WARR - About Warrants Subscriptions

Overview

The Warrants Subscriptions application allows individual participants and group users to exercise and reverse warrant transactions. This application also allows you to access the Warrant Instruction Inquiry function for inquiries on both the warrant CUSIP level and the transaction level.

A warrant exercise through DTC consists of surrendering warrant free position and receiving free position in up to three underlying issues. The subscription cost can be covered by:

  • Automatic debit of next-day funds in cash,
  • Surrendering free position in related payment securities, or
  • Any combination of cash and payment securities.

The subscription cost may be based on warrants surrendered or underlying issues received, and the subscription rate may be multiplied by or divided into the warrants surrendered.

Transactions are processed in two steps:

  1. The minimal amount of information is entered and edited.
  2. The underlying side of the transaction is displayed and the transaction is either confirmed or cancelled. A transmitted transaction is input to DTC's system for position verification, movement and, if necessary, automatic recycle processing. A cancelled transaction is deleted from the system.

In the unlikely event that an edited transaction is neither transmitted nor cancelled (for example, terminal session time-out or the system is down), the exercise or reversal in progress will be retained for inquiry as an incomplete transaction and may be processed later at your discretion.

Note

Incomplete transactions have not been transmitted to DTC for exercise or reversal, and are not transactions on which either DTC or a Warrant Agent will take action. You are solely responsible for taking additional processing steps in order to complete or cancel exercises or reversals marked as incomplete transactions by DTC

 

About Warrant Exercises

The following rules and conditions apply to processing warrant exercise transactions:

  • A valid Corporate Actions Web ID (CAID) must exist for the specified CUSIP, with valid pay-rate information.
  • If you have insufficient position when you submit a transaction, the transaction recycles until sufficient position exists. Transactions still recycling at cutoff (12:00 p.m. eastern time) are dropped.
  • When the transaction is processed (made), the warrants are removed from your account, you are credited with the underlying securities, and you are charged a subscription fee. All of this takes place on the day you submit the transaction.

About Custody and Restricted Custody Exercises

Warrants Subscriptions allows for processing of transactions involving custody issues for participants and group users with custody or restricted custody access.

For warrant custody exercises, instructions are processed from the prep box location. When instructions are processed (made), the old position is placed in an unusable account, awaiting shares from the agent. When the shares are received from the agent, they are placed in a holding account to await instructions. You will receive a message that the securities have been returned, to which you respond with instructions as to what custody account they should be placed in. When this instruction is received, the new security is placed in the usable custody account, along with the corresponding Aim location adjustment. For warrant custody processing, you are charged exercise proceeds on the day of instruction.

For warrant restricted custody exercises, you must move your restricted shares into a new restricted-like free account, from which instructions can be processed via Warrants Subscriptions. These instructions must state clearly that they are submitted on behalf of a specific restricted account, and must also indicate the reference number created when the position was moved into the restricted-like free account. The custody account for the new security will be treated as a restricted, unusable custody account awaiting shares from the agent. Each restricted unit of work must be presented to the agent independently for a unique window ticket which must be noted as restricted.

Warrant exercises for custody and restricted custody issues are handled the same way as non-custody warrant exercises.

 

When to Use

Use Warrants Subscriptions to exercise or reverse warrant transactions.

This application is available whenever PBS is available. The following options are limited by a cutoff time:

  • Warrant Exercises and Reversals: Available from 8:00 a.m. to 12:00 p.m. eastern time.
  • Incomplete Exercises and Reversals: Inquiry is available whenever PBS is available, but selection for processing is limited to the 12:00 p.m. eastern time cutoff. 

Where to Find

You can access this service through the PBS Homepage –> Corporate Actions Services –> Instructions and Inquiries –> Warrant Subscriptions.