I hold a HSI call warrant which was last traded at HK$0.01. The HSI increased by more than 3% but the liquidity provider refused to quote and the warrant’s last traded price still remained at HK$0.01. Why didn’t the liquidity provider’s quote increase in line with the underlying?

It is likely that the HK$0.01 last traded (nominal) price could have been brought down a while ago and does not reflect its prevailing theoretical value before the rally of the HSI, hence it is not the best reference to gauge the actual performance of the warrant.

It is particularly the case for short term and deep out-of-the-money warrant. Despite the HSI rallied more than 3%, the warrant is still out-of-the-money with extremely short term, hence its prevailing theoretical value after the rally of the HSI is still below HK$0.01.

The liquidity provider is not required to provide quote when the theoretical value of the warrant is less than HK$0.01.