Equity warrants

Equity warrants are a type of trading warrant. They are either call or put warrants issued over securities. Some equity warrants might be issued over foreign securities, which may lead to a variation in the treatment on ASX. Reasons to invest in equity warrants include leverage and protection.

Example of an equity warrant

Warrant code TLSWXH
Underlying instrument Telstra Ltd.
Warrant type Call warrant
Expiry date 24 September 2009
Exercise price $3.50
Exercise style American
Conversion ratio  1
Settlement Deliverable

You have the right to buy one ordinary share in Telstra Ltd. upon exercise of one TLSWXH warrant and the payment of $3.50 on or before 24 September 2009.

The price of each warrant series is determined by market forces.  However, the price can be influenced by other factors.

International equity warrants

Equity warrants issued over underlying securities not listed on ASX are treated differently to those issued over ASX listed securities.  This may include the following:

  • The exercise price may be denominated in a foreign currency possibly exposing you to foreign currency movements.
  • The underlying securities may not be open for trading on the home exchange while the ASX market is open for trading due to different time zones.
  • Exercise may result in delivery of securities that are not currently listed on ASX. Ownership or custodial arrangements in the foreign jurisdiction may differ from arrangements in relation to ASX listed securities. You may need to exercise a large number of warrants before the securities are delivered.
  • ASX does not supervise or regulate trading in relation to the underlying securities. As a result, company announcements and historical trading data will not be available from ASX, although disclosure document will identify other places where this information can be accessed (particularly via the internet).

The disclosure document outlines the terms and conditions for each warrant series. You should be familiar with those prior to trading. You can access information on how to find a disclosure document on the ASX website. Alternatively, you may contact your adviser or the warrant issuer.

To learn more about equity warrants, visit our online warrants class.