CITIC Securities: warrant settlement method
http://www.sina.com.cn 10:26, March 26, 2007 China Securities Network (source: China Securities Journal)
There are two settlement methods for warrants: cash settlement and physical settlement. Physical settlement is also called securities payment settlement, securities settlement, physical delivery, etc.
During the exercise of cash settled warrants, the issuer shall pay the difference between the securities settlement price and the exercise price to the exerciser, which does not involve securities settlement. The settlement price of the securities shall be the average of the daily closing prices of the underlying securities ten trading days before the exercise date. If the cash settled warrants are within the price when exercising, they will automatically exercise; If it is out of price, it cannot be exercised.
The exercise of warrants settled in kind involves the actual delivery of physical securities. When the warrant is exercised, the warrant holder shall pay cash to the issuer and obtain corresponding amount of securities at the same time; When the put warrants are exercised, the warrant holders shall pay securities to the issuer and obtain corresponding amount of cash at the same time. Warrants settled in kind cannot be exercised automatically, and the exerciser must declare on his own initiative.
All causes in China's warrant market at present Non tradable shares The share reform warrants generated by the reform and the equity warrants issued by listed companies due to financing needs are settled in kind, so the warrant holders must actively submit the exercise declaration on the exercise date. When exercising warrants with physical settlement, the warrant holder must ensure that there is sufficient cash in the account, while the put warrant holder must ensure that there are securities in the account consistent with the number of warrants to be exercised. For example, Baotou Steel warrant Baotou Steel JTB1 The exercise price of 580002) is 1.94 yuan. If the investor wants to exercise 1000 shares of Baotou Steel JTB1, it needs to ensure that there is at least 1.94 * 1000=1940 yuan in cash in the capital account, in addition to certain transfer fees and other related expenses. After successful exercise, investors can obtain 1000 shares Baotou Steel And can operate this part of the stock on the next trading day.
It should be pointed out that after the exercise of the warrant with physical settlement, the securities obtained by the investor can only be operated on the next trading day after the exercise, so the securities obtained from the exercise face risk exposure, and the exercise income is affected by the fluctuation of the positive stock price after the exercise. ( citic securities )
Sina statement: The content of this article is purely the author's personal view, only for investors' reference, and does not constitute investment advice. Investors operate accordingly at their own risk.
