The Stock Exchange of Thailand has changed the ceiling and floor for derivative warrants (DWs), warrants and transferable subscription rights (TSRs) in order to limit risks of price volatility that investors may face and to reduce improper trade orders.
Mr. Suthichai Chitvanich, Secretary to the SET Board of Governors said that the Board meeting on February 16, 2011, has approved a proposal to amend ceiling and floor for Derivative Warrants (DWs), Warrants, and Transferable Subscription Right (TSRs).
Presently, warrants and TSRs prices are not allowed to change from the previous day’s closing level by more than +/- 30% of the last closing price of the underlying security in multiplied by the exercise ratio. The new regulation will also be put into effect for DWs trade.
On the first day of trading, the ceiling price of warrants, TSRs and DWs will be kept at no more than 100% of the initial public offering price (IPO), while the floor will be not lower than 50% of the last closing price of the underlying security, Mr. Suthichai Chitvanich revealed. Moreover, an order screening system will also be set up for DWs, Warrants, and TSRs.
Investors will benefit from these changes as the ceiling and floor will limit investment risks incurring from price volatility, which might be caused by improper or mistaken trade orders for DWs, Warrants, and TSRs.
The Exchange will arrange a hearing on the proposed new ceiling and floor at a member companies’meeting before announcing an effective date.