Glossary

Best Entry

Belonging to no capital protection certificates, these certificates allow the investor to gradually increase exposure to the underlying asset's performance when specific conditions occur (equity exposure). The portion of capital not exposed to the underlying asset's performance constitutes the monetary exposure. At the issue date, the product does not have equity exposure and has a 100% monetary exposure. Best Entry certificates pay a periodic remuneration calculated by multiplying a fixed rate by the arithmetic average of daily monetary exposure. In this type of certificates, the investor does not benefit from capital protection and may suffer losses up to 100% of the invested capital.

Bonus (Cap)

Belonging to conditional capital protection or no capital protection certificates, they may allow the investor to receive a minimum remuneration amount (the bonus) and a yield, up to a maximum achievable amount (the  cap). For Bonus (cap) certificates with conditionally protected capital, the investor suffers a loss of the invested capital if the underlying is below a specified value (the barrier level) on the final valuation date. For Bonus (cap) certificates with non-protected capital, in the event of a downturn of the underlying, the investor suffers a loss of the invested capital, equal to the performance of the underlying.

Cash Collect

Belonging to conditional capital protection certificates, they grant to the investor unconditional periodic and/or at maturity remuneration amounts. At maturity, for the Cash Collect certificates, the investor suffers a loss of the invested capital if the underlying is below a specified value (the barrier level) on the final valuation date.

Cash Collect Autocallable

Belonging to conditional capital protection certificates, they grant to the investor unconditional periodic and/or at maturity remuneration amounts. The certificate early redeem if, on one of the observation dates, the value of the underlying is equal to or higher than a specified value. At maturity, for the Cash Collect Autocallable certificates, the investor suffers a loss of the invested capital if the underlying is below a specified value (the barrier level) on the final valuation date.

Credit-linked

Credit Linked Certificates (CLC) are financial instruments that allow investors to take exposure to the creditworthiness of one or more companies, financial institutions, or government entities (the Reference Entities). CLCs is aimed at paying fixed or variable periodic remuneration amounts and, at maturity, the possible repayment of the nominal value. In CLCs, if a credit event occurs on the reference entity during the life of the certificate, the investor is not entitled to the payment of periodic remunerations and suffer loss of the invested capital. A credit event could include, for example, the bankruptcy of the reference entity, failure to pay the coupons expected for the related bonds, etc.

Express

Belonging to conditional capital protection certificates, they early redeem if, on one of the observation dates, the value of the underlying is equal to or higher than a specific level. In case of early redemption of the certificate, in addition to the notional value of the certificate, a predefined remuneration is paid to the investor. At maturity, for Express Certificates, the investor suffers a loss of the invested capital if the underlying is below a specified value (the barrier level) on the final valuation date.

Lock-In

Belonging to conditional capital protection certificates, upon the occurrence of specific conditions (the Lock-In Event), they provide: i) at maturity, the payment of a cash settlement amount equal to the notional value; ii) on predetermined dates following the Lock-In Event, a fixed remuneration amounts. If the Lock-In Event does not occur, the product corresponds: i) at maturity, an amount equal to the notional value provided that the level of the underlying is above a specified value (the barrier level); if the level is lower, the investor suffers losses of the invested capital; and ii) a conditional periodic remuneration if, on the observation date, the level of the underlying is equal to or higher than a specified value.

Phoenix

Belonging to conditional capital protection certificates, Phoenix certificates allow the investor to receive periodic and/or at maturity remunerations. These remunerations can be either unconditional or conditional. The conditional remunerations may have a memory feature, meaning, upon the occurrence of the condition for the payment, the certificate also correspond any unpaid remunerations on previous payment dates. For the Phoenix certificates, the investor suffers a loss of the invested capital if the underlying is below the barrier level at the final valuation date.

Phoenix Autocallable

Belonging to conditional capital protection certificates, Phoenix Autocallable certificates allow the investor to receive periodic and/or at maturity remunerations and/or at maturity. These remunerations can be either unconditional or conditional. The conditional remunerations may have a memory feature, meaning, upon the occurrence of the condition for the payment, the certificate also correspond any unpaid remunerations on previous payment dates. They are also characterized by the possibility of early redemption if, on one of the observation dates, the value of the underlying is equal to or higher than a specified value (the barrier level). For the Phoenix Autocallable certificates, the investor suffers a loss of the invested capital if the underlying is below the barrier level at the final valuation date.

Protection (Cap)

Belonging to protection or partial capital protection certificates, they allow yield at maturity up to a maximum achievable amount (the cap) both in the case of an increase and a decrease in the underlying. Protection certificates offer the investor predefined capital protection at maturity. Protection certificates may also pay unconditional or conditional periodic remuneration amounts. The conditional remuneration amounts may have a memory feature, that is, upon the occurrence of the condition for the payment of the remuneration, the certificate also corresponds any unpaid remunerations on previous payment dates.

 

For more information about the meaning of further terms consult ACEPI (Italian only)

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