Some exercise failures of WISCO warrants sounded alarm bells
http://www.sina.com.cn 05:46, November 20, 2006 China Securities Journal
Our reporter Zhu Yin
On the first trading day of WISCO warrants, some investors failed to exercise their rights, which alerted both clearing brokers and investors. The risk of financial innovation lies not only in the profit and loss of the product itself, but also in the smoothness and familiarity of the trading process, which may bring unnecessary risks.
On the first exercise day, a securities firm with a large number of warrants in WISCO was very busy. The innovative product department of the company called out the bills in the whole system after the end of the trading on that day for checking, and confirmed the exercise situation item by item. The company said that as early as one month ago, it had given prompt and guidance to investors through various channels, and at the same time, the company had made clear every detail and step of the exercise. Due to the meticulous work, there was no failure of investors' exercise due to settlement errors.
However, some securities companies were negligent in the specific exercise operation process, and failed to timely transfer sufficient funds into the non guaranteed capital settlement account dedicated to the registration company, resulting in the failure of many investors' exercise. It is understood that the account of the clearing participant for warrant settlement in the registration company is the non guaranteed capital settlement account shares The secured capital account used in the transaction is different. The so-called guarantee fund account, even if the funds in the account of the settlement participant are insufficient, the registration company will transfer the shares to the investors first, including the allotment of shares, and then require the settlement participant to make up the funds afterwards; For the so-called non guaranteed capital settlement account, if the settlement participant has insufficient funds in the account, the registration company will refuse to transfer the transactions with insufficient funds.
In the process of work, some securities companies also found some things that need to be reminded to investors: on the first day of the exercise of WISCO warrants, a total of 1.462 million WISCO put warrants were declared for exercise, of which 26000 were successful, and the rest 1.436 million failed. The failure of the exercise of these put warrants is caused by the investors themselves, that is, the lack of sufficient warrants or Wuhan Iron and Steel Corporation regular shares in their accounts. Some investors may put and subscribe at the same time, but if there is no stock in their account, they cannot exercise on that day, and can only continue to operate after the stock arrives in the account the next day.
The cumulative total number of warrants issued by WISCO was 474 million. In addition to the 141.5 million that had been successfully exercised on the first day of exercise, a considerable part of the warrants had not been exercised. Fortunately, the exercise period of WISCO warrants has a total of 5 trading days, and investors still have the opportunity to exercise.
The trend of Wuhan Iron and Steel Corporation's regular shares has risen steadily in the past two days. Relevant people said that it is necessary to remind investors again: the holders of WISCO's call warrants should exercise their rights in a timely manner to avoid becoming a piece of waste paper after expiration and suffering unnecessary losses; The clearing participating securities firms should straighten out in time operating system 。
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.
