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Most Asked Questions

Why does the liquidity provider quote wider spread for a warrant with an illiquid stock underlying than a liquid or blue chip underlying?

A liquidity provider provides quotes for a particular warrant or CBBC by taking into consideration the prevailing market conditions such as hedging costs and the liquidity, spread and volatility of the relevant hedging vehicles. Normally, blue chip stocks have better liquidity which allows liquidity provider to provide a tighter quote than illiquid underlying.