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quote originally posted by Checker:
There are 2 types of warrant in the market, American Warrant and European Warrant. Both type of warrants are tradable and will expired upon a specific timeframe, usually 2/3 years for American Warrant and 3 to 12 months for European Warrant.
For American Warrant, when you exercised the warrant at the exercise price, you will get the mother share.
For European Warrant, there is Call warrant and Put Warrant. This kind of warrant is similar to gambling, predicting the exercise price on the Index or Stocks to be positive or negative than the Issue Price.
For example HSI21800MBLECW100225 (Instead of HSIMBIECW100225P), it should read as European Call Warrant (ECW) based on HSI(HKSE Index)issued by MACQUARIE CAPITAL SECURITIES (MBL), which will expired on 25 Feb 2010. Investor who buys this ECW, expects the HKSE Index to be higher than 21800 points when it expires. If it is positive (higher than 21800), investors will be paid cash. If it is negative (lower than 21800), investor gets nothing.
For Put Warrant, it is the reverse. Investors are betting that the Exercise Price is lower than the Issue Price, then they will get paid.
European Call/Put warrant is sophisticated securities, which may not be suitable for Ordinary Investors.
I attached herewith 1 announcement by the Issuer for your reference.
MACQUARIE BANK LIMITED
(ABN 46 008 583 542)
(Incorporated under the laws of Australia)
ANNOUNCEMENT
Proposed Issue of
80,000,000 European Style Cash Settled Call Warrants
relating to ordinary shares of Keppel Corporation Limited
Introduction
Macquarie Bank Limited (the “Issuer”) wishes to announce the launch of the proposed issuance of
80,000,000 European Style Cash Settled Call Warrants (the “Warrants”) relating to the ordinary shares
of Keppel Corporation Limited (the “Underlying Shares”). Macquarie Capital Securities (Singapore) Pte.
Limited has been appointed as the designated market-maker (the “Designated Market Maker”) and the
warrant agent (the “Warrant Agent”) for the Warrants.
The Warrants are cash-settled warrants which entitle a warrantholder to be paid a cash settlement
amount (if positive) (the “Cash Settlement Amount”) in accordance with the terms and conditions of the
Warrants.
Further details of the Warrants are set out below.
Entitlement/Exercise of the Warrants
The issue price of each Warrant is S$0.301. Every three Warrants will initially relate to one Underlying
Share.
The Warrants have an exercise price of S$8.40 (the “Exercise Price”) and may only be exercised on 2
July 2010 (the “Expiry Date”).
Cash Settlement Amount
Warrantholders shall not be required to deliver an exercise notice. Exercise of Warrants shall be
determined by whether the Cash Settlement Amount is positive. If the Cash Settlement Amount is
positive, all Warrants shall be deemed to have been automatically exercised at 12:00 noon (Singapore
time) on the Expiry Date. The Cash Settlement Amount less the Exercise Expenses in respect of the
Warrants shall be paid in the manner set out in the terms and conditions of the Warrants. In the event
the Cash Settlement Amount is zero or negative, all Warrants shall be deemed to have expired at 12:00
noon (Singapore time) on the Expiry Date and warrantholders shall not be entitled to receive any
payment from the Issuer in respect of the Warrants.
The Cash Settlement Amount in respect of each Warrant exercised shall be an amount (if positive)
payable in Singapore dollars equal to (A) (i) the arithmetic mean of the closing prices of one Underlying
Share (as derived from the daily publications of the Singapore Exchange Securities Trading Limited
(“SGX-ST”) subject to any adjustments to such closing prices determined by the Issuer to be necessary
to reflect any capitalisation, rights issue, distribution or the like) for each Valuation Date LESS (ii) the
Exercise Price (subject to adjustment as provided in the terms and conditions of the Warrants)
MULTIPLIED by (B) the Conversion Ratio. The Valuation Date is each of the five business days prior to
and including the business day immediately before the Expiry Date. The Conversion Ratio (expressed as
the number of Underlying Shares to which one Warrant relates) is 0.333. The Exercise Price is based on
the reference spot price of S$8.45 used for the pricing of the Warrants. The Warrants carry a premium of
10.1% and a gearing of 9.4 times.
Listing and Trading of the Warrants
An application will be made to the SGX-ST for the listing of and quotation for the Warrants. The
Warrants, when issued, will be represented by a global warrant certificate to be deposited with The
Central Depository (Pte) Limited (“CDP”). The Warrants will be traded on the SGX-ST through the bookentry
scripless settlement system of CDP. It is expected that dealings in the Warrants will commence on
or about 28 January 2010 on the SGX-ST. The Warrants will be traded in Singapore dollars on the SGXST.
