□ Shanghai Tianming Law Firm
Lawyer Chen Rong
Recently, as the stock market turns hot and cold, the warrant market continues to be hot, and the speculation of individual warrants has even reached a crazy level. For example, in only four trading days, the price of potash fertilizer JPT1, which attracted market attention, rose from 0.803 yuan to 8.050 yuan, up 10 times, and the cumulative turnover rate reached 4400%. In the face of the high risk of warrant trading, how the warrant issuer and other relevant institutions strictly perform their information disclosure obligations and standardize their operations, how investors learn and master relevant professional knowledge and identify risks, and how all parties define their responsibilities and minimize risks and disputes are common problems facing the market. Here are some suggestions:
Viewing the Risk from the Characteristics of Warrants
The warrant is a contract between the issuer and the holder. The warrant holder has the right to buy or sell a certain amount of underlying assets at the agreed price at the agreed time. Warrants are derivatives of securities. According to the direction of exercise of rights, warrants can be divided into call warrants and put warrants.
The main characteristics of warrants are: 1. High leverage. Only a small amount of premium needs to be paid when trading warrants, which can magnify the use value of funds many times and has a high financial leverage effect. 2. High risk. During the trading process of warrants, the price is affected by many factors, such as the size of price fluctuation of the underlying securities, the strength of market liquidity, the length of the time limit and many other factors. There is a risk that the intrinsic value of warrants will fall to zero. 3. Strong timeliness. Unlike stocks that can be held for a long time, warrants have a duration, and lose their effectiveness after the expiration of warrant trading or exercise. If relevant rights are not exercised, investors will lose all their investment in warrants.
The above characteristics of warrants determine that warrants are more risky than stocks, which investors must be aware of clearly.
Several Cases of Warrant Trading Disputes
At present, with the continuous increase of warrant trading varieties and the escalation of speculation, warrant trading disputes are gradually emerging and showing an upward trend. The main causes of disputes are as follows:
First, the issuer or relevant institutions have information disclosure or other irregularities.
Some warrant issuers or relevant institutions list the warrant type, issuer, issuance method, underlying securities code, exercise price, exercise proportion, duration, exercise period, number of warrants listed on the market, time of listing, place of listing, performance guarantee The listing dealer of warrants and other contents, but the contents of the last trading day of warrants are omitted. Many investors are unable to clearly know the last time of the warrant transaction from the above documents, and thus mistakenly believe that the last transaction time is the time when the exercise expires; The title of some indicative announcements of exercise or termination of listing is inconsistent with the content, and investors cannot see it clearly at a glance, failing to play an adequate role in prompting; Some announcements have delayed the content of the notice, which has little significance.
Second, the service quality of securities companies is not high.
Some securities business departments failed to provide active and effective professional services for investors in several important links of warrant trading, and some even misled investors. If investors reported that some securities companies did not prompt the last date of warrant trading or exercise through online display, telephone voice prompts, notices posted at eye-catching locations in business places or broadcast, etc, Many investors unknowingly missed the last trading date of the transaction. Some investors asked the securities firm staff when the warrant trading ended, and the securities firm staff unexpectedly replied that it was the last day of exercise. How can such service quality avoid disputes?
Third, investors' warrant knowledge and risk awareness need to be improved.
Although some investors have invested in stocks for many years, they have little knowledge of warrants and risks. Some investors equate the last trading date of warrants with the exercise date; Some people who do not understand the intrinsic value of warrants may return to zero; Some do not care about the warrant related announcements published by the media; Some regard warrants as stocks, thinking that they will not be delisted unless they lose money in successive years; Some regard the call warrant and put warrant as one kind, etc., thus causing unnecessary economic losses.
Fourth, there are other situations.
Application of law to handle warrant disputes
At present, there are few legal provisions and normative documents related to warrant trading, mainly including the Securities Law of the People's Republic of China, the Stock Listing Rules and the Interim Measures for the Administration of Warrant Business of the Stock Exchange.
Article 59 of the Securities Law stipulates that "the documents for the issuance and listing of stocks or corporate bonds announced by the company must be true, accurate and complete, and shall not contain false records, misleading statements or major omissions". According to the provisions of Article 63, the issuer and other documents such as the prospectus and listing announcement shall bear legal liability "if there are false records, misleading statements or major omissions that cause investors to suffer losses in securities trading".
Article 2.10 of Chapter II of the Listing Rules of Shanghai Stock Exchange stipulates that "when a listed company discloses information, it shall use factual descriptive language to explain the true situation of the event concisely and easily".
In addition, Shanghai Stock Exchange and Shenzhen Stock Exchange have also formulated the Interim Measures for the Administration of Warrant Business. Although the Measures have yet to be further improved in practice, they still have a strong normative role in warrant trading.
As a financial derivative product, the issuance and transaction of warrants shall be subject to the basic principles of the above-mentioned laws and the provisions of the normative documents. At the same time, relevant departments should timely summarize and formulate, modify and improve the relevant provisions on warrant issuance and trading in view of some problems in practice.
Handling of Warrant Trading Disputes
According to the current situation of warrant trading disputes, the author believes that liability should be determined in different situations.
If the economic losses of investors are caused by false records, misleading statements or major omissions in the information disclosure of the issuer or relevant institutions or other irregularities, investors have the right to pursue their economic compensation liabilities;
If investors suffer economic losses due to poor service quality provided by securities companies due to weak sense of responsibility or lack of warrant professional knowledge, securities companies shall bear corresponding legal liabilities. However, investors may have some difficulties in proving the fault of securities dealers to the court;
If the losses of investors are caused by their own reasons or market risks under the condition that the issuer or relevant institutions and securities companies perform relevant obligations legally and in compliance without any fault, they shall bear their own losses;
If other circumstances cause economic losses to investors, specific analysis shall be made according to specific circumstances.
Warrant trading dispute is a new type of case, and the handling of the case needs continuous exploration in practice. We believe that the trial of some warrant cases and the construction of the legalization and standardization of the securities market will effectively promote the sustainable, healthy and orderly development of the warrant market.
-Securities Law
