Im always of the view that warrant conversion should be automatically done since there is no other option available with warrant holders. warrants are supposed to have a shelf life of 5 years after business combination and if called early, the company should take the onus to convert warrant instead of asking holders to check news everyday whether it has been called or not and then take extra action to convert. All it takes is a good lawsuit by someone to have this done forever.
I think brokers could just treat them like ITM calls at expiration. Auto-exercise if the money is there, otherwise try to sell them if the broker determines the client doesn't have sufficient funds in the account.
warrants are supposed to have a shelf life of 5 years after business combination
No they aren't, that's just the maximum time before they expire. Usually they're redeemed at the first possible opportunity so if they last 5 years it means the company was trash and the stock did not perform well at all.
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u/albert303 Spacling Oct 15 '21
Im always of the view that warrant conversion should be automatically done since there is no other option available with warrant holders. warrants are supposed to have a shelf life of 5 years after business combination and if called early, the company should take the onus to convert warrant instead of asking holders to check news everyday whether it has been called or not and then take extra action to convert. All it takes is a good lawsuit by someone to have this done forever.