Are Warrants traded on normal stocks exchanges and secondary markets?

Question

Hello I have a theoretical question. Are warrants traded as listed instruments on any exchange. And can the standard big stock exchanges like NYSE trade warrants?

kurtosis · Accepted Answer

Warrants are traded on exchanges though some have far more liquidity over the counter (i.e. by phone/email/Bloomberg). Typically, those warrants are issued in other currencies to attract international investors.
Warrants may be issued in an IPO as part of a greenshoe (option to issue more shares); however, they are most often issued with bonds. Issuing bonds with attached warrants allows the firm to avoid a large cash outlay to pay back the bond -- if their stock rises enough to encourage warrant holders to exercise.
Even when warrants are listed on an exchange and are more liquid there than OTC, take care: warrants tend to be illiquid wherever they trade. Bid-ask spreads can be very wide.

Bob Baerker · Answer

In addition to common stock, IPOs can  contain warrants.  The IPO tends to trade initially as a unit but all three may trade initially as well (common, warrant, unit).  They can also be issued at a later date as a sweetener (see the APC/OXY merger).  They can be issued with other securities as wells (bonds).
In the case of equity warrants, they will trade on the market where the common trades.

Are Warrants traded on normal stocks exchanges and secondary markets?

2 Answers

Add your own answers!

Ask a Question