIAN STOCK AND THE OBX INDEX

COR 6.1 Contract Specifications

COR 6.1.1 Contract Specifications: Cleared Only Contracts - Norwegian Stock Futures


Type of Contract Non-Standardised Futures Contracts with Daily Cash Settlement and Delivery of theUnderlying Stock.

Contract Base The share listed on Oslo Børs on which the Future is based and which is shown inthe Turquoise Norwegian Stock List.

Deliverable Instruments The relevant Underlying Stock for the contract in question.


Lifetime As determined by the parties subject to a maximum of three years.




Designation of Cleared Only Stock Futures Contracts

Each Cleared Only Stock Futures Contract shall be designated by a maximum oftwenty symbols, where a maximum of five symbols designates the Underlying Stock,one symbol designates the Expiration Year, two symbols designate the day of themonth and one symbol designates the Expiration Month. The use of the symbol X, Yor Z indicates that the Recalculation Rules have been applied to the Contract inquestion.

Expiration Date The parties to a Cleared Only Stock Futures Contract may determine its ExpirationDate, Month and Year provided that such day is a Norwegian Bank Day. Wheresuch day is declared by Oslo Børs in advance to be a half trading day the ExpirationDate will be the preceding Norwegian Bank Day.

Daily Cash Settlement A Cleared Only Norwegian Stock Futures Contract is settled on each NorwegianBank Day as specified in Rule 4.5.12A.

Delivery A Cleared Only Norwegian Stock Futures Contract is settled by delivery of theUnderlying Stock in accordance with Rule 4.5.13

Expiration Settlement Payment of the Expiration Settlement Amount against delivery of the UnderlyingStock shall occur in accordance with the instructions of Turquoise pursuant to Rule4.5.14.




RULE BOOK

178

COR 6.1.2 Contract Specifications: Cleared Only Contracts-Norwegian Stock Options

These contracts are traded on a bilateral basis. Turquoise does not provide trading facilities forsuch contracts. Turquoise provides Trade Matching services for these contracts in conjunctionwith Associated Clearing Houses. The Designated Clearing House and, where applicable, anAssociated Clearing House clear the contracts registered with them as central clearing

counterparties to their respective members.

Type of Contract Non-Standardised Options Contracts with Delivery.

Style of Options American or European Style as determined by the parties.


Contract Base The share listed on Oslo Børs on which the Option is based and which is shown in theTurquoise Norwegian Stock List.



Lifetime As determined by the parties, subject to a maximum of three years.

Premium The amount agreed to by the parties as the premium payable for the Contractmultiplied by the number of shares represented by the Contract.

Premium Settlement Day The first Norwegian Bank Day following registration.

Strike Price The parties to a Cleared Only Stock Options Contract may select its Strike Price.




Designation of Cleared Only Stock Option Contracts

Each Cleared Only Stock Option Contract shall be designated by a maximum oftwenty symbols, where a maximum of five symbols designates the Underlying Stock,one symbol designates the Expiration Year, two symbols designates the day of themonth, one symbol designates the Expiration Month and Option Type, a number ofsymbols designates the Strike Price to two decimal places and one symboldesignates the Option Style. The use of the symbol X, Y or Z indicates that theRecalculation Rules have been applied to the Contract in question.

Expiration Date The parties to a Cleared Only Stock Options Contract may determine its ExpirationDate, Month and Year provided that such day is a Norwegian Bank Day. Where such

day is declared by Oslo Børs in advance to be a half trading day the Expiration Datewill be the preceding Norwegian Bank Day.

Exercise An American Style Cleared Only Norwegian Stock Options Contract may be exercisedat any time during its Lifetime subject to Rules 4.5.15 and 4.5.16. A European StyleCleared Only Norwegian Stock Options Contract may only be exercised on theExpiration Date for such Contract subject to Rules 4.5.15 and 4.5.16.

Delivery A Cleared Only Norwegian Stock Options Contract is settled by delivery of theUnderlying Stock in accordance with Rules 4.5.13.

Exercise Settlement Payment of the Premium and of the Exercise Settlement Amount against delivery ofthe Underlying Stock shall occur in accordance with the instructions of Turquoise.

Exercise Settlement Day The fourth Norwegian Bank Day following the day on which the Exercise Order isreceived by Turquoise or the day on which Standard Exercise of the Contract iseffected in accordance with Rule 4.5.16.



RULE BOOK

179

Standard Exercise A Cleared Only Stock Options Contract shall be subject to Standard Exercise inaccordance with Rule 4.5.16.




RULE BOOK

180

COR 6.1.3 Contract Specifications: Cleared Only Contracts-OBX Index Futures



Type of Contract Non-Standardised Futures Contracts with Daily Cash Settlement.

Contract Base The OBX Index.


Lifetime As determined by the parties subject to a maximum of three years.


Last day for Trade Reporting The Expiration Date.

Designation of Cleared Only OBX Index Futures Contracts

Each Cleared Only OBX Futures Contract shall be designated by a maximum oftwenty symbols, where a maximum of six symbols designates the Contract Index,one symbol designates the Expiration Year, two symbols designate the ExpirationDate, two symbols designates the day of the month and one symbol designates theExpiration Month.

Expiration Date The parties to a Cleared Only OBX Futures Contract may determine its ExpirationDate, Month and Year provided that such day is a Norwegian Bank Day. Wheresuch day is declared by Oslo Børs in advance to be a half trading day, the ExpirationDate will be the preceding Norwegian Bank Day.

Daily Settlement Cash Settlement on each Norwegian Bank Day as specified in Rule 4.6.14

Initial Daily Settlement The first Norwegian Bank Day following Registration.

