A Complete Guide to Structured Warrants in Malaysia

Structured warrants have quickly emerged as one of Malaysia’s most actively traded derivative instruments—offering investors leveraged exposure to both local blue chips and global tech names, without the capital burden of owning underlying assets.

In 2024, the average daily trading value of structured warrants more than doubled, surging from RM56 million in 2023 to RM123 million, according to Bursa Malaysia CEO. This growth underscores rising investor interest in short-term, tactical instruments that offer asymmetrical payoff opportunities.

Institutional investors currently make up 59% of participation, but retail activity remains strong at 41%, reflecting the increasingly sophisticated nature of Malaysia’s retail trading base. What’s more, structured warrants are now the second most traded instrument on Bursa Malaysia.

What began in 2003 as a niche product has now evolved into a key pillar of Bursa’s equity-linked derivatives ecosystem—with eight active issuers, tighter spreads, broader underlying coverage (from Maybank to Nvidia), and improved educational tools.

What are structured warrants?

Structured warrants are listed derivative instruments issued by third-party institutions—typically licensed investment banks or brokers—that give investors the right, but not the obligation, to buy or sell an underlying asset at a fixed (exercise) price on a future date.

Unlike company-issued warrants, which are tied to corporate fundraising and may dilute existing shareholders, structured warrants are non-dilutive and cash-settled. This means you don’t receive actual shares upon exercise—instead, profit or loss is settled in cash, based on the difference between the market price of the underlying and the exercise price at expiry.

In Malaysia, structured warrants are regulated by Bursa Malaysia and governed under strict listing rules. Key characteristics include:

Because they are leveraged instruments, structured warrants allow investors to take tactical positions on the direction of the underlying asset—whether bullish (via call warrants) or bearish (via put warrants)—without committing to full share ownership.

Example:

Instead of buying 1,000 shares of Maybank at RM9.20 (RM9,200 capital), you could buy 10,000 units of a Maybank-C45 call warrant at RM0.20 (just RM2,000 capital), amplifying your potential upside (and risk).

In essence, structured warrants behave like short-term trading instruments, often used for speculation, hedging, or event-driven plays (e.g. earnings announcements, macro news). They are not suitable for long-term holding and require active monitoring.

Call vs Put warrants: What’s the difference?

In the structured warrant market, all instruments fall into one of two main categories: call warrants or put warrants. These are directional derivative products designed for investors who want to profit from short-term market movements—without owning the underlying asset.

Call warrants: Taking a bullish view

A call warrant gives the holder the right, but not the obligation, to buy the underlying asset at a fixed price (known as the exercise price) on a specific expiry date. 

Investors typically use call warrants when they anticipate the underlying stock or index will increase in value. As the market price rises above the exercise price, the call warrant appreciates in value and can be sold for a profit.

For example, if TENAGA is trading at RM12 and you buy a call warrant with an exercise price of RM11, any rise in TENAGA’s market price enhances the value of that warrant. You do not need to buy the stock itself—your return is purely based on the difference in value, settled in cash.

Put warrants: Taking a bearish position

A put warrant works in the opposite direction. It gives the holder the right to sell the underlying asset at a fixed price, making it suitable for bearish views or hedging purposes. 

If the market price of the asset drops below the exercise price, the put warrant gains value. This makes it an effective tool during market corrections or downturns.

Using the same example, if TENAGA is at RM12 and you buy a put warrant with an exercise price of RM13, a decline in TENAGA’s price to RM11 would increase the warrant’s value—again, settled in cash at expiry.

Key differences between call and put warrants

Strategic use

While the basic mechanics are simple, call and put warrants are increasingly used as strategic tools by both retail and institutional investors in Malaysia. These include:

• Speculative trades: Leveraging price movements of local blue chips (e.g., Maybank, CIMB) or foreign stocks (via issuers like Macquarie).
• Hedging: Protecting an existing equity portfolio using put warrants without the need to sell shares or access short-selling.
• Capital efficiency: Taking positions with smaller capital compared to buying the actual stock or index.

All structured warrants on Bursa Malaysia are cash-settled and follow European-style expiry, meaning they can only be exercised on the final day. This makes them more predictable for pricing and suitable for short-term tactical plays.

How do structured warrants work

Structured warrants enable investors to speculate on price movements of stocks and indices with limited upfront capital. The mechanism involves investors choosing between two primary warrant types based on their market outlook:

Call Warrants

Call warrants grant the right, but not the obligation, to buy the underlying asset at a predetermined price (exercise price) within a specific timeframe.

