Covered warrants are promoting relevant businesses to test the innovation ability of securities companies

Our reporter Yu Lingbo

The news that Guotai Jun'an will issue Baosteel covered warrants has attracted the attention of the market. In fact, China Merchants Securities, United Securities, Guosen Securities, GF Securities and other securities companies have designed covered warrants, and expect the regulators to start the starting gun as soon as possible. The new warrant business has begun to become the touchstone for testing the innovation ability of securities companies. It is the goal of securities companies to promote asset management business innovation and improve investment capability with the help of warrants.

　　 Fully design covered warrants

The reporter learned that almost every broker expecting to make a difference in the warrant business has set up a warrant product research and development department. The first step is to fully develop covered warrant products.

GF Securities has specially set up a warrant research and development team formed by the Fixed Income Department and the company's innovation business department, and the president is in charge of promoting warrant research and development. China Merchants Securities has also set up a cross sectoral warrant product development team. United Securities has already launched the warrant research and design center. The warrant team of Guosen Securities has been launched. These securities companies are ready to establish the first mover advantage in the warrant business field.

Xie Bingzhi, a member of the group of China Merchants Securities, said that it is more realistic to issue covered warrants to expand warrant business, while other derivatives are still an idea. After the market matures, more personalized products can be developed to enrich the variety structure of the warrant market.

It is understood that China Merchants Securities has prepared several covered warrant product plans. United Securities will also cooperate with Shenzhen Stock Exchange to launch warrant products. He Rongtian, Deputy General Manager of Fixed Income Department of GF Securities, said that GF Securities has reserved three types of covered warrant products: index type, fund type and stock type.

For securities companies, the issuance of covered warrants is all ready, and only the policy is needed. However, for the expectation of the start-up schedule of the warrant market, securities companies are divided into two different schools. Some securities companies expect the issuance of covered warrants to be faster than expected, which may come out this year. However, some securities traders believe that the reality of Baosteel's rapid speculation of warrants will make regulators more cautious about the speed of covered warrants. The warrant market also needs to further cultivate correct investment concepts.

　　 Warrants: new core business of securities companies

Yang Chizhong, general manager of Everbright Securities Self operation Department, pointed out that at present, warrants are not an important type of securities dealers' self operation, and the positions of securities dealers in warrants will not be too large. He Rongtian of GF Securities believes that in the short term, the impact of warrants on the investment business of securities companies is not too great, but with the formation of the scale of warrant products, investors have formed a considerable understanding of warrant products, and its impact on the investment business of securities companies will grow day by day. By adding warrant products, asset allocation will be more flexible. The asset management and proprietary portfolio of securities firms will change significantly.

Ge Xinyuan, chief financial engineering analyst of Guosen Securities, pointed out that warrant business will bring significant changes to the profit model of securities firms. Once the warrant market is mature, the issuer can implement hedging operations, and the warrant business will become an advantageous business for securities traders to control risks.

"With the help of warrants, asset management business will adapt to market demand and design products that are attractive to target customers. Securities dealers' self operation can increase new profit models, that is, they can use the trading of volatility to obtain greater investment returns in addition to the trading of price differences. In addition, with the development of the warrant market, the arbitrage model will also become more mature." Xie Bingzhi of China Merchants Securities believes that, Warrants will add a hedging tool to securities dealers' self operation.

Many securities companies value warrants to improve portfolio performance and enhance the function of portfolio management. According to Ge Xinyuan, "with the help of warrants, the investment risk control of securities companies is more effective, and they can design financial products that truly guarantee the principal and income for customers. For example, they can design products that strictly guarantee the principal from the combination of positive shares and put warrants. It is also possible to design a product that combines bonds and warrants. The principal can buy bonds and the interest can buy warrants, so as to strive for a yield close to that of stocks while guaranteeing the principal. Warrant products can realize the lower risk locking, so that the risk control of securities companies can be more refined ".

With the maturity of the equity securities market, this business is expected to become the new main business and core business of securities companies. Securities companies that strive to find new profit models will gain a cornucopia. In order to promote the development of the warrant market and create new business models, securities companies should also work hard to create an atmosphere for warrant investment.

However, it is worth noting that warrants are high-risk and high-yield investment products. Warrant business requires that securities companies have considerable design capability, trading experience and risk control level. Securities companies with strong investment ability can further reduce investment costs. However, the securities companies with poor investment management level may stumble in operation. The difference in investment capacity of securities companies will be more obvious in the warrant era.