test4

Sunday, September 5, 2010

How to Exercise Your Warrant Options (SGX)

I have exercised my Saizen Warrants recently. While doing so, I realised that there are people who were unsure of how to exercise their warrants. So here I am, writing a mini tutorial on how to exercise your warrants and convert them into mother shares.

I found out how to exercise my warrants from here:
http://www.cdp.com.sg/faq/warrant_faq1.html


Step 1:
Find out who your warrant agent is from
http://www.sgx.com/wps/portal/marketplace/mp-en/products/securities_products/company_warrants


Step 2:
Call your warrant agent up. The phone number is listed on the website above.
You will need to get them to send you the exercise notice form. Give them your address, and they will mail it to you accordingly.


Step 3:
Apply for a cashier's order from your bank. The amount on the cashier's order is equal to the value of the warrants to be converted. Cashier's orders can be ordered using internet-banking for free. I went with DBS. However, the cashier's order from internet banking can only be collected at a few branches. Do check out with branches are available before applying.

A $5 surcharge is chargeable if it is applied at the bank itself and not through internet banking.


Step 4:
Fill up the exercise notice form when you receive it, which will include your name, address, securities account number, and the number of warrants to be converted.


Step 5:
Prepare an envelope, and put your completed exercise notice form, together with your cashier's order into the envelope. Although it is mentioned in the CDP website that your latest account statement is needed, in actual fact, it is not. You do not need to send it to the warrant agent. However, this is my information from calling up the warrant agent for Saizen Reit. It would be prudent to confirm with your warrant agent.



Step 6:
Affix a stamp and send your exercise notice!



There you have it.

Update:
The day the warrant agent receive your notice is the Lodgement date. The warrant agent can decide whether to list your shares at the Lodgement date or the following working day.

Once it is listed, your CDP account will be debited of the warrants, and credited with the new shares. The company will also announce on SGX website the number of warrants converted (without names of course).

14 comments:

  1. Hi JW,

    Thanks for this very useful post. I will ask my readers to come to your blog to read up on this. :)

    Is that your thumb in the picture? ;p

    ReplyDelete
  2. Hi AK,

    thanks. Yup that's my thumb. Thumbs up? :)

    ReplyDelete
  3. Great.

    I loved this kind of "How To (do this and that".
    Would AK47, consider a special section for this kind of topics.

    Perhaps, an additional part about 'common mistakes/pitfalls/misunderstanding/error" will be a good bonus too.

    My turn soon - for Rights

    Jimmy

    ReplyDelete
  4. Hi Jimmy,

    thanks :)

    A how-to guide for rights issue would be good :)
    AIMS Rights issue is coming up!

    ReplyDelete
  5. Hi JW,

    I just chanced upon your site today, as I was frustrated trying to find out how to exercise warrants, and this post was just quite simply an in-your-face solution. Thanks =).

    Just want to confirm about the amount to put on the cashier's order, shouldn't it be the No. of Shares Entitled for Conversion x Exercise Price, and not the value of the warrants?

    Regards,
    Kieran (Email: kier_w2002@msn.com)

    ReplyDelete
  6. Hi Kieran,

    glad my post was useful :)

    Yup, the cashier's order is the num of shares entitled for conversion x Exercise price, and not the value of the warrants.


    The value of the warrants is what you have paid for, or what was given/distributed to you.

    ReplyDelete
  7. May I ask why must it be a cashier's order? Cannot use cheque?

    ReplyDelete
    Replies
    1. Hi, I'm unsure too.
      I merely followed the instructions as per the warrants exercise notice form.

      Delete
  8. Although I don't invest in options Stock warrants which are like options can sometimes be worth the risk.

    ReplyDelete
  9. Hi JW,

    Why we have to pay S$0.09 per new unit subscribed when exercise the warrent? We have paid the amount while purchasing the warrent in year 2009. If we pay again than we are paying double. Sorry for lacking of knowledge in warrent.

    ReplyDelete
  10. The price you pay for the warrant is the price difference between the share price and the warrant. Warrants only give you the option to purchase the share at $0.09. That's why you have to exercise it by paying that amount.


    Basically, there was no difference in buying the warrants or the share if you are going to exercise it anyway, apart from
    1) No dividends are given for the warrants
    2) Warrants are a cheaper way to lock in the price, until you decide to convert to mother share somewhere in the near future.

    I considered point 2 for my purchase of Saizen warrants last time.

    ReplyDelete
  11. I understand you can't send by mail these days, according to Boardroom(MDR Warrants).

    ReplyDelete
  12. I generally do not get into warrents. But theirs something called tarp warrants tarp stands for treasury assistance and recovery plan. Warrants were issued by the major money center banks in the united states as part of the treasury assistance and bailout the warrants trade for less than ten cents and do expire until 2018 not a bad risk at all.

    ReplyDelete
  13. hey. to exercise the warrants, do i need to wait for the company to release the exercise date before i call them up to request for the form?

    ReplyDelete

Please Comment >>