"There are gray areas in the warrant market - such as the spread between bid and ask prices being too high and no clear lines between issuers' own and clients' positions," said lawmaker Chim Pui- chung, who represents the financial services sector.

"The warrant market is becoming more influential, I think the regulators should increase the transparency and set up more guidelines to make sure rules are not violated," Chim said.

Since 2006, the Hong Kong stock exchange has allowed warrant issuers to be market-makers providing bid and ask prices. Investors may approach market issuers for quotes and it is up to the issuers to determine the reasonable prices.

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Market watchers said there may be risks.

Lawmaker Chan Kam-lam agreed, saying the measures allowing "warrant issuers to increase warrant sizes and quote prices freely without restrictions" should be looked into.

However, Lui Chi-wah, president of the Protection of Investors' Association, said the case is an isolated one, and that "supervision on the warrant market is already better than its international counterparts."