{"id":9233,"date":"2025-11-24T13:30:37","date_gmt":"2025-11-24T05:30:37","guid":{"rendered":"https:\/\/www.linkwayshk.com\/?page_id=9233"},"modified":"2025-12-05T10:47:52","modified_gmt":"2025-12-05T02:47:52","slug":"investor-education-warrents","status":"publish","type":"page","link":"https:\/\/www.linkwayshk.com\/?page_id=9233","title":{"rendered":"Warrents"},"content":{"rendered":"\n
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INVESTOR
EDUCATION<\/h1>\n<\/div>\n\n\n\n
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INVESTOR
EDUCATION<\/h1>\n<\/div><\/div>\n\n\n\n
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WARRANTS<\/h3><\/div><\/div><\/div><\/div>\n<\/div>\n\n\n\n
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Warrants are an instrument which gives investors the right – but not the obligation – to buy or sell the underlying asset at a pre-set price on or before a specified date. There are two main types of warrants: equity warrants and derivative warrants, which are subject to different provisions of the Listing Rules in Hong Kong.<\/p><\/div><\/div>\n<\/div><\/div>\n<\/div><\/div>\n<\/div>\n\n\n\n

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Equity warrants<\/h3><\/div><\/div><\/div>\n<\/div>\n<\/div><\/div>\n<\/div>\n\n\n\n
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Issued by a listed company and give holders the right to subscribe for equity securities of the issuer. Equity warrants are often issued together with new shares in IPOs, or distributed together with the shares acquired for any dividend payment, bonus issue or rights issue. Equity warrants have a life of one to five years. Upon exercise, the listed company will issue new shares to their holders and collect extra capital. The issuer of a warrant must specify whether it is settled by cash or by physical delivery of the underlying assets.<\/p><\/div><\/div>\n<\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n

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Derivative warrants<\/h3><\/div><\/div><\/div>\n<\/div>\n<\/div><\/div>\n<\/div>\n\n\n\n
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Issued by a third party, generally an investment bank, independent of the issuer of the underlying assets. They have a life of six months to five years. The underlying assets of derivative warrants include ordinary shares, market indices, currencies and baskets of shares. The issuer of derivative warrants may not be the issuer of the underlying assets but should hold or have a right to hold the underlying assets. The right conferred by a derivative warrant may be the right to buy (call warrant) or the right to sell (put warrant).
 
Derivative warrants can be linked to a single security or a basket of securities, stock indices, currencies, commodities or futures contracts (like crude oil futures). Almost all derivative warrants currently traded in Hong Kong are cash-settled. When a physically settled call derivative warrant on a single stock is exercised, the warrant holder will receive the underlying stock from the issuer. Unlike equity warrants, no new shares will be issued. Furthermore, every derivative warrant has a designated liquidity provider to help improve the liquidity of the instrument in the market.
 
The price of a derivative warrant at expiry mainly rests with the price of the underlying assets. However, so long as a derivative warrant remains valid, its price will be affected by other factors in addition to the underlying assets\u2019 price. They include the volatility of the underlying assets\u2019 price, the exercise price, the time remaining to expiry, interest rates and expected dividend payments on the underlying assets, etc. Like other securities, the price of a derivative warrant may also be affected the supply of and demand for the derivative warrant itself.
Since derivative warrants can have great product variety, large warrant markets in the world are usually mainly derivative warrant markets. The equity warrant markets are usually of a much smaller scale.<\/p><\/div><\/div>\n<\/div>\n<\/div>\n\n\n\n

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Attributes<\/h3><\/div><\/div><\/div>\n<\/div>\n<\/div><\/div>\n<\/div>\n\n\n\n
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Warrants have following attributes which include:<\/div>\n