As of Thursday (3rd December), a total of 6 warrants issued by Macquarie have sold out of inventory or are approaching the sold-out level. These warrants consist of 3 warrants over index (i.e. FBMKLCI-HS, FBMKLCI-HT and HSI-CY) while the remaining are warrants over single stocks (i.e. FGV-C7, UEMS-C21 and UEMS-C21).
When a warrant is listed the issuer must specify an amount of inventory, meaning the maximum number of warrants that can be sold. When a particular warrant is approaching the end of its available inventory, the issuer will typically widen the offer price to discourage further buying from investors. Once the inventory of ‘sold out’ the issuer can no longer provide an offer price.
To alert investors, Macquarie will highlight these warrants on our website as “Sold Out”. This means that Macquarie is no longer able to provide a tight spread and the OFFER price is widened to avoid further selling to investors. In some cases, where the inventory is completely sold out, there will be no offer price. However, Macquarie’s BID price will be maintained and will follow the underlying price movements, allowing existing investors to sell back the warrants at a fair price.
Investors should use caution when buying warrants that are “Sold out” When the Macquarie’s OFFER price is widened for a sold-out warrant, investors should note that in some circumstances the market BID price may be inflated, as other investors may be bidding higher than Macquarie’s bid price. Investors should take caution when buying such warrants, as these investors may not be bidding such high prices when they need to exit their position. It is advisable to always check to see whether a warrant is “Sold Out” before investing.
How do I know if a warrant is “Sold Out”? There are two ways that investors can determine whether a warrant is sold out:
Refer to the Macquarie warrants homepage at the “Inventory Sold-Out” section to check the list of warrants that are low in inventory, if any. Refer to the Live Matrix page (https://www.malaysiawarrants.com.my/tools?sp=lmatrix) to see where Macquarie’s bid/offer is quoted for a warrant.
Macquarie’s “live matrix” is a particularly powerful tool and a first in Malaysia. We strongly recommend that all investors consult this before each trade. The live matrix has a direct link to Macquarie’s market making system and shows investors where Macquarie’s bid and offer prices will be in a warrant (for the various levels in the underlying) at any particular point in time. If Macquarie makes changes to our pricing or our spreads it will be immediately updated on this page (you may need to refresh your browser), giving investors a very transparent view of our pricing. Please note that this price matrix can change intraday.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....