Information for Brokers

Covered warrants can give you the high potential returns of a geared investment, while limiting the possible downside to the initial investment. For our member firms, covered warrants are an important opportunity - to offer clients an exciting new product and develop a new, profitable line of business.

What can Covered Warrants do for you?

  • Potential to outperform in discretionary managed portfolios, through low-cost hedging or backing your view of a market, stock or commodity price direction

  • Provide the sophisticated investor with additional investment opportunities

  • Gain exposure to underlyings not usually traded in your clients’ portfolios (e.g. silver, gold, house prices)

  • Give your clients full access to investments across the risk spectrum through one broker – you

  • Attract and retain the business of active investors who want to trade geared products or profit from a falling market, while still using CREST settlement

What can Covered Warrants do for your clients?

  • Gearing – giving the investor the ability to make high returns without actually buying the share or underlying

  • Limit losses to the premium paid for the covered warrant

  • No need for the investor to pay stamp duty for cash-settled covered warrants

  • Opportunity to generate returns in a bear market (using puts)

  • Release capital from their portfolio

  • Hedge their existing portfolio

Trading on the Exchange's covered warrants market is open to all member firms of the Exchange. With no margin calls and no need to set up new systems, covered warrants are easy to trade. You can trade via the Exchange's order book, the RSP Gateway, other RSPs and the Issuer's proprietary networks. Covered warrants are settled through CREST in the same way as shares.

How can we help you?

  • Brochures and educational material for your clients (see Investor Centre)

  • Providing speakers for your covered warrants events

  • Support internal staff training events

  • Training guide (see downloads section in right hand column)

To find out more about offering and trading covered warrants talk to your Exchange account manager or our product management team on +44 (0)20 7797 3921 or email coveredwarrants@londonstockexchange.com.