What Are Structured Warrants?
What are structured warrants, how they're issued and priced, how leverage and settlement work, and the risks involved — a complete plain-English guide with a scroll-through visual introduction.
By warrants.asia Editorial Team · Published July 14, 2026 · Updated July 18, 2026
From Derivatives to Structured Warrants
Five ideas that build up to a structured warrant — use the arrows to step through.
What are derivatives?
Derivatives are financial contracts whose value is derived from an underlying asset — a stock, an index like the HSI, a commodity, or a currency. Instead of owning the asset directly, a derivative lets you gain (or hedge) exposure to its price movement.
What are structured warrants?
Structured warrants are exchange-listed derivatives issued by financial institutions — such as Macquarie, RHB, Kenanga, CIMB, Maybank IB, CLSA, Affin Hwang, and AmBank — rather than by the underlying company itself. A derivative is simply a contract whose value is derived from something else: here, that something is an underlying share, index, or ETF. Structured warrants cover single stocks (Maybank, Sunway, Tenaga Nasional and similar names on Bursa Malaysia), major indices like the Hang Seng Index (HSI) and Hang Seng TECH Index (HSTECH) on HKEX, and a growing set of regional ASEAN and ETF-linked underlyings.
The word "structured" distinguishes them from the warrants a company might issue directly to its own shareholders (see the warrants meaning guide for that distinction). A structured warrant is a separate, third-party product: the issuing bank prices it, lists it on the exchange, and stands behind the payout at maturity. Unlike a company warrant, exercising a structured warrant never dilutes the underlying company's share count — the issuer settles in cash, not by handing over new shares.
- 1Issuer lists the warrantA licensed bank fixes the strike, expiry, and entitlement ratio, then lists it on the exchange.
- 2Trades on exchange like a shareBought and sold through an ordinary trading account, with the issuer quoting live prices.
- 3Approaching expiry — time decay acceleratesTime value erodes faster in the final weeks, even if the underlying stands still.
- 4Automatic cash settlementIn-the-money warrants are cash-settled at maturity — no exercise instruction needed.
How structured warrants are issued and priced
When an issuer lists a structured warrant, it fixes three things at launch: the strike (exercise) price, the expiry (maturity) date, and the entitlement or conversion ratio — how many warrants convert into one unit of the underlying. The issuer then continuously quotes a live price for the warrant throughout the trading day, based on a pricing model (commonly a Black-Scholes-style model — see this site's free calculator) that factors in the underlying's current price, the strike, time remaining to expiry, implied volatility, and prevailing interest rates.
A simplified worked example: suppose Stock XYZ trades at RM5.00, and an issuer lists a call warrant with a strike of RM5.00, an entitlement ratio of 4 (meaning 4 warrants convert into 1 share), and six months to expiry. If XYZ rises to RM5.80 by expiry, the warrant is in-the-money by RM0.80 per share. Divided by the entitlement ratio of 4, the payout is RM0.20 per warrant, credited automatically in cash — no exercise instruction needed on Bursa or HKEX. If XYZ instead finishes at or below RM5.00, the call warrant expires worthless, and the maximum loss is capped at the premium originally paid for the warrant, never more.
Why trade structured warrants instead of the underlying?
Structured warrants let traders take leveraged, defined-risk directional views (via call or put warrants) on an underlying without the capital outlay of buying it outright, and without needing a margin account the way futures or CFDs require. Because a warrant's price moves by a multiple of the underlying's move — its gearing — a relatively small capital outlay can produce a proportionally larger gain (or loss) than buying the underlying share directly.
That leverage cuts both ways, and it's genuinely the core trade-off of the product: the maximum loss on a long warrant position is capped at the premium paid (you can never owe more than you put in, unlike some other leveraged instruments), but losing that full premium is also common if the underlying doesn't move as expected before expiry. See the risks section below before treating leverage as a one-sided benefit.
What moves a structured warrant's price
A warrant's price is driven by more than just the underlying's direction. Delta measures sensitivity to the underlying's price; gearing and effective gearing measure the leverage multiple; implied volatility reflects the market's expectation of future price swings; and time decay steadily erodes the warrant's time value as it approaches maturity, accelerating in the final weeks. Moneyness (in-, at-, or out-of-the-money) and the premium paid also shape the payoff. Rather than redefine each of these here, the glossary is the single reference for precise definitions — worth bookmarking before comparing two warrants on the same underlying.
