Business Times

Plans to regulate share market warrants

Warrants, increasingly popular with listed firms, is receiving the urgent attention of share market regulators, who are gearing to bring in international best practices pertaining to this instrument, according to officials.

“Urgent attention has been drawn to the issuance of warrants by companies and it’s being studied (in a bid to regulate it),” Malik Cader Deputy Director General Securities and Exchange Commission (SEC) told the Business Times.

Some companies which issued warrants recently are Nation's Trust Bank, Reefcomber, Ceylon Leather Products and Environmental Resources and Investments. Companies often include warrants as part of a new issue offering; for instance a rights issue in a bid to entice investors into buying this new security.

“What the recently issued warrants by certain firms have done is increase the shareholders confidence in those stocks,” an analyst noted. He said that warrants are issued as a sweetener along with a right, making it attractive for investors as the warrants are free. “Warrants are one type of equity derivative and they’re issued as a strategy to get the rights subscribed,” he said. Warrants which give their owners the right to purchase shares in the company at a specific price at a future date and they’re are tradable in their own right, and their value will go up and down as the price of the shares to which they relate goes up and down.

The analyst said that warrants tend to be an attractive option for speculators and hedgers and offers significant gains to an investor during a bull market. “In such a market the management of the listed entity can take the share price up when warrants are issued,” he added.

“At present they’re not regulated and we’re studying the international best practices with regard to implementing the rules,” Mr. Cader said. According to sources close to the SEC, they are looking at Indian laws to prepare rules pertaining to warrants to be implemented locally.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
Other Business Times Articles
IMF: Keen to put Lankan economy on track
New Colombo port terminal on stream soon
SEC devises hush-hush formula to curb market volatility
Plans to regulate share market warrants
Quicker credit cards for Sri Lankans
Smart Media crowned No.1 ARC in the world
Comment - IMF, ILO and disciplined spending
Feature - Changes to the CSE listing rules effective Sept. 1
Feature - Tomorrow CHILD: Nature not nurture
CB slashes interest rates to promote dairy industry
17 Colombo food outlets to be 'crowned' for food hygiene
Aitken Spence hotels partners with environmental leader Earthcheck
Seminar on Tax, Customs and Exchange Control Law
NAC Farmer Awards 2010 presented
More broking firms add labour price pressure to incumbents
Western crisis will propel foreign funds into SL
Rating agency raises Sri Lanka’s international credit-worthiness
Colombo bourse hyped; but undervalued shares in force
Lanka's "brand image" - can it be improved?
ICICI Bank wins World Finance Awards 2010 in 3 categories
Global financial services giant Religare enters Sri Lanka through Bartleet TransCapital
Expansion of Oil Palm needs reconsideration
Sri Lanka Tourism – Pitfalls and prevention
More firefighting rather than efficiency in local IT
Janashakthi D&O Insurance to protect directors from Personal Legal Liability
Runeware organises WMWARE, Juniper Network events
BOC backing retains Fitch 'BBB(lka)' for Merchant Credit
Delmege supports renowned ‘Safe Bottle Lamp’ project
Longer time needed to attract investment to post-war Sri Lanka
Dockyard unit to undertake mega infrastructure projects
Slow progress of GK repayments raise doubts
Strategic alliance between Lake House Printers and Indian printers
Fitch affirms National Savings Bank at 'AAA(lka), stable outlook
Microsoft holds Partner Conference and Award Ceremony
Appeal Court sets date for inquiry in Seylan Bank retired employees case
Mobitel’s $30 mln investment for North-East
IMF, ILO come together to solve the global jobs crisis
Systems Integrator ETPL joins prestigious Asianux Consortium
Durdans adds new technology to Radiology Department
Changes to ease life in former conflict areas – Commission tells President


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2010 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution