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June 23, 2017

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Warrants trading target likely to exceed 5 percent: FSC

TAIPEI, Taiwan -- The Financial Supervisory Commission (金管會, FSC) recently announced that it expects the warrants trading volume to reach 5 percent of the overall spot markets this year.

FSC Chairman Tseng Ming-chung (曾銘宗) emphasized that investment capital is beginning to flow from the housing market to the equities market, and that warrants remain a viable instrument for investors to employ leverage and risk hedging. Tseng however, advised investors to first familiarize themselves with the mechanisms and associated risks of warrants trading before utilizing the derivatives tool.

The FSC said that as of the end of June this year, the number of warrants available to the investing public have reached 12,000, with trading volume expanding above the NT$350 billion benchmark, representing a 2.37 percent portion of the overall equities market. In the future, the FSC will continue to introduce new policies to encourage the growth in variety of the derivatives instrument, adding that high performing brokerage firms will granted greater flexibility in the warrants they issue.

Meanwhile, put warrants for Medigen Biotechnology Co. (基亞) shares yesterday surged 1,000 percent intraday, following reports of discouraging clinical trials relating to the company's upcoming new medicine product.

Concurrently, Largan Precision Co.'s (大立光) warrants transaction volume yesterday came close to NT$200 million, the highest among all warrants listed currently.

The FSC said that the warrant is a very good product, suitable for leverage, risk hedging, and non-risk hedging applications, and are ideal for investors who can stomach its related risks.

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