What are warrants?

Warrants offer investors the right, but not the obligation, to buy or sell a certain quantity of an underlying instrument at an agreed-upon price. The right to buy the underlying instrument is referred to as a call warrant; the right to sell it is known as a put warrant.

Warrants are financial products that are normally issued by a bank or some other financial institution, or by the company themselves. They can be traded on NZX's markets just like buying or selling shares.

Warrants are a form of derivative. In other words, the value of the warrant is derived from the underlying instrument that the warrant is issued on. Warrants can be issued over a range of instruments including shares, an index, currency or commodities. Warrants are most commonly issued over shares.

Warrants do not have standard terms, as different warrants are issued by different institutions with different features – all designed to meet a variety of investors needs.

The institution that issues the warrants constructs the product in accordance with the NZX Participant Rules and relevant Securities Law.