Expiration Settlement Payment of the Expiration Settlement Amount shall occur in accordance with theinstructions of Turquoise pursuant to Rule 4.6.16.




RULE BOOK

181

COR 6.1.4 Contract Specifications: Cleared Only Contracts-OBX Index Options



Type of Contract Non-Standardised Options Contracts with Cash Settlement.

Style of Options American or European Style as determined by the parties.


Contract Base The OBX Index.


Lifetime As determined by the parties, subject to a maximum of three years.

Premium The amount agreed to by the parties as the premium payable for the Contractmultiplied by the Index Multiplier

Premium Settlement Day The first Norwegian Bank Day following registration.

Strike Price The parties to a Cleared Only OBX Options Contract may select its Strike Price.




Designation of Cleared Only OBX Index Option Contracts

Each Cleared OBX Option Contract shall be designated by a maximum of twentysymbols, where a maximum of five symbols designates the Underlying Stock, onesymbol designates the Expiration Year, two symbols designates the day of themonth, one symbol designates the Expiration Month and Option Type, a number ofsymbols designates the Strike Price to two decimal places and one symboldesignates the Option Style. The use of the symbol X, Y or Z indicates that theRecalculation Rules have been applied to the Contract in question.

Expiration Date The parties to an OBX Options Contract may determine its Expiration Date, Monthand Year provided that such day is a Norwegian Bank Day. Where such day isdeclared by Oslo Børs in advance to be a half trading day the Expiration Date will bethe preceding Norwegian Bank Day.

Exercise An American Style Cleared Only OBX Options Contract may be exercised at any timeduring its Lifetime subject to Rules 4.6.17 and 4.6.18. A European Style Cleared Only

OBX Options Contract may only be exercised on the Expiration Day for such Contractsubject to Rules 4.6.17 and 4.6.18.

Exercise Settlement Payment of the Premium and of the Exercise Settlement Amount shall occur inaccordance with the instructions of Turquoise.

Exercise Settlement Day

The first Norwegian Bank Day following the day on which the Exercise Order isreceived by Turquoise or the day on which Standard Exercise of the Contract iseffected in accordance with Rule 4.6.17.

Standard Exercise A Cleared Only OBX Index Options Contract shall be subject to Standard Exercise inaccordance with Rule 4.6.18.




RULE BOOK

182

COR 6.2 Settlement and Delivery of Cleared Only Norwegian Stock Contracts: Generaland Application of Rules in Part 4.5

COR 6.2.1 The settlement of Cleared Only Futures and Cleared Only Options based on one of theNorwegian Stocks listed in the Norwegian Stock List on exercise or expiration is performed bythe delivery of the Underlying Stock against the payment of the Exercise Settlement Sum in thecase of a Cleared Only Options Contract and the Expiration Settlement Amount in the Case ofa Cleared Only Futures Contract. The rights and obligations of a Member concerning thedelivery of the Underlying Stock following the exercise or expiration of any such Contract shallbe performed by means of the VPS's VP system in accordance with instructions issued byTurquoise relative thereto. The Member shall make arrangements with a nominee holding anaccount at the VPS to act on its behalf in relation to such deliveries where necessary.


(i) Rule 4.5.1. – Norwegian Stock - Introductory;

(ii) Rule 4.5.12A - Norwegian Stock Contracts: Daily Cash Settlement

(ii) Rule 4.5.13 - Settlement and Delivery of Norwegian Stock Contracts;

(iii) Rule 4.5.14 - Norwegian Stock Futures: Settlement Procedures;

(iv) Rule 4.5.15 - Exercise of Norwegian Stock Options;

(v) Rule 4.5.17 - Recalculation Rules

shall apply equally to the settlement and delivery of Cleared Only Contracts based onNorwegian Stock.

COR 6.2.3 The provisions of Rule 4.5.15 shall apply to the Exercise of Cleared Only Options Contractsbased on a Norwegian Stock which are American Style which are exercised on any day prior tothe Expiration Date.

COR 6.2.4 The provisions of Rule 4.5.16 shall apply to the Exercise of Cleared Only Options Contracts

based on a Norwegian Stock where the Option in question is European Style or, where theOption is American Style, it is exercised on the Expiration Date.



RULE BOOK

183

COR 6.3 Settlement of Cleared Only OBX Index Contracts: General and Application of Rules in Part 4.6

COR 6.3.1 The settlement of Cleared Only Futures and Options based on the OBX Index on exercise orexpiration is performed by the payment of the Exercise Settlement Amount in the case of aCleared Only Options Contract and the Expiration Settlement Amount in the case of a ClearedOnly Futures Contract.

Cleared Only Futures based on the OBX Index are subject to Daily Cash Settlement.


(i) 4.6.14 – Daily Cash Settlement;

(ii) 4.6.15 – Closing Transactions;

(iii) 4.6.16 – OBX Futures Contracts: Expiration Settlement;

(iv) 4.6.16.7 – Expiration Settlement Value;

(v) 4.6.17 – Options: Exercise;

(vi) 4.6.18 – Options: Standard Exercise

(vii) 4.6.19 – OBX Composition and Related Matters

(viii) Addendum to Rule 4.6.19

shall apply equally to the settlement and delivery of Cleared Only Futures and OptionsContracts based on the OBX Index.

COR 6.3.3 The provisions of Rule 4.6.17 shall apply to the Exercise of Cleared Only Options Contractsbased on the OBX Index which are American Style which are exercised on any day prior to theExpiration Date.

COR 6.3.4 The provisions of Rule 4.6.18 shall apply to the Exercise of Cleared Only Options Contractsbased on the OBX Index where the Option in question is European Style or where the Option isAmerican Style it is exercised on the Expiration Date.



RULE BOOK