This scenario describes how warrants are represented in Treasury Management.

A warrant documents the right to buy or sell an underlying at a certain point in time or within a certain period against payment of an amount specified when the warrant was issued. This scenario includes processes for the purchase/sale of warrants, that is, the posting of warrants from warrant bonds, plus for exercising the rights established in these warrants.

You must have created the warrant in the class master data by entering the following information:

• Issuer
• Issue currency
• Option ratio
• Term
• Underlying

Equity warrants include both traditional warrants, as in warrant bonds, and covered warrants. You enter traditional warrants within the framework of scenario TR-SE: Warrant Bonds using the Exercise Security Rights function by detaching the warrant from the warrant bond. All other warrant positions are represented by buying the warrants via transaction management.

• The Exercise security rights function enables you to exercise warrants, or let them expire.

• When you exercise a warrant, the system displays the information on the warrant and the corresponding underlying in the header data. If you specified cash settlement in the issue conditions when maintaining the class master data, the system calculates the cash settlement per reference unit based on the current rate of the underlying (which you have to enter). If you specified delivery, the system automatically generates the flows for the corresponding change in the capital position.

• Before you exercise a warrant, you have the opportunity of changing the generated flows, entering payment details, or generating additional flows.

• To let the warrant expire, you sell the warrant at a price of "0" (zero).

Having managed your warrants, you are back at the position measure planning stage: you have processed your warrants and now need to decide whether to plan another warrant or switch to a different securities type and position.