Strategies to get the most from share and option positions

 

What Macquarie Executive Solutions offers

Executive option sale

Your clients can sell their company options to Macquarie to receive their current value

Exercise and sale

Macquarie can fund the exercise of company options and sell the securities for your clients

Tailored Equity Collar

Macquarie can tailor risk management solutions for your client’s resulting stock position

Investment solutions cover a wide range of ASX-listed stocks.

Sale of options directly to Macquarie means no upfront cash outlay for your clients.

Your clients can choose from various settlement techniques to best suit their investment objectives.

Efficiently packaged transaction with a single point of contact.

Counterparty risk: the risk that Macquarie does not perform its obligations under the facilities or services discussed about (for example, if Macquarie Bank is insolvent).

Poor performance risk: depending on the solution selected, there is the risk that prices may move in an adverse manner before your client is able to capture the value in their options or the underlying shares. In times of global economic downturn, and high levels of volatility in equity and other markets, there is an increased risk that prices will fall in value, or change in value significantly over a short period of time.

Leverage risk: if your clients access a loan under one of the facilities, the higher the leverage of their investment, the riskier the investment will be. To break even, the value of the investment must increase by more than the total interest payments and other costs your clients have incurred over the term of their loan (excluding taxation considerations and the time value of money).

Tax risk: the expected tax implications of entering into one of the facilities mentioned above may change as a result of changes in taxation laws. All investors should seek their own independent tax advice in relation to their own individual circumstances.

About Macquarie Executive Solutions

Macquarie Executive Solutions can provide company executives and wholesale investors with tailored investment solutions to help them manage their share and option positions.

This includes the exercise and/or sale of large option positions through a variety of funding, risk management and sophisticated stock trading techniques that can be tailored to meet a wide range of investment needs.

Depending on their investment objectives, your clients can use any of the following facilities:

  • Executive option sale facility. Your clients can receive the current value of their company options by selling them directly to Macquarie at any time until their expiry.
  • Exercise and sale facility. Macquarie can provide funding to exercise your clients’ company options and sell the underlying securities for them.
  • Tailored Equity Collar facility. Macquarie can also provide your clients with tailored risk management solutions for their resulting stock position.

How the Executive option Sale Facility works

Your clients can transfer their fully vested and exercisable employee share options to Macquarie.

We determine the value of the options, including intrinsic value and time value (if any), and pay that amount to your clients (less a fee).

We can also tailor the option valuation by determining the value of the underlying shares in one of the following ways:

  • Shares can be valued on either the day the options are transferred to Macquarie or the day Macquarie receives the underlying shares from the company.
  • Shares can be valued using algorithm trading capabilities that offer the following services:
    • Trading throughout the day to try to match volume weighted average price (VWAP). Note: guaranteeing VWAP incurs an additional cost.
    • Volume of trading in a day may be set at a certain limit. For example, a sale will not constitute more than 30 per cent of the total stock traded in a given day.
    • Spreading the valuation over a set number of days. This may reduce the likelihood of moving the market adversely with large volumes.

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