ALEXANDRE HOUPERT<br />HEAD OF LISTED PRODUCTS UK, SG CORPORATE &amp; INVESTMENT BANKING<br /><br />WHILE covered warrants might seem like a relatively new means of trading the markets to UK investors, this month marks their 20th birthday in continental Europe, where they are now a well developed market widely recognised by the private investor. And Soci&eacute;t&eacute; G&eacute;n&eacute;rale not only created the product in 1989 but also launched the first listed covered warrant in 1993 in Paris. <br /><br />Today there are currently more than 129,000 covered warrants listed in Germany and 20 issuers in total. In France, the turnover of covered warrant products has been more than &euro;8bn since the start of 2009. Compare this to the UK, where the turnover has been about &pound;300m over the same period. <br /><br />Covered warrants have been around in the UK since 2002 but the market has been slow to take off. One of the reasons that could explain this phenomenon is the fact that the off-exchange market for retail investors is highly developed in the UK. Spread betting and contracts for difference, for example, are much more widespread here than they are in mainland Europe. This gave issuers little incentive to improve their on-exchange products, especially since listing in the UK requires so much investment. This is one of the reasons that, when covered warrants first came to the UK, there were eight issuers, but now there are only two. In France, there are 10 issuers. <br /><br />Retail investors are now increasingly looking for simplicity, liquidity and transparency so the market is tending towards the exchange-traded products once again. Exchange-traded funds (ETFs) are a growing market among retail investors in Britain and covered warrants will be following this trend. <br /><br />There are now 1,400 covered warrants listed on the London Stock Exchange across all asset classes from the original indices to commodities warrants. And client interest is growing in such a way that we may see more issuers enter the space. This will be good for the market itself, as being pushed by several providers will be in investors&rsquo; interest. <br />