UK warrants market sees growth on the back of equity rally

The upturn in equity markets that began in the spring has led to increased investor interest in UK warrants, according to Goldman Sachs. But the UK warrants market, which was launched in October by the London Stock Exchange (LSE), has yet to see significant volumes.

“Covered warrants have attracted good levels of interest and the recent rally in equity markets has encouraged even more investors to incorporate them into their investment activities,” said Mark Valentine, executive director in charge of UK warrants at Goldman Sachs in London.

The total warrants premium traded in July was a record £11.1 billion, representing 3,020 trades, according to the latest figures from the LSE. This is up from £7.8 million in June, representing 2,878 trades. Goldman Sachs traded 1,386 of the July contracts, representing a premium of £5.5 million.

John Glendinning, chief executive of online broker Comdirect, said UK warrants are one of his company’s fastest-growing products. “We have seen a rising trend in securities turnover since the beginning of the year, and one of the main reasons for this has been above average growth in covered warrants and certificate trading,” he said.