• When to use: If you anticipate the underlying asset’s price will rise.
• Profit scenario: You gain when the market price exceeds the exercise price significantly at expiry.

Example Scenario (Call Warrant)

• Scenario A: Share price exceeds the exercise price significantly, warrant value increases substantially.
• Scenario B: Share price precisely meets the breakeven point; the investor neither profits nor loses.
• Scenario C: Share price remains below the exercise price; warrants expire worthless, limiting loss to initial outlay.

Put Warrants

Put warrants grant the right, but not the obligation, to sell the underlying asset at a specified price within a specific timeframe.

• When to use: If you expect the underlying asset’s price to fall.
• Profit scenario: You benefit when the market price declines below the exercise price at expiry.

Example Scenario (Put Warrant)

• Scenario A: Price falls significantly below exercise price, warrant value rises, providing substantial profits.
• Scenario B: Market price at expiry exactly matches the breakeven point; investor recovers initial investment only.
• Scenario C: Price rises above exercise price, warrant expires worthless, loss capped at initial investment.

Getting started with structured warrants

Structured warrants offer investors the opportunity to profit from short-term market movements with leveraged positions. However, their leveraged nature means that gains—and losses—can be magnified significantly compared to direct stock investments. 

Understand the power (and risks) of leverage

Structured warrants are leveraged instruments, meaning a relatively small investment can control a large underlying position, resulting in magnified profits or losses.

Example:

• Investing in warrants: 1,000 warrants at RM0.20 each = total investment RM200
• Investing directly in shares: 1,000 shares at RM8 each = total investment RM8,000

If the warrant price rises from RM0.20 to RM0.30, your profit is RM100 (50% gain), whereas the share price moving from RM8 to RM9 yields RM1,000 profit, but only a 12.5% return on a much larger investment. Conversely, losses on warrants can quickly reach 100% of your invested amount.

Knowing the features of structured warrants

Every structured warrant has unique characteristics outlined in the issuer's disclosure documents. The key terms to understand include:

• Underlying instrument: the asset on which the warrant is based (shares, indices, ETFs, or baskets of shares).
• Expiry/maturity date: the last day the warrant can be exercised. Warrants become worthless after expiry. Typical maturities range from 6 months to 5 years.
• Exercise price: the fixed price at which the underlying can be bought (call) or sold (put) upon expiry.
• Exercise style: mostly european-style in Malaysia, meaning warrants can only be exercised on the maturity date.
• Conversion ratio: the number of warrants required to gain exposure equivalent to one underlying asset.
• Settlement method: structured warrants in Malaysia are primarily cash-settled, meaning you receive or pay cash differences rather than physical shares upon expiry.

Example of cash settlement:

A call warrant on Bursa shares with an exercise price of RM7.00 and 1:1 conversion ratio:

• If Bursa shares close at RM7.70 at expiry, you receive RM0.70 per warrant in cash, settled automatically within 7 days.

Develop a clear market view

The price of warrants closely tracks the underlying instrument. Before trading warrants, you must clearly understand and form a directional view on the underlying stock or index:

• Research the underlying market trends.
• Set realistic target prices for underlying instruments within your investment horizon.
• Use both fundamental and technical analysis to guide your directional views.

For instance, if you are bullish on Tenaga Nasional (TENAGA), you might buy a call warrant. Conversely, a bearish outlook on Public Bank could mean purchasing put warrants.

Set your investment and risk parameters

Structured warrants are short-term instruments. Successful warrant investors follow disciplined trading practices:

• Focus on a manageable number of underlying stocks or indices to monitor closely.
• Establish clear profit-taking targets and loss-cutting points for each trade.
• Set realistic deadlines (within warrant maturity) for your underlying price targets.
• Always manage position sizes to limit your overall exposure; structured warrants should typically represent only a small portion (10-20%) of your total investment capital.

What affects warrant prices?

The price of a structured warrant on Bursa Malaysia may look straightforward at first—especially since it often moves in the same direction as its underlying asset. 

But in reality, warrant pricing involves a complex interaction of multiple variables, some of which may amplify or erode value regardless of the investor's directional view.

1. Underlying asset price movement

This is the most direct driver of warrant price. In general:

• A call warrant increases in value as the price of the underlying asset rises.
• A put warrant gains value when the price of the underlying asset falls.

However, this relationship is not always linear. A warrant’s sensitivity to price changes—known as delta—varies based on how far in- or out-of-the-money the warrant is, as well as how close it is to expiry.

2. Time decay (theta)

Time decay is one of the most important—yet often underestimated—factors affecting warrant value. Known as theta in options pricing, time decay refers to the erosion of the time value component of the warrant as it approaches expiry.

