Investing in Structured Warrants the SGX Way

Ready to get started? Learn more about

» how you can interpret the trading name of structured warrants
» how you can buy and sell listed structured warrants
» how structured warrants are cleared and settled
» how you can exercise structured warrants

» when is the last trading day of a structured warrant

» what are the corporate action adjustments for structured warrants

Interpreting the Trading Name of Structured Warrants

In general, the trading name of a structured warrant reflects the following information (in sequential order):

1.	Underlying instrument
2.	Issuer (in abbreviated form)
3.	Exercise style (American or European style warrant) "e" represents an European style warrant. If the letter 'e' is not denoted, the warrant is an American style warrant.
4.	Non-traditional warrants "i" represents an Investment Warrant
5.	Type of warrant (Call or Put warrant) "CW" represents a Call Warrant "PW" represents a Put Warrant
6.	Expiration date The expiration date is represented in this format: yy mm dd

The following are examples of the trading names of structured warrants counters.

Example 1:

SIA DB ePW060228

a) Underlying instrument ("SIA" ) --> SIA Shares
b) Issuer ("DB") --> Deutsche Bank
c) Exercise style ("e") --> European Style
d) Type of warrant ("PW") --> Put Warrant
e) Expiration date ("060228") --> 28 February 2006

Example 2:

DBS MBL iCW081230

a) Underlying instrument ("DBS" ) --> DBS Shares
b) Issuer ("MBL") --> Macquarie Bank
c) Non-traditional warrant ( "i") --> Investment Warrant
d) Type of warrant ("CW") --> Call Warrant
e) Expiration date ("081230") --> 30 December 2008

Example 3:

(i) PearlE BNPeCW60525A
(ii) PearlE BNPeCW60525B

a) Underlying instrument ("PearlE" ) --> Pearl Energy Shares
b) Issuer ("BNP") --> BNP Paribas
c) Exercise style ("e") --> European Style
d) Type of warrant ("CW") --> Call Warrant
e) Expiration date ("060525") -->25 May 2006
f ) When an issuer lists more than one structured warrant with the same underlying instrument and expiration date, the warrants are distinguished by letters A, B, C, D etc after the expiration date.

Buying and selling structured warrants

Listed structured warrants are traded in the same way as company warrants and shares. You may buy and sell listed structured warrants on the SGX securities market through your broker or your online trading account.

Clearing and settlement of structured warrants

Transactions in structured warrants are settled on the same basis as share transactions, which is on the third business day after the trade date, or T+3.

Exercising structured warrants

The procedures for the exercise of structured warrants are outlined in the Terms and Conditions of the warrant issue. Unless an automatic exercise is specified, this usually involves the submission of an exercise notice by the warrant holder to the warrant agent.

Last trading day of structured warrants

The last trading day of a structured warrant is different from its expiry day. In the case of a structured warrant with automatic exercise feature, its last trading day in the “Ready” and “Unit-Share” markets is 4 business days before its expiry date. Investors can only trade the structured warrant on or before the last trading day.

Example:

Corporate action adjustments for structured warrants

Structured warrants on stocks are subject to adjustments to take into account any corporate actions arising from the underlying stock. Corporate actions such as rights issue, bonus issue, stock splits or consolidation may lead to a diluting or concentrative effect on the theoretical value of the underlying stock. This may result in adjustments to the entitlement, the exercise price or other variables of the structured warrants.

For structured warrants on index, adjustments are normally not required on the warrant terms for corporate actions involving the component stocks of the index upon which the structured warrants is based. This is because the underlying index will have already adjusted itself to take into account such corporate actions.

Disclaimer

Neither this document nor any information or opinion herein constitutes an offer, solicitation or invitation to make an offer to buy or sell any securities or any options, futures or other derivatives related to securities or any other financial instrument ("financial instruments"). SGX, its subsidiaries and their respective affiliates may deal in financial instruments in the usual course of their business, and may at any given time be on the opposite side of trades by investors and market participants.

This document is for general circulation and provides information of a general nature only. It does not have any regard to the specific investment objectives, financial situation or individual needs of any particular person receiving this document. Investors should seek advice from a professional financial adviser regarding investing in any financial instruments or adopting any investment strategies discussed in this document. The material in this document is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness assured. Examples are used for illustrative purposes only and do not constitute investment advice. Statements regarding future prospects may not be realised.

The value or price of, or income from, any financial instruments referred to in this document may fluctuate and may be affected by changes in exchange rates. Accordingly, investors may receive back an amount that is less than the amount originally invested, or may lose the entire principal amount invested. Past performance is not necessarily a guide to future performance. Any investments discussed herein may involve significant risk, may be illiquid and may not be suitable for all investors.