Euronext to launch dedicated warrants platform

Pan-European exchange Euronext is set to launch a platform dedicated exclusively to warrants, in a move designed to enhance the visibility of the market and promote trading.

From May 27, all warrants (options on single stocks) traded on Euronext exchanges – Amsterdam, Lisbon, Brussels and Paris stock markets – will be listed on NextWarrants, a specific system based on the group’s current cash market technology.

“NextWarrants will offer issuers, as well as retail and institutional investors, easy and direct access to a market of more than 6,000 warrants,” said Euronext. The exchange added that the attractions of the market model includes permanent bid/offer quotes from liquidity providers – usually the bank that issued the warrant, indicative opening and closing valuations, and a transparent and liquid market with automated trade execution.

Euronext said the move comes in response to demands from issuers to enhance the visibility of an expanding market.

But according to the International Warrants Institute, a Paris-based independent market data collector, global turnover in warrants was €125 billion, down €65 billion from 2000’s €190 billion.

Marianne Demarchi, senior manager of research and development and strategic marketing at Euronext in Paris, said despite the slowing down in turnover, the number of warrants listed on Euronext markets rose from 4,683 in 2000 to 6,064 at the end of 2001. “In April 2002 the number had risen again to 6,319,” she said.

Demarchi said warrants activity continues to grow. “In 2001, warrant trading on Euronext's markets reached nearly three million trades, compared with just over 2.5 million trades in 2000 and roughly 1.2 million trades in 1999.”