Securities derivatives can be divided into two categories: contract type and security type.

Contractual securities derivatives are based on capital securities such as stocks and bonds or the overall value measurement standard of capital securities such as stock indexes. They mainly include various futures, options and other varieties, such as stock index futures and stock index options. , Treasury bond futures, stock options, etc. Its characteristics lie in three aspects:

(1) Contract derivatives exist in the form of standardized and standardized contracts designed by securities trading venues, rather than in the form of securities.

(2) Contract derivatives do not have financing functions and mainly exist as a risk management tool.

(3) Contract derivatives do not have an issuer and are traded in the form of futures trading. Trading risk control measures such as margin, position limits, and daily mark-to-market are implemented.

Security-type securities derivatives are a combination of basic securities such as stocks and a rights contract, and the rights are expressed in the form of securities, forming a new security variety. Representative securities derivatives include warrants and convertible companies, such as warrants.

As a stock-based derivative security, warrants are a combination of stocks and option contracts. Among them, the subject of the contract is the issuer and holder of the warrant, and the content of the contract is the holding of the warrant. A person has the right to choose whether to buy or sell stocks from the warrant issuer at an agreed time and at an agreed price. Different from general contractual derivatives, the contract in the warrant does not exist in the form of a standardized and standardized contract, but in the form of a security, and the content of the contract has been securitized into the basic elements of the warrant. . From a legal point of view, warrants, as security derivatives, have the basic characteristics of securities and are thus distinguished from general contract security derivatives.

(1) From the basic principles of securities, all types of securities are the securitization of specific rights. For example, stocks are the securitization of shareholder rights, bonds are the securitization of creditor’s rights, and warrants The securitization of "options" should belong to the category of securities. The reason why it is called a derivative security is that it is based on the purchase and sale of specific stocks and is based on the existence of the underlying stock and is derivative.

(2) Like stocks and corporate bonds, warrants have an issuer, set the issuance price, go through issuance and fundraising procedures, and have direct or indirect financing functions. However, contractual securities derivatives, There is no issuer and issuance process, and there is no financing function.

(3) Although warrants are securities derivatives, their trading methods are consistent with stocks, corporate bonds, etc., and spot transactions are implemented. The above analysis of the characteristics of warrants is also applicable to convertible corporate bonds derived from the combination of stock option contracts and corporate bonds, revealing the unique characteristics of security derivatives.