Structured Warrant vs Company Warrant: What Bursa Investors Must Know
You open your brokerage platform, type a stock name like "Tenaga", and a list of "warrants" appears - TENAGA-CW this, TENAGA-C45 that, and sometimes TENAGA-WA. All called "warrants", all priced much lower than the mother share, and all able to multiply your money if you are right. Easy to assume they are all the same thing.
That is an expensive mistake. Although they all carry the word "warrant" in their name, Bursa Malaysia has two very different kinds of warrants - and they differ in who issues them, how long they live, what you get at expiry, and their risk profile. Retail investors who confuse the two often make trading decisions based on wrong assumptions - and losses come faster than they expect.
This article explains the difference between structured warrant (or call/put warrant) and company warrant in the Bursa Malaysia context. We break down the technical terms in simple language, give real stock-name examples, and show when each type of warrant is (or is not) suitable for retail investors.
Short Answer
Structured warrant is issued by a third-party investment bank (Macquarie, RHB, Maybank IB, etc.), has a short life (3 months to 2 years), and is settled in CASH - you do not get shares. Company warrant is issued by the company itself, has a long life (3-10 years), and exercise gives you NEW SHARES of the company (dilutive). Both are high-risk, but they serve very different purposes and strategies.
What Is a Warrant, Really?
Before we break down the two types, understand the basic concept of a warrant. A warrant is a contract giving you the RIGHT (but not the obligation) to buy an asset at a fixed price (exercise price/strike price) before a certain expiry date.
Simple analogy: imagine you got a voucher that lets you buy an iPhone at RM3,000 anytime in the next 6 months. Today the iPhone costs RM4,500 in stores. That voucher is worth at least RM1,500 (the difference between the market price and the voucher price). If the iPhone rises to RM6,000, your voucher becomes more valuable - you can sell it to someone else at a higher price. If the iPhone drops to RM2,500, your voucher may become worthless (because nobody wants to use a voucher to pay more than the store price).
That is the concept of a warrant. But who issues that voucher and what you get when the voucher is used - that is what distinguishes a structured warrant from a company warrant.
Structured Warrant: Issued by Third Party, Settled in Cash
A structured warrant - also known as a call warrant or put warrant on Bursa Malaysia - is a derivative product issued by a third-party investment bank, not by the company whose shares are the underlying.
For example, TENAGA-C45 is a call warrant on Tenaga Nasional (TENAGA) shares, but it is issued by an investment bank like Macquarie or CGS-CIMB. Tenaga Nasional itself has nothing to do with this warrant - they just happen to be the underlying stock.
Key features of a structured warrant:
Short lifespan. Typically 3 months to 2 years. After the expiry date, the warrant becomes void and worthless (if out-of-the-money).
Cash settlement. On the expiry date, if the warrant is in-the-money (the underlying price is above the exercise price for a CW), you receive a cash payment equal to the price difference. You do not get shares. You also cannot exercise early to get shares - you have to sell the warrant on the open market if you want out.
Two direction types. Call warrant (CW) bets the underlying price will GO UP. Put warrant (PW) bets the underlying price will GO DOWN. That is why on Bursa Malaysia you can see names like TENAGA-CW (call) or TENAGA-PW (put), sometimes with a number after.
Naming convention. Typical format: {STOCK}-C{number} or {STOCK}-P{number}. The number has no inherent meaning - just a series identifier issued by the issuer. Each series has a different expiry date and exercise price.
Investment banks earn from the spread. The issuer (bank) makes money from the bid-ask spread and from managing their own hedging. They are not "betting against you" - they are dealers.
To understand the specific dangers of this type of warrant, we explain in more detail in Warrants & Call/Put Warrants: A Dangerous Trap for New Investors.
Company Warrant: Issued by the Company Itself, Converts to Shares
A company warrant - also called a subscription warrant or just warrant in the corporate context - is an instrument issued by the company itself, usually as part of a corporate exercise like a rights issue or bonus issue.
For example, EKOVEST-WD is a company warrant issued by Ekovest Berhad itself. Exercising this warrant gives you new Ekovest shares - which simultaneously increases the number of shares in the market (dilutive).
