What is a Certificate?

Certificates are issuer-led structured financial products that offer investment opportunities based on different market themes and expectations.

Fancy the growth story of BRIC (Brazil Russia India China) or the companies that produce your Louis Vuittons and BMWs? Or have a view that some local blue chips will be somewhat stable for the next one year? Find out how you can enhance your investment portfolio with the Certificates.

Before investing in certificates, it is important that you read and understand the nature and risks of such instruments. You should carefully consider whether such trading is suitable for you in the light of your financial objective and situation.

Types of Certificates

Participation Certificates

Participation Certificates are essentially zero strike warrants. With an exercise of (close to) zero, such certificates will track the performance of the underlying asset(s) such as single stocks, stock indices and thematic indices etc with no leverage or a gearing ratio of one.

Discount Certificates

Discount Certificate, also known as a call spread warrant, is a financial instrument that allows an investor to buy into the performance of an underlying asset at a discount to its actual price. The potential gain to the investor is limited to a maximum amount from the onset (cap). This cap is fixed when the instrument is issued and remains constant for the entire lifetime of the instrument.

Daily Lock-in Certificates

Daily Lock-In Certificate is a structured product with a daily accrual feature where the investor accumulates a lock-in amount throughout the life of the certificate if the underlying shares or indices perform in a certain way. These products may have specific features which investors should also consider.

Interpreting the Trading Name of Certificates

As Certificates are products customized by the respective issuers, the trading name of Certificates will start with the issuer code followed by the product information. In general, the features below will be reflected in the trading name (in sequential order).

1.	Issuer Denotation Issuer AA ABN AMRO Bank DB Deutsche Bank RB Rabobank
2.	Product Type Denotation Product Type ZPC Participation Certificates DC Discount Certificates DLC Daily Lock-In Certificates
3.	Underlying Instrument This information may not be indicated depending on the product structure.
4.	Special Features (if any) Denotation Feature * Products that are exotic^ K Products with a knock-out feature^ ^ Before investing in certificates, it is important that you read and understand the nature and risks of such instruments. You should carefully consider whether such trading is suitable for you in the light of your financial objective and situation.
5.	Expiry Date The expiration date is represented in this format: yy mm dd

The following are examples of the trading names of certificates counters.

Example 1:

AA ZPC CLIMATE 100328

a) Issuer ("AA") --> ABN AMRO Bank

b) Product Type ("ZPC") --> Participation Certificates

c) Underlying instrument ("CLIMATE") --> ABN AMRO Climate Change & Environment Index

d) Special Feature --> Not Applicable

e) Expiration date ("100328") --> 28 March 2010

Example 2:

RB DLC01*K080611

a) Issuer ("RB") --> Rabobank

b) Product Type ("DLC") --> Daily Lock-In Certificates

c) Underlying instrument ("01" ) --> RaboJet Certs Series 01

d) Special Feature (“*K”) --> Exotic product with a knock-out feature

e) Expiration date ("080611") --> 11 June 2008