Settlement of structured warrants: Bursa vs HKEX
Most Bursa Malaysia and HKEX structured warrants are cash-settled and European-style: exercisable only at expiry, not any time before, and automatically settled with no action required from the holder. On Bursa Malaysia, in-the-money warrants pay out the cash difference between the underlying's settlement price and the strike, adjusted for the entitlement/conversion ratio, credited directly to the holder's trading account on the maturity date.
On HKEX, index warrants over the HSI or HSTECH settle against the Expiry-day Average Settlement (EAS) price rather than a single closing print — an average of index quotations taken at set intervals on the expiry morning — which is a subtle but important difference from Bursa's mechanics. See the HSI underlying page for the full expiry and rollover mechanics specific to Hong Kong index warrants, and the CBBCs guide for how the mandatory call feature changes settlement for that related product.
Risks of trading structured warrants
Structured warrants carry real, specific risks that any trader should weigh before opening a position. Time decay works against holders continuously — a warrant that goes nowhere in price still loses value every day as expiry approaches, unlike owning the underlying share outright. Leverage magnifies losses as readily as gains: a warrant can lose its entire premium even on a modest adverse move in the underlying, well before the underlying itself would be considered a bad investment.
Warrants also carry issuer risk (the payout depends on the issuing bank honoring its obligation) and liquidity risk (some strikes and expiries trade thinly, widening the bid-ask spread). CBBCs add mandatory-call risk on top of ordinary time decay — see the CBBCs guide. None of this is investment advice; it's a description of mechanics every structured warrant carries, and the reason this site treats every listing as an educational, curated snapshot rather than a recommendation to trade.
How to start trading structured warrants
On Bursa Malaysia, structured warrants trade through an ordinary CDS trading account with any registered broker — no separate derivatives account is required, and warrants trade in the same 100-unit board lot as regular shares. See the Malaysia market guide for the naming convention, trading hours, and issuer landscape in full. On HKEX, derivative warrants and CBBCs trade through a standard Hong Kong securities account, settled via CCASS, with board lot sizes that vary per listing.
Before opening a position on any specific warrant, cross-check its live strike, expiry, and entitlement ratio directly against the issuing bank's own term sheet or the exchange's listing document — this site's tables are a curated, periodically refreshed snapshot, with a live link to each issuer's own screener for the current price and full specification.
FAQ
What are structured warrants?
Structured warrants are exchange-listed derivatives issued by licensed financial institutions (like Macquarie, RHB, Kenanga, CIMB, Maybank IB, CLSA, Affin Hwang, and AmBank on Bursa Malaysia) rather than the underlying company itself, covering single stocks, indices like the HSI, or ETFs, and settled in cash at maturity.
Why trade structured warrants instead of the underlying?
They offer built-in leverage and a defined maximum loss (the premium paid), letting traders express a directional view with less capital than buying the underlying outright — though that same leverage means the full premium can be lost even on a modest adverse move.
How are structured warrants settled?
Most Bursa Malaysia and HKEX structured warrants are cash-settled automatically at maturity — in-the-money warrants pay out the cash difference (adjusted for the entitlement ratio), no exercise action needed. HKEX index warrants settle against the Expiry-day Average Settlement price rather than a single closing print.
What is the maximum I can lose trading a structured warrant?
The maximum loss on a long warrant position is capped at the premium paid for it — you cannot lose more than your initial outlay — but losing that full premium is common if the underlying doesn't move as expected before expiry, since time decay erodes value continuously.
Do I need a special account to trade structured warrants?
On Bursa Malaysia, no — structured warrants trade through an ordinary CDS trading account in the same board lot as regular shares. On HKEX, they trade through a standard Hong Kong securities account settled via CCASS.
Related guides
Sources
- Bursa Malaysia: Structured Warrants product page — Bursa Malaysia
- HKEX: Derivative Warrants & CBBCs — HKEX
Further reading
Recommendations, not citations. Some are sites we own — see our network.
- What Are Structured Warrants in Malaysia? Complete Guide — Warren Mak (our network)
Key resources
Structured warrants homepage · Pricing calculator · Glossary · HSI warrants guide · CBBCs guide
Explore further
See the structured warrants screener or browse more learn articles.