Warrants are traded in a similar way to shares. You can subscribe for warrants directly with the issuer when they are first issued, as well as buy and sell them on ASX. The buying and selling process is the same as for ordinary shares.
Choosing a broker
Warrants are traded through ASX-accredited brokers. You may already be using a broker to buy and sell shares. If he or she advises on warrants, there may be no need to look elsewhere. However, if your existing broker is not active in warrants, or accredited to advise on warrants, it is wise to seek out a specialist broker in this area.
Your broker must fulfil certain requirements before you can start investing in warrants. Your adviser will ask you to:
- read the ASX booklet Understanding trading and investment warrants
- sign a warrant client agreement form.
You should also make sure you understand the specific terms of any warrant before trading. The terms will be laid out in the product disclosure statement (PDS). The PDS will also include information on how to exercise your warrant on or before the expiry date.
Identifying warrants - warrant codes
The graphic below explains how to read the six letter code warrants are issued with;
There are many different types of warrants and each type can be identified by the fourth letter in the warrant’s six letter code;
|Fourth letter of code||Description|
|I or J||Instalments|
|S||Self funding instalments and structure investment products (SIPs - these include longer-term investment style products)|
|W, V, U or T||Trading style warrants including equity calls and puts, index calls and puts, currency calls and puts|
|X, Y or Z||Equity and index knock-out/barrier warrants and Capital Plus Warrants|
|K, M or Q||MINIs|
|L||Guaranteed Stop Loss MINIs|
|D||This is a temporary code assigned to a warrant trading on a deferred settlement basis due to a corporate action, reconstruction or a rollover|
Placing an order
As with shares, you place an order to buy or sell warrants with your broker. You may find you do not buy or sell warrants from other investors: instead, your orders may be filled by market makers. The market makers for warrants are typically the warrant issuers.