Covered warrants are listed securities issued by financial institutions that are then made available for trading on London Stock Exchange. A covered warrant gives the holder the right, but not the obligation, to buy or sell an underlying asset, at a specified price, on or before a predetermined date.
Covered warrants are similar to options but typically have a longer maturity and are issued over a wide range of assets. There are five types of covered warrants: stock warrants, commodity, basket, currency and index covered warrants:
Covered warrants trade in an electronic, order-driven trading service where the market maker, who is also the issuer, is obliged to provide two-way prices at a minimum price and maximum spread throughout the trading day and for the lifetime of the instrument. Off-book instruments, which are available for trade reporting only, are also supported.
Securitised derivatives are not suitable for all investors – they may be highly geared and therefore volatile. You should not deal in securitised derivatives unless you understand their nature and the extent of your exposure to risk. Since this disclaimer cannot cover all the risks and other significant aspects of these instruments, you should consult an appropriately qualified financial adviser if you are in any doubt. Information on this website does not constitute professional, financial or investment advice. It must not be used as a basis for making investment decisions and is in no way intended, directly or indirectly, as an attempt to market or sell any type of financial instrument.