• This erosion accelerates in the final 1–2 months before expiry.
• Even if the underlying moves in the correct direction, a warrant may still lose value if it happens too slowly.

Warrant traders in Malaysia need to be aware that holding a warrant too close to maturity without a strong move in the underlying asset can result in substantial losses.

3. Implied volatility

Implied volatility reflects the market’s expectation of how much the underlying asset may fluctuate over the warrant’s remaining life.

• Higher volatility raises the premium of both call and put warrants.
• During earnings season or key economic events, implied volatility tends to spike—boosting warrant prices temporarily.
• Warrants on tech or small-cap stocks tend to price in more volatility than those on blue chips or indices.

4. Interest rates

Interest rates subtly affect warrant valuation by influencing the cost of carry. When interest rates rise:

• Call warrants may increase in value (due to lower relative financing cost)
• Put warrants may decline in value (due to increased opportunity cost of holding)

In practice, the effect of Malaysian overnight policy rate (OPR) changes on warrant pricing is relatively mild, but still relevant for long-dated warrants.

5. Dividends

If a dividend is expected to be paid during the life of a call warrant, its value will be reduced accordingly—since the stock price typically drops on the ex-dividend date.

• Call warrants decline in value as expected dividends rise.
• Put warrants may increase in value slightly for the same reason.

This adjustment is typically priced in at issuance, but unexpected changes in dividend payout (e.g. special dividends) can still impact warrant valuations post-listing.

Major risks of warrant trading

While structured warrants offer attractive leverage and tactical trading opportunities, they also carry significant risks — some of which can lead to total capital loss. Understanding these risks is essential for any Malaysian investor considering entry into this market.

1. Total loss of investment

Structured warrants can expire completely worthless if they finish out-of-the-money on the expiry date. Unlike stocks, which often retain some intrinsic value even in downturns, a warrant that fails to breach its exercise price will deliver no recovery value, and the full premium paid is lost.

This risk is particularly acute for traders who hold warrants too close to expiry without a clear in-the-money advantage.

2. Accelerated time decay and liquidity erosion

Warrants are time-sensitive instruments, and the rate at which their value declines increases as expiry approaches. This phenomenon—known as theta or time decay—means that even if your directional view is correct, you may lose money if the market doesn’t move fast enough.

• Time decay becomes especially sharp in the final 30–45 days before expiry.
• Near-expiry warrants may also suffer from reduced liquidity, as market makers widen bid-ask spreads or limit trading size due to increased hedging costs.

This combination makes it risky to “hold and hope” into the final days of a warrant’s life cycle.

3. Pricing complexity and volatility shocks

Warrant prices do not always move in a predictable manner—even when the underlying asset behaves as expected. That’s because structured warrant pricing is influenced by multiple variables such as implied volatility, interest rates, and dividend expectations.

• A drop in implied volatility, for example, can negatively affect a warrant’s value—even if the stock price goes in the anticipated direction.
• This complexity often leads to misaligned expectations for newer investors unfamiliar with options-style pricing behavior.

4. Leverage and magnified losses

While leverage is the main appeal of warrants, it also exposes investors to magnified downside. A small 2% drop in the underlying asset might result in a 20–30% drop in the warrant price, depending on the gearing level.

Without proper position sizing and risk limits, these amplified losses can severely impact a portfolio—especially if a large portion is allocated to leveraged products.

5. Operational and security risks

Beyond market mechanics, warrant trading also introduces operational risks tied to account management. A real-life case in March 2025 involved unauthorized warrant trades using margin accounts, resulting in millions in losses. It served as a stark reminder that:

• Trading accounts must be protected with 2FA and login alerts.
• Investors should monitor position limits, especially when using margin or auto-leverage functions.

How to trade structured warrants in Malaysia

Trading structured warrants on Bursa Malaysia is a straightforward process, especially if you're already familiar with stock trading. However, it does require proper account setup and a basic understanding of how derivatives work. Here’s a complete step-by-step breakdown:

1. Open a Malaysian bank account

This is required to fund your trading activities and link to your broker.

2. Set up a CDS account

A Central Depository System (CDS) account must be opened through an Authorized Depository Agent—typically your broker (e.g., Maybank, Rakuten Trade, CIMB). This account holds all Bursa-listed securities, including structured warrants.

3. Open a trading account

Often opened together with the CDS account. Brokers will typically ask you to complete a risk assessment questionnaire, especially for derivative access.

4. Choose a broker with warrant access

Major brokers like HLeBroking, RHBInvest, Macquarie, and Kenanga offer structured warrant trading via their web and mobile platforms. You do not need to trade via the warrant issuer. 

