Settlement
Most Bursa Malaysia and HKEX structured warrants are cash-settled: on expiry, in-the-money warrants pay out the cash difference automatically, no exercise action needed.
By warrants.asia Editorial Team · Published July 20, 2026
How structured warrant settlement works
Settlement is the process by which an in-the-money structured warrant pays out its value at expiry. The vast majority of structured warrants on Bursa Malaysia and HKEX are cash-settled: the holder automatically receives the cash difference between the underlying's settlement price and the warrant's strike price, adjusted for the conversion ratio. No exercise action, no phone call to the broker, no delivery of shares — it happens automatically.
For out-of-the-money warrants (the underlying hasn't moved past the strike in the favorable direction), settlement is equally simple: the warrant expires worthless, and the holder's loss is capped at the premium originally paid.
Settlement on Bursa Malaysia vs HKEX
On Bursa Malaysia, the settlement price is typically the underlying's closing price (or volume-weighted average price) on the expiry date, and the payout is credited directly to the holder's CDS trading account within T+2 business days. The process is automatic — no exercise notice or instruction is needed.
On HKEX, index warrants (HSI, HSTECH) settle against the Expiry-day Average Settlement (EAS) price rather than a single closing print. EAS is calculated by averaging index quotations taken at fixed intervals on the expiry morning, which smooths out settlement against a single volatile moment. This is a subtle but important difference: a warrant that appears in-the-money based on the closing index level may settle differently if the EAS differs from the close.
European-style vs American-style settlement
Almost all Bursa Malaysia and HKEX structured warrants are European-style, meaning they can only be exercised at expiry — not before. This is important: even if a warrant is deeply in-the-money during its life, the holder cannot trigger early exercise and lock in the gain. To realize a profit before expiry, the holder must sell the warrant on the open market. The distinction between European and American style rarely matters in practice for structured warrants (since almost all are European), but it's worth confirming in the listing document if you're unfamiliar with the specific product.
FAQ
Are structured warrants cash-settled?
Yes — the vast majority of structured warrants on Bursa Malaysia and HKEX are cash-settled automatically at expiry. In-the-money warrants pay out the cash difference; out-of-the-money warrants expire worthless with the loss capped at the premium paid.
Do I need to do anything when my warrant expires?
No action is needed. Both Bursa Malaysia and HKEX structured warrants are settled automatically — in-the-money payouts are credited to your account, and out-of-the-money warrants simply lapse.
Explore further
See all terms in the full glossary, or try the pricing calculator to see settlement in action.