Key features of a company warrant:
Long lifespan. Typically 3 to 10 years from the issue date. Gives you a much longer time for the underlying to rise.
Physical settlement - converts to shares. On or before the expiry date, you can exercise the warrant by paying the exercise price. In exchange, you get new mother shares from the company. Example: WARRANT-WA with an exercise price of RM1.00 - pay RM1.00 + warrant cost + 1 warrant = 1 new mother share.
Dilutive to existing shareholders. When exercise happens, the company issues new shares. This increases the total share count, so each existing share represents a smaller percentage ownership in the company.
Naming convention. Typical format: {STOCK}-W{letter}. The letter (A, B, C, etc.) indicates a different series. Examples: EKOVEST-WA, EKOVEST-WB, EKOVEST-WD.
Company's purpose. Companies issue warrants for two main reasons: (1) as a "sweetener" as part of a rights or bonus issue to attract investors, (2) as a way to raise future capital without needing another corporate exercise.
For investors with warrants near expiry and wondering how to exercise, we explain step by step in How to Convert an Expiring Warrant to Mother Share.
Quick Comparison Table
| Feature | Structured Warrant | Company Warrant |
|---|---|---|
| Issuer | Third-party investment bank (Macquarie, RHB-IB, Maybank IB, etc.) | The company itself |
| Lifespan | 3 months to 2 years | 3 to 10 years |
| Settlement | Cash only | New shares |
| Dilution effect | None (underlying shares unaffected) | Dilutive (new shares issued) |
| Direction type | Call (up) OR Put (down) | Almost always Call (up) only |
| Naming convention | STOCK-Cxx or STOCK-Pxx | STOCK-WA, STOCK-WB, etc. |
| Issuance purpose | Trading product for investors, profit for issuer | Sweetener for rights/bonus issue or raise capital |
| Initial liquidity | Usually higher (issuer market-makes) | Depends entirely on the company |
| Dividends | None | None (but mother share can) |
| Can get shares? | No | Yes, by paying exercise price |
Risk Level: Both Are HEAVILY LEVERAGED
Important to understand: both types of warrants are highly leveraged products. That means warrant price movements are often 2-5 times (or more) the movement of the mother share. Profits can be huge, but losses can also wipe out your capital quickly.
But their risk profiles differ:
Structured warrant - time decay (theta) risk is very pronounced. Because of the short life, each week the warrant loses some value even if the underlying does not move. If the expiry date arrives and the warrant is still out-of-the-money, it becomes worthless - you lose 100% of your capital. More suitable for investors who have a specific DIRECTIONAL view and a clear time horizon.
Company warrant - time decay risk is lower because of the long life. But there is dilution risk (when exercise happens, the mother share can be affected), and liquidity can be very low (hard to sell if you need to exit). Long time periods mean you are exposed to many unexpected corporate and economic events.
Before trading any kind of warrant, read Warrant Risks You Need to Know to understand the worst-case scenarios.
When a Structured Warrant Is Suitable
A structured warrant can be useful in specific situations:
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Short-term directional view - you are confident a stock will rise (or fall) in the next 1-3 months. A structured warrant gives exposure with smaller capital than buying the stock directly.
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Portfolio hedging - if you hold lots of blue-chip stocks and are worried about a market drop, a put warrant can function as insurance (though this is more for sophisticated investors).
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Momentum trading - when there is a specific catalyst (quarterly results, corporate action), a structured warrant gives quick leverage.
What NOT to do: hold a structured warrant "long-term hoping for profit". Time decay will eat your value - and if the market does not move the way you hope, you will lose even if your fundamental analysis is eventually correct.
When a Company Warrant Is Suitable
Company warrants have specific opportunities in the following situations:
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You are confident in the company long-term - if you believe company X will be 2x the size in 5-7 years, a company warrant gives exposure with less capital than the mother share.
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You received free warrants from a bonus issue - many company warrants come as a free sweetener. If the company is solid, exercising at the end of the life can be a good decision. But if the company is not good, sell the warrant earlier before it becomes worthless.
