Jiangnan
As can be seen from the Asian financial turmoil, when the market is attacked by speculators, there are two main solutions: first, the government funds to rescue the market; The second is to adopt a market-oriented solution mechanism. For the excessive speculation of warrants, the best solution is to create a market-oriented mechanism
The crazy performance of put warrants in the "5.30" market and the subsequent "windfall profits" obtained by several securities companies through the creation of warrants have made the warrant market the focus of attention in recent years.
In addition to paying attention to the price of warrants such as "ECG", investors began to examine the supply and demand mechanism hidden behind this derivative product, and warrant creation undoubtedly became the most intense area of market discussion.
July 19, 2005, via China CSRC Approved, and the Interim Measures of Shanghai Stock Exchange for the Administration of Warrant Business was officially released. It stipulates that "for the warrants that have been listed and traded, qualified institutions may create the same type of warrants". On November 21, 2005, the SSE issued the Notice on Matters Related to the Creation of WISCO Warrants by Securities Companies, detailing the specific creation business.
Since then, for a long period of time, although securities companies have been creating warrants uninterruptedly, most of the warrants are relatively rational in price, and the amount of creation is generally moderate. However, after May 30 this year, some put warrants rose more than ten times in just over ten trading days, which brought a great opportunity for the creation of securities companies.
According to the data of Shanghai Stock Exchange, as of May 17, securities firms had created 273 million CMB put warrants (580997. SH), but by June 22, the number had increased to 3.789 billion. More than 3.5 billion copies were created in just over a month.
During this period, securities companies obtained huge profits by creating. It is revealed that Guotai Jun'an Securities, which ranked first in net profit in the first half of this year, made a profit of 600 million yuan just by creating CMB put warrants. As of June 25, the revenue of 19 innovative securities companies involved in the creation of warrants in the first half of the year reached 4.4148 billion yuan.
Some market participants pointed out that the creation of warrants by securities companies has entered the era of risk-free and windfall profits, which is unfair.
In this regard, the derivatives business principals of several securities firms told China Business News that warrant creation itself has costs and risks, but in the case of excessive speculation in the warrant price, the risk is really low. On the premise of not violating the rules, any compliant securities firm has the incentive to make profits, so there will be Tianliang Creation, This has expanded the supply of warrants in the market and played an effective role in curbing speculation, which is beneficial to the development of the warrant market.
Zhang Biao, the head of Guotai Junan Derivatives Department, said that when the price of CMB put warrants was 0.4 yuan, few brokers were willing to create them, but when the price reached 4 yuan, any qualified broker could see the opportunity. Imagine that without the creation of warrants, put warrants will be speculated to an unimaginable height by speculative funds when resources are scarce. In this process, more retail investors will follow suit and suffer greater losses.
In fact, the warrant creation business is not without risks. The founder needs to perform the same obligations as the issuer and provide 100% performance guarantee for this purpose. This has already had a considerable cost of capital or asset occupation. However, when the warrant price tends to be rational, the creation risk is still easy to occur. Therefore, when risks and costs coexist, creation is a completely market-oriented decision-making behavior, and the amount of creation mainly depends on the degree of warrant price deviation. Obviously, the creation of warrants after the "5.30" market is an extreme situation. The creation of mechanisms is the best way to correct this extreme situation.
Liu Xiaodong, deputy general manager of Shanghai Stock Exchange, said that from the Asian financial turmoil, when the market is attacked by speculators, there are two main solutions: first, the government funds to rescue the market; The second is to adopt a market-oriented solution mechanism. For the excessive speculation of warrants, the market-based mechanism based on creation is the best solution.
Wang Jizhong, the general manager of the financial derivatives department of Everbright Securities, pointed out that the issue of risk-free windfall profits created by warrants, which has been much discussed in the market, is in fact a phased phenomenon of stock reform put warrants and will not last forever. With the expiration and exercise of share reform warrants, this phased phenomenon will gradually disappear. In the future, with more reasonable warrant pricing and mature investor education, the so-called risk-free profits will be difficult to repeat.