5. Fund your trading account

Transfer funds from your linked bank account. Most brokers support low entry amounts. Some warrants are tradable from as little as RM100–500, depending on unit price and broker policy.

6. Fund your trading account

Use broker platforms to filter warrants by issuer, expiry date, underlying asset, gearing ratio, and other attributes.

7. Fund your trading account

Trading is similar to equities and follows the same T+2 settlement cycle.

8. Fund your trading account

Track your holdings closely using your broker's dashboard. Warrants expire automatically—if you don’t sell them and they finish out-of-the-money, they become worthless.

Tax and fees for structured warrant trading

Capital Gains Tax status

Structured warrant profits are generally treated as capital gains in Malaysia, which means they are not taxable for individual retail investors. This favorable treatment applies as long as:

• You are not classified as a professional trader by the Inland Revenue Board (LHDN).
• Your warrant trading is not considered your primary business activity.

Note: If you engage in warrant trading systematically as a source of income or manage large capital pools, you may be reclassified, and your gains could be taxed as business income.

You may be classified as a professional trader if:

• You trade with high frequency.
• Warrant trading is your main income source.
• You allocate substantial capital exclusively to warrant trades.
• You have formal qualifications or work experience in financial markets.

Foreign warrants

While Bursa Malaysia-listed structured warrants enjoy capital gains exemption, foreign-listed warrants may be taxed under different rules depending on:

• The foreign jurisdiction’s tax rules
• Whether profits are repatriated to Malaysia

Fee breakdown for structured warrant trading

Brokerage commission

Bursa Malaysia clearing fee

• 0.03% of transaction value
• Capped at RM1,000 per contract
• Applies to both buyer and seller

Stamp Duty

• Exempted for structured warrants
• Applies until 31 December 2025
• Saves up to RM1,000 vs. regular share transactions

Sales and Service Tax (SST)

• No 6% SST applies to structured warrant trading

List of structured warrant issuers in Malaysia

As of 2025, there are eight licensed structured warrant issuers operating in Malaysia. These issuers are approved by the Securities Commission Malaysia (SC) and must comply with Bursa Malaysia’s listing rules and market-making obligations.

Who should use structured warrants (and who shouldn't)

Structured warrants are not for everyone. They are designed for investors who understand market timing, leverage, and risk. While the low entry cost and high return potential are attractive, the risk of total capital loss and rapid time decay means that only certain investor profiles are suitable for trading them.

Suitable for:

• Short- to medium-term traders - Investors looking to profit from price movements within weeks or months—not years.
• Active investors who can monitor markets daily - Structured warrants require close monitoring. Prices can change rapidly based on market volatility, expiry proximity, or underlying stock news.
• Speculators with a clear directional view - For example, expecting CIMB to surge after earnings? A call warrant offers a leveraged way to express that view.
• Hedgers managing downside risk - Portfolio holders who want protection against short-term downturns can buy put warrants on indices (e.g., FBMKLCI) without selling core positions.
• Experienced traders using tactical strategies - Including volatility plays, warrant arbitrage across issuers, or event-driven trades (e.g., dividend announcements, index rebalancing).

Not suitable for:

• Buy-and-hold investors - Warrants expire. Time decay erodes value—making them unsuitable for long-term strategies.
• Passive or first-time investors - Without the time or tools to track markets actively, capital loss risk is high.
• Conservative investors prioritising capital preservation - Structured warrants involve full premium risk and are not capital-guaranteed.
• Those unfamiliar with derivative pricing or leverage mechanics - Misunderstanding how gearing, delta, or volatility affects warrant prices can result in losses even when the market moves in the intended direction.

Sample trading scenarios

Scenario 1: Bullish short-term trade

A retail investor expects Maybank to report strong quarterly earnings. Instead of buying Maybank shares at RM9.00, they purchase a call warrant with a strike price of RM8.80 and two months to expiry. If the stock rises 10%, the warrant could rise 30–50%, depending on gearing and delta.

However, if the price moves sideways or falls, time decay will erode the value, potentially resulting in a full loss of the premium paid.

Scenario 2: Hedging an equity portfolio

A fund manager holds a diversified portfolio of Malaysian stocks. Concerned about short-term macro volatility, they purchase put warrants on the FBMKLCI to protect against downside risk. This allows them to maintain long exposure while capping potential losses through gains in the put position—similar to an insurance policy.

However, accurate hedge ratios and timing are critical, and put warrants must be monitored for expiry risk.

