SG, one of the warrant market's more active players, has predicted a sharp increase in listings on the London Stock Exchange's (LSE) nascent covered warrant market, despite the disappointing take-up of the instruments.

Covered warrants are securitised derivatives similar to options that give investors the right, but not the obligation, to buy or sell the underlying assets at a set price and future date. The LSE launched trading in covered warrants in October 2002, following the success of similar ventures in continental markets including Germany and Switzerland.