Research On Some Issues Of Demonstration And Application Of Shang Hai-Shen Zhen Warrant Market In China

With the rapid development of the global financial derivative market, a kind of relatively simpler financial derivative—warrant, because of its special characteristics, gains weight. At the same time with the initiation of the equity division, warrant re-emerged in Chinese stock market in 2005, and developed quickly. Meanwhile, it is also applied to some other areas. Under this background, combined with the market performance of the warrant, the application of it in incentive system and the application of it in equity division reform, together with related literature review, this paper gives an empirical study to the effect of the warrant issues on underlying stock, to the overall relations and the deviation between the theoretical prices and real prices of warrants, and because of the practice in incentive system and in the aspect of protecting medium and minority shareholders in equity division, the application of warrants in incentive system moves to a wider scale, and warrants are also used to analyze how to protect medium and minority shareholders. In this way, I wish to conclude that it plays an instructive role in warrant exchanging market and in its practice in application area.The main content is as follows:1.Study the effect of the Call and the Put warrants' issuance upon the price, mobility and volatility of the underlying stock on the basis of market data of Shanghai-Shenzhen Securities Market.2. Empirically study the call warrant pricing model. Based on the market data, this paper adopts several regressors. Mainly from the influences of related policies of the warrant market, of the relations of supply to demand, and of the behaviors of exchange, the deviation between theoretical prices and real prices is studied. The theoretical prices are derived from the B-S model, an improved model which takes into consideration interests , exclude right and exclude dividend , An empirical analysis is conducted by using the Regressive Model.3.Aiming at the problems existing in equity cooperation, call warrant plans of multi-stage and various executive prices are designed. Major shareholders (maybe minority shareholders or entrepreneurs) re-purchase the enterprises and minority shareholders (perhaps major shareholders or venture capitalists) withdraw. This plan can stimulate both parties to work hard during the cooperation. Besides, this plan shows that, if warrants function as incentive tools, different designs should be brought up in accordance with different objects, purposes and conditions so as to fit the specific situations.4. Due to the wide existence of depriving corporations, the fact that the controlling shareholders deprive the medium and minority shareholders exists extensively and becomes more and more hidden. In order to solve this problem, measures should be taken from many aspects. Meanwhile, some tools should be introduced, and thus a certain systems can be established. Therefore, the Put warrants of multi- stages and multi- executive prices in the governing of the corporation will protect the medium and minority shareholders (non- controlling shareholders).