The Designated Market Maker
The Designated Market Maker will provide competitive buy and sell quotes (“Quotations”) for the
Warrants continuously during the trading hours of the SGX-ST (with the spread between the buy and sell
quotes not exceeding 10 times the minimum permitted price movement in the Warrants in accordance
with the rules of the SGX-ST or S$0.30, whichever is the greater). The minimum quantity of Warrants to
which the Quotations will apply is 10,000 Warrants.
Quotations will/may however not be provided by the Designated Market Maker in the following
circumstances:
(a) during the pre-market opening and five minutes following the opening of the SGX-ST on any
trading day;
(b) if the Warrants are valueless (where the Issuer’s bid price is below S$0.005), then the
Designated Market Maker will provide the offer price only;
(c) where trading in the Underlying Shares is suspended or limited in a material way;
(d) where the Issuer or the Designated Market Maker faces technical problems affecting the ability of
the Designated Market Maker to provide bids and offer quotations;
(e) where the ability of the Issuer to source a hedge or unwind an existing hedge, as determined by
the Issuer in good faith, is materially affected by the prevailing market conditions, and the Issuer
informs the SGX-ST of its inability to do so as soon as practicable;
(f) in cases where the Issuer has no Warrants to sell, then the Designated Market Maker will only
provide the bid price;
(g) if the stock market experiences exceptional price movement and volatility; and
(h) when it is a public holiday in Singapore and the SGX-ST is not open for dealings.
The last trading day on which the Designated Market Maker will provide competitive Quotations for the
Warrants would be the fifth Business Day immediately preceding the Expiry Date.
Information on the Issuer
The Issuer was incorporated on 26 April 1983 with limited liability for an unlimited duration. It is
incorporated in Australia, registered in the Australian Capital Territory, Australia and regulated by the
Corporations Act 2001 of Australia. The registered office of the Issuer is at Level 3, 25 National Circuit,
Forrest, ACT, 2603. The Issuer’s principal place of business is No. 1 Martin Place, Sydney, NSW, 2000,
Australia. In November 2007 the Macquarie Group restructured its business into separate banking and
non-banking groups, and Macquarie Group Limited (“MGL”) replaced the Issuer as the ultimate listed
parent of the Macquarie Group. The Issuer is a wholly owned subsidiary of MGL and remains regulated
by the Australian Prudential Regulation Authority (“APRA”) as an Authorised Deposit-taking Institution
(“ADI”). MGL is licensed by APRA as a non-operating holding company of an ADI. The ordinary shares
of MGL are listed on the Australian Securities Exchange (“ASX”). The Issuer continues to be listed on the
ASX but has changed its status from a full ASX listing to a debt listing because its existing hybrid
securities, the Macquarie Income Securities (the “MIS”), remain on issue.
Under the non-operating holding company structure, Macquarie's banking and non-banking businesses
operate in two separate groups under Macquarie Group Limited; the Banking Group (which includes
Macquarie Bank Limited and its subsidiaries) and the Non-Banking Group (Macquarie Financial Holdings
and its subsidiaries). Both the Banking and the Non-Banking Groups are wholly-owned by Macquarie
Group Limited.
The Banking Group comprises four operating groups and two divisions: the Treasury and Commodities,
Macquarie Securities, Banking and Financial Services and Macquarie Funds operating groups, and the
Real Estate Banking and Corporate & Asset Finance divisions. The Non-Banking Group comprises
Macquarie Capital, the Cash division of Macquarie Securities and certain less financially significant
assets and businesses of Treasury and Commodities.
Warrant issuance and trading is part of the business of the Macquarie Securities Group (the “Group”).
Macquarie Securities Group offers a range of equity-linked investments, trading products and risk
management services. The Group also operates Macquarie's global securities lending and equity finance
activities and institutional cash equities business.
The Issuer’s long-term debt has been assigned a credit rating of A1 by Moody’s Investors Service Inc
and A by Standard and Poor’s Ratings Group. The Issuer is regulated as an Authorised Deposit-taking
institution by the Australian Prudential Regulation Authority.
Issued by
MACQUARIE BANK LIMITED
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PM Checker
21-Jan 2010 Thursday
12:14 PM (5227 days ago)
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