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| Equity Derivatives & Credit Derivatives |
Business / Corporate / Financial Institution Services
Equity-Linked
Note
Product Description
An Equity-Linked Note can potentially offer a higher return
than other investment of a similar credit quality and
maturity. The risk is that the customer has the obligation
to take delivery of the shares, if the Final Price of
the share on the Determination Date is below the Strike
Price.
Risk Benefit Analysis
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What are the benefits?
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Significantly higher interest return than
an ordinary Fixed Deposit. |
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Tailored
to customer’s specific request.
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What are the risks?
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Valuation loss caused
by price movement when the price of the
equity falls below strike price.
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Reverse
Equity-Linked Note
Product Description
The Reverse Equity-Linked Note offers customer an opportunity
to liquidate their share-holding at a higher price. The
risk is that the holder has the obligation to deliver
the shares should the price goes above the Strike Price
and lose any benefit on further upside.
Risk Benefit Analysis
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What are the benefits?
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Significantly higher interest return than
an ordinary Fixed Deposit. |
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Tailored to specific customer’s
request. |
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What are the risks?
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Opportunity cost caused by price movement
when the price of the equity rises below strike
price. |
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Rainbow
Equity-Linked Notes
Product Description
A Rainbow ELN is like a standard ELN except:
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There is more than
1 underlying share.
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The Least Performing Share
(LPS) will be delivered to the Noteholder when
the Rainbow ELN is exercised
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There is an Additional
Return payable to the Noteholder if the Final Price
of the LPS is above the Initial Price
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Risk Benefit Analysis
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What are the benefits?
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Significantly higher interest
return than an ordinary Fixed Deposit. |
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Attractive and convenient for investors
with mandate to allocate funds between cash
and shares. |
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What are the risks?
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Noteholders may get back an amount less
than the redemption amount, if they terminate
the Rainbow ELN early. |
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If Noteholders are delivered the LPS, they
will incur a marked to market loss. |
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Equity
Swap
Product Description
An Equity Swap is a transaction between 2 counterparties
to swap two different payments, referenced to two different
indices (equity or money market) over an agreed period
of time, based on mutually agreed terms. Equity Swaps
can be highly customised; it can range from a simple share
performance swap to more complex structures.
Risk Benefit Analysis
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What are the benefits?
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Highly customisable to suit
each individual customer |
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In some cases, allows customer to have
access into restricted markets |
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Provides a cheap form of financing, as this
is highly leveraged |
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What are the risks?
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There is counterparty risk |
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May be difficult to unwind as this is
over the counter (OTC) |
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Credit-Linked
Notes
Product Description
Credit Linked Notes (CLN’s) are structured securities
whose principal and interest payments are contingent on
the performance of specified borrower company, or Reference
Entity. CLN’s provide customers with the opportunity
to synthetically create credit exposures and gain access
to names and risk profiles that they may not have direct
access to, enhancing portfolio diversity and yield.
Risk Benefit Analysis
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What are the benefits?
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Tailored to specific customer’s
request. |
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Allows customer to invest in credits that
they may not have direct access to or are
not easily found in the market. |
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What are the risks?
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Risky securities that
specifically assume the credit risk with
the danger of not receiving payment at the
end of the term. |
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First-To-Default
CLN
Product Description
First-to-Default CLN (FTD-CLN) referenced to a basket
of Credits. Once a credit event occurs on one of the credit,
the whole FTD-CLN will be redeemed and the customer will
be delivered the bond of the affected underlying credit.
Customer receives a higher coupon payment than that of
a single name CLN.
Risk Benefit Analysis
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What are the benefits?
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Allows customer to choose their basket of
Reference Entities and to tailor the tenor and the currency of the customer's exposure. |
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Enhanced yield via increased leverage (function
of the number of credits in the basket). |
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Customer is compensated for
taking on additional risk, without having
to put up more collateral. |
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What are the risks?
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Exposed to more than one credit risk. |
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Remarks
The information
shown on this website does not constitute a recommendation,
an invitation or an offer to subscribe or purchase any investment
product or services. Products mentioned above are not principal-protected;
the risk of loss in above products can be substantial. Products
mentioned above may not be suitable for all customers. Customers
must make investment decisions based on their own investment
objectives and experience, financial position and particular
needs. Investment involves risks. Customers should consult
their professional advisers if necessary and should read relevant
term sheet before making any trade.
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