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Attracted by a cheap exercise price - sometimes warrants trade at a "discount" to intrinsic value. But this rarely happens in efficient markets.
What NOT to do: buy a company warrant on the belief that it is "like the mother share but cheaper". A warrant is NOT the same as a share - no voting rights, no dividends, and can become worthless if the company underperforms. For more guidance, read 5 Things You Must Know Before Buying a Warrant.
How to Distinguish Them on Your Brokerage Platform
When you type a stock name on your brokerage platform, you will see a list of related counters. Easy way to distinguish:
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Look at the name format. STOCK-CW, STOCK-C45, STOCK-PW = structured warrant. STOCK-WA, STOCK-WB, STOCK-WD = company warrant.
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Look at the issuer (if the platform shows it). A structured warrant will have a bank name like "Macquarie", "RHB", "Maybank IB", "CGS-CIMB". A company warrant will have the company's own name.
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Look at the expiry date. A structured warrant usually expires in the near term (a few months). A company warrant can expire years in the future.
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Look at the prospectus / circular. For complete information, check the Bursa Malaysia announcement for the full terms of the warrant.
To understand how to calculate the real value (premium) for both types of warrant, read What Is Warrant Premium & How to Calculate It.
FAQ
1. Is a structured warrant more dangerous than a company warrant? Both are high-risk, but structured warrants have stronger time-decay risk because of the short life. Company warrants live longer but are exposed to dilution risk and low liquidity. Both can cause 100% capital loss.
2. What is the difference between CW and WA in a warrant name? CW (or Cxx) indicates a call warrant (structured warrant) issued by an investment bank. WA (or WB, WC, etc.) indicates a company warrant issued by the company itself. This naming format is standard on Bursa Malaysia.
3. Do I get shares when a structured warrant matures and is in-the-money? No. Structured warrants are settled in CASH. You receive a cash payment equal to the difference between the underlying price and the exercise price (if in-the-money). No shares are issued or transferred to you.
4. Can I sell a company warrant before expiry? Yes, just like a structured warrant. You can sell on the open market anytime before expiry - as long as there is a buyer. Liquidity is the key thing to check before trading.
5. Can structured warrant issuers "manipulate" the price? The issuer is a market maker who is supposed to provide bid-ask quotes throughout trading hours. Bursa Malaysia has rules on maximum spread and quoting obligations. But the price structure (delta, theta, implied volatility) is indeed controlled by the issuer - so it is important to understand that the "warrant price" is not solely determined by retail investor demand/supply.
6. Can I exercise a company warrant early before expiry? For most company warrants, yes - you can exercise anytime during the exercise period (typically several years before the final expiry date). But early exercise is rarely worthwhile unless there is a specific reason (example: wanting to receive a dividend that will be paid soon).
7. Am I entitled to dividends if I hold a warrant? No. Warrants (both types) are NOT entitled to dividends paid on the mother share. You need to be an actual mother share holder to receive dividends. That is one of the trade-offs of trading warrants.
8. Are warrants subject to the new 2% dividend tax? The 2% dividend tax in Malaysia (for dividends exceeding RM100,000 a year) applies to actual dividends from listed companies. Warrants do NOT pay dividends, so this tax does not apply. But if you exercise a warrant and receive mother shares, dividends from those mother shares may be subject to tax.
Conclusion
Although both structured warrants and company warrants are called "warrants" and trade on Bursa Malaysia, they are very different products in terms of issuer, lifespan, settlement method, and risk profile. Confusing the two can lead to wrong strategies and unnecessary losses.
Before buying any warrant, take 5 minutes to check: what type of warrant is this (look at the name format), who is the issuer, what is the expiry date, what is the exercise price, and does it fit your strategy and risk tolerance. If you are new to investing, it is better to start with the mother share before moving on to leveraged instruments like warrants.
To trade warrants on a platform that supports detailed analysis as well as access to stocks on Bursa Malaysia and overseas, you need a complete trading account.
Open a CDS and trading account to start investing in stocks on Bursa Malaysia as well as foreign markets such as the United States and Hong Kong through a single platform.
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