Legal Definitions - ex warrants

The term ex warrants (often abbreviated as X or XW in financial markets) describes a situation where a security, typically a share of stock, is traded without the right to receive an associated financial warrant that has already been declared or distributed.

In finance, a warrant is a type of security that gives the holder the right, but not the obligation, to purchase a company's stock at a specific price before a certain date. Companies sometimes issue warrants to shareholders as a bonus or as part of a larger financial offering.

When shares trade "ex warrants," it means that if you buy those shares, you will not be entitled to receive the specific warrants that were previously announced or distributed to prior owners. The right to those warrants has been separated from the shares.

• Example 1: The Ex-Warrant Date Announcement

  Imagine "Tech Innovations Inc." announces that it will issue one warrant for every ten shares held by investors on record as of June 15th. The company declares that its shares will begin trading ex warrants on June 13th. This means anyone who buys Tech Innovations Inc. shares on or after June 13th will not receive the warrants, even if they become a shareholder before June 15th. To receive the warrants, an investor would need to purchase the shares before June 13th.

• Example 2: Investor's Purchase Strategy

  An investor, Sarah, is keen to acquire both shares and the newly issued warrants of "Green Energy Solutions Corp." She learns that the company's shares are currently trading ex warrants. This tells Sarah that if she buys the shares now, she will only receive the stock itself and will not be entitled to the warrants that were recently distributed. To obtain the warrants, she would either need to purchase them separately on the market or have bought the shares before the ex-warrant date.

• Example 3: Secondary Market Trading After Distribution

  "Global Logistics Ltd." previously distributed warrants to its shareholders. Now, a large institutional investor decides to sell a block of their Global Logistics Ltd. shares on the open market. Since the warrants have already been physically or digitally separated and sent to the original holders, these shares are now offered and traded as ex warrants. Any buyer of this block of shares understands they are acquiring only the stock and not the previously distributed warrants, which are now independent securities.