Covered Warrants

Covered Warrants

An overview of FSA regulation for securitised derivatives.

Covered warrants can give you the high potential returns of a geared investment, while limiting the possible downside to the initial investment.

Covered warrants offer member firms, whether as issuers or brokers, an exciting new product and the opportunity to develop a new, profitable line of business.

Benefits of Listing & Admission to a Regulated Market

  • Admission to the London Stock Exchange’s Main Market, an EU-Regulated Market under MiFID, ensures highest standards of disclosure and regulatory oversight.
  • Transparency offered by continuous market maker quoting on electronic order-book.
  • Added flexibility of off-book trading on-exchange.
  • Price and trading data disseminated to over 140K terminals worldwide in addition to end investors worldwide via Exchange data feeds, ensuring global reach.
  • Allows product providers to leverage the London Stock Exchange’s extensive distribution.

Market Model

  • Covered warrants  trade in an electronic, order-driven trading service where the market maker, who is also the issuer, is obliged to provide two-way prices at a minimum size and maximum spread throughout the trading day and for the lifetime of the instrument.
  • ‘Off-book’ instruments are also supported which are available for trade reporting only. Participants wanting to trade these instruments should contact the issuer directly.
  • Trades are normally cash settled bilaterally between participants.
Securitised Derivatives are not suitable for all investors - they may be highly geared and therefore volatile. You should not deal in Securitised Derivatives unless you understand their nature and the extent of your exposure to risk. Since this disclaimer cannot cover all the risks and other significant aspects of these instruments, you should consult an appropriately qualified financial advisor if you are in any doubt. Information on this website does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions and is in no way intended, directly or indirectly, as an attempt to market or sell any type of financial instrument.