| With the first reform-result-warrant, Baoshan Iron and Steel JTB1 (SH, 580000), listed in the SSE, warrants re-emerged in China's capital market as a financial derivative and an important instrument of payment in share-trading reform at August 22, 2005. As soon as warrants began to be trading in the exchange, speculative atmosphere was quite strong.To reduce the market speculative level, the management introduced the policy of creation of warrants, which is, by increasing the supply of warrants, to drop the premium rate of the warrants and to return to a rational market. November 21, 2005, Shanghai Stock Exchange issued"Notice of the matter on the creation of Wuhan Iron and Steel warrant"."Subject of creation, trading code, collateral, quota limit, strike order and write-off", etc, was stipulated in this notice and became the first record of the domestic warrants market. With historical background and missions, the policy of creation of warrants is a guinea pig of issuing derivative warrants in domestic market.This article is to explore whether the policy provided the privilege of access high profit, whether the policy would damage the benefit of warrants holders, by comparing the policy of creation of warrants to the similar policies in other developed market and finding the features of the policy of creation of warrants. And also, this article try to analysis the impacts of the create acts against the warrants prices with empirical approach.The article consists of six chapters:Chapter 1: Background of the research; Meaning, purpose and methodology of research;Chapter 2: Fundamental theories and literature reviews;Chapter 3: The policy of the creation of the warrants'terms; Comparison with Hong Kong Exchanges and Clearing Limited, Australian Stock Exchanges on the terms about"Subject, terms, underlying assets, collateral, market maker, and write-off".Chapter 4: Analysis of the impacts of the create acts on the creators and the warrants holders.Chapter 5: Make 2 empirical hypotheses and test them. Chapter 6: Conclusions and other suggestions. |
