Frequently Asked Questions
What is a covered warrant?
A covered warrant is a securitised derivative conferring the right but not the obligation to buy or sell an underlying security at or before a predetermined date at a specified price. They are cash settled, meaning that you never take delivery of the underlying asset.
What do I need to do to deal in traditional warrants?
Successful completion of the covered warrants risk warning and suitability assessment will permit dealing in traditional warrants also.
In which accounts can covered warrants be held?
You can hold warrants in a Dealing account or SIPP, but they are not permitted in an ISA or PEP under Inland Revenue rules.
Can Investment Clubs deal in covered warrants?
Yes. However, the lead investor must complete and sign the covered warrants risk warning and suitability assessment. This should be accompanied by minutes reflecting the Club's understanding of the document, signed by two club members.
Can I deal in covered warrants in a Joint account?
Yes. However, the covered warrants risk warning and suitability assessment must be returned to us with both signatures.
What do I pay for dealing covered warrants?
Flat £12.50 dealing fee for in Dealing accounts or SIPP Dealing accounts.
Which covered warrant issuers are available through comdirect?
comdirect is able to offer dealing in the covered warrants of all issuers listed on the London Stock Exchange.
Is there a minimum order volume in covered warrants?
In general the minimum order size will be one warrant. However, some issuers may insist on a higher number.
Can I place limit and stop orders for covered warrants?
Yes. The system is operable from 8:15 am. Spread protection is built into the system and prevents orders from firing in the event that the bid and offer spread exceed a certain percentage. This percentage varies depending on the unit price of the warrant. There is no spread protection for warrants priced below 1 penny. See the for more details.
When are covered warrant automatically exercised?
All covered warrants will exercise automatically upon expiry where the investor is 'in the money'.
Can I transfer covered warrant holdings into or out of my account?
Covered warrants may be transferred providing there is sufficient time to complete the transfer before the warrant is due to expire.
What is the underlying of a covered warrant?
The underlying refers to the asset upon which the covered warrant is derived. This may be a share, index, currency, interest rate or commodity.
What is a call?
A call confers the right to buy an asset.
What is a put?
A put confers the right to sell an asset.
What is the ratio of a covered warrant?
The ratio is the conversion factor or the number of shares or other unit that a warrant confers the right to buy or sell. The ratio will usually change in the event of a corporate action.
What is an American style covered warrant?
An American style covered warrant is one which may be exercised at any point until expiry. They can be traded at any point during this period.
What is a European styled covered warrant?
A European style covered warrant is one which may be exercised only at expiry. They can be traded at any point during this period.
How can I exercise a covered warrant?
All covered warrants will automatically exercise at expiry provided they are 'in the money'. American style covered warrants may be exercised at any point prior to expiry. There are two methods of exercising such a warrant: (1) telephone customer services, (b) send a secure message requesting exercise. In either case, please ensure you are clear as to the quantity you wish to exercise and identity of the issue by quoting the ISIN.