Although it might not seem this way to novices, the UK market is starting by keeping things simple. The issuers and the LSE decided that more complex warrants would confuse, mislead, and eventually stifle demand as inexperienced warrant investors grappled with unfamiliar jargon and information. Most warrants will therefore be plain vanilla to begin with. More exotic and cleverly structured 'investment' style warrants can follow later once a base of education has been achieved.
Whatever support may be provided though, the success of the new market ultimately rests on the provision of warrants which investors wish to trade, and are able to trade profitably. It is reasonable to be optimistic about this prospect, but not complacent. Covered warrants are effectively a brand new product in the UK. There are a few problems which could arise.
For now though the immediate prospects are tantalising. The UK looks set to have more warrants than ever before, more choice and variety, more liquidity, more instruction, more backers, and a fresh set of regulations written specifically for the protection of private investors.
The ingredients are in place: let us hope it is a recipe for success.
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