Scenario 3: Arbitrage between issuers

An experienced trader notices two call warrants on Public Bank from different issuers, with similar expiry and strike prices—but a 10% difference in warrant pricing. The trader simultaneously sells the overvalued warrant and buys the undervalued one, profiting as the prices converge.

This strategy requires deep knowledge of warrant pricing, real-time tools, and tight execution.

Common mistakes to avoid

Structured warrants can be rewarding, but they are also unforgiving for traders who overlook key mechanics. Many retail investors new to warrants fall into the same traps—misjudging expiry timelines, volatility effects, and exposure risks. These mistakes often result in losses even when the market moves in the right direction.

One of the most frequent errors is holding warrants too close to expiry. Time decay accelerates sharply in the final weeks, and even in-the-money positions can lose value quickly if not exited on time. Similarly, many investors underestimate the role of implied volatility. A warrant’s price can fall even if the underlying asset rises, especially if volatility drops.

Another major issue is overexposure. Structured warrants are leveraged instruments, and allocating more than 10–20% of your portfolio to them increases the risk of sharp drawdowns. Without proper position sizing and risk control, losses can compound quickly.

Lastly, liquidity is often overlooked. Not checking for market maker presence or wide bid-ask spreads can leave investors stuck in positions they cannot exit efficiently—especially during low-volume or volatile sessions.

Warrants vs. Long-Term Investing

While structured warrants offer short-term tactical opportunities with high leverage and risk, they are not suitable for every investor—especially those seeking capital preservation, diversification, or long-term wealth growth. This is where platforms like StashAway come in.

As a regulated digital wealth manager, StashAway provides globally diversified portfolios that are designed to weather market cycles—not just capitalize on short-term price movements. 

For investors who prefer automated, data-driven investing without the need for daily market monitoring or trading risk, StashAway offers an accessible, lower-risk path to financial growth.

What are callable bull/bear certificates (CBBC)

Callable bull/bear certificates (CBBC) are structured investment products similar to structured warrants, but they include an automatic "knock-out" feature. 

First introduced in Malaysia by CIMB in 2010, CBBCs allow investors to profit from either rising (bull) or falling (bear) movements in underlying assets like local or foreign stocks and indices without directly owning the asset.

How CBBC works

CBBC prices closely track movements in their underlying asset price (with delta typically near +1 for bull and -1 for bear certificates). This gives investors direct exposure to price changes with minimal impact from volatility or time decay. 

However, CBBCs have a mandatory call feature: if the underlying asset reaches a predefined "call price," the CBBC immediately terminates, triggering a Mandatory Call Event (MCE).

Mandatory call event (MCE) and settlement

Upon an MCE, trading of the CBBC stops immediately. Holders may receive a residual cash amount depending on the lowest or highest traded price after the MCE, although this residual amount could also be zero. 

If a CBBC reaches its normal expiry without triggering an MCE, it is cash-settled based on the difference between the underlying asset’s closing price and the CBBC's exercise price.

Funding costs considerations

CBBC prices include upfront funding costs covering the issuer's borrowing expenses, expected dividends, and profit margins. Investors lose the full amount of these funding costs if the CBBC terminates early due to an MCE, even if the instrument’s actual tenure is shortened.

Eligible underlying assets

CBBC issuance in Malaysia is limited to underlying assets meeting Bursa Malaysia's criteria, including:

• Local and foreign shares
• Exchange Traded Funds (ETFs)
• Local and foreign indices

Major issuers in Malaysia include CIMB, AmBank, RHB Investment Bank, Kenanga Investment Bank, Maybank Investment Bank, and Macquarie Capital Securities.

Risks of trading CBBC

Investors should carefully consider significant risks associated with CBBC trading:

• Leverage Risk: Amplified potential gains and losses.
• Mandatory Call Event Risk: Early termination can result in total loss of initial investment.
• Limited Life: CBBCs have fixed expiry dates; this duration can be shortened if an MCE occurs.
• Liquidity Risk: Potentially reduced liquidity and higher volatility near call prices.
• Foreign Exchange Risk: Exposure to currency fluctuations for CBBCs on foreign underlying assets.

Structured warrants in malaysia: a high-leverage tool for tactical investors

Structured warrants are among Malaysia's most actively traded derivative instruments, offering leveraged exposure to local and international markets without the cost of owning underlying assets. 

Investors must understand key differences between call warrants (bullish strategies) and put warrants (bearish or hedging strategies), carefully manage the risks of leverage and time decay, and follow disciplined trading practices, including closely monitoring expiry dates, implied volatility, and liquidity. 

Ultimately, structured warrants are best suited for active, knowledgeable investors aiming to capitalize on directional market opportunities.