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The Market, Regulations, and Issuing Strategies of Covered Warrants in Taiwan

Author

Listed:
  • Raymond Chiang

    (The Chinese University of Hong Kong, China)

  • Chin-Shen Lee

    (Ming Chuan University, R.O.C.)

  • Wen-Liang Hsieh

    (Tamkang University, Tamsui, Taipei country, Taiwan, R.O.C.)

Abstract

This paper documents the general market situations, the regulations, and the issuing strategies as well as hedging strategies in the recently established Taiwan warrant market. Regulations highly affected the development of the market including the issuers' qualifications, the liquidity requirement of the underlying stocks, the large minimum issuance size, the extended issuing period, and the rules determining the initial premium. Issuers, facing some unrealistic regulations, not only bear substantial issuing risk, but also sustain greater issuance and hedging costs. Security houses therefore become more conservative to further issuance. A modification of current regulations may resolve most of the difficulties and enhance the liquidity of the market.

Suggested Citation

  • Raymond Chiang & Chin-Shen Lee & Wen-Liang Hsieh, 2000. "The Market, Regulations, and Issuing Strategies of Covered Warrants in Taiwan," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 3(01), pages 87-105.
    • Handle: RePEc:wsi:rpbfmp:v:03:y:2000:i:01:n:s021909150000008x
    DOI: 10.1142/S021909150000008X
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    Citations

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    Cited by:

    1. Chung, Huimin & Lee, Chin-Shen & Wu, Soushan, 2002. "The effects of model errors and market imperfections on financial institutions writing derivative warrants: Simulation evidence from Taiwan," Pacific-Basin Finance Journal, Elsevier, vol. 10(1), pages 55-75, January.
    2. Chang, Chih-Hsiang & Chan, Kam C., 2011. "Investment banks' stock ratings, call warrant issuance, and responses from heterogeneous investors: Evidence from Taiwan," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 733-743, October.

    More about this item

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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