- The benefits of Barriere Reverse Convertibels
- The benefits of Capital Protection Certificates
- The benefits of Mini Future Certificates
Was ist ein Strukturiertes Produkt? (german)
- Was ist ein Strukturiertes Produkt?
- Wie entsteht ein Strukturiertes Produkt?
- Vier Produktvorteile
- Die SSPA Swiss Derivative Map
- Die wesentlichen Risikofaktoren
Wie finde ich das richtige Strukturierte Produkt? (german)
Individual investment solutions tailored precisely to your needs and your market view can be implemented swiftly and in a straightforward manner. In contrast to a direct investment, this means that you can fine-tune your investment specifically to reduce risk or increase yield prospects. Structured products thus provide you with a means of earning attractive returns even when share prices are on a sideways or slightly downward trend. Structured products are also traded on the stock exchange. This offers you the advantage of a high level of transparency and neutral supervision of trading. The issuers of structured products additionally ensure high liquidity and tradeability, facilitating straightforward purchase and sale of the products.
When you hear the term “knock-out warrant”, do you think of a boxing blow or a leveraged product? You can test your knowledge here. Because structured products and associated terminology require basic knowledge if you want to invest successfully. Find out how good your know-how really is. If the basic test is too easy for you, you can go straight to the advanced test. Good luck!Test Basic Test Advanced
What are structured products?
Structured products are a combination of derivatives and conventional financial investments such as equities or bonds. They are innovative and flexible investment instruments that represent an attractive alternative to direct financial investments (such as equities, bonds, foreign exchange, etc.). According to Switzerland’s Financial Market Authority (FINMA, Circular 2008/18), they are “investments in the form of a bond or debt instrument in which a cash instrument (e.g. a fixed-income security) is firmly linked to one or more derivative financial instruments to form a legal and economic unit. In this conjunction, the derivative financial instruments relate to one or more underlying assets (e.g. equities, bonds, interest rates, exchange rates, alternative investments).” Thanks to their flexibility, suitable investment solutions can be found for every risk profile, even in demanding market environments. Unlike traditional equities and bonds, structured products often have an asymmetric payout profile. This makes it possible to generate added value even in trend-free markets or to optimise returns in sideways markets and to guarantee capital protection in falling markets. Structured products are generally bearer bonds for the fulfilment of which the issuer is liable with all its assets. The quality of a structured product is therefore dependant on the creditworthiness of the debtor (issuer).
How important are structured products to the Swiss financial centre?
In recent years, structured products have become innovative, highly flexible investment instruments. The more than 20 product types have turned Switzerland into an internationally leading innovator that has demonstrated its strength again and again. For example, COSI products after the 2008 crisis, flexible and rapidly available products in response to trends such as digitisation, healthcare, etc., and cryptocurrencies during the coronavirus crisis. These innovations are held in high regard internationally and have made the entire Swiss financial centre more attractive. With an investment volume of around CHF 200 billion, Switzerland is the world’s largest market for structured products. Structured products are also significant for the economy at large. They create liquidity in the Swiss capital market, i.e. equity capital and outside capital for companies, and at the same time, they directly and indirectly secure a large number of highly-qualified jobs. Pursuant to the SSPA Value Creation Report, which takes into account listed and unlisted products created in Switzerland and sold worldwide, the industry generated annual sales of CHF 352 billion in 2019.
What advantages are there in investing in structured products?
Structured products provide investors with any risk profile and in any market scenario with an appropriate repayment profile that makes satisfactory yields possible in growing, sinking or sideways-moving markets. Structured product risk can be closely controlled. For risk-averse investors, for example, solutions with capital protection are available, while yield-oriented investors are more likely to invest in yield optimisation, participation or leverage products. What’s important is that investors receive qualified advice in selecting an appropriate risk profile and that they have a clear understanding of how the product of their choice functions.
Another advantage of structured products is the short time-to-market and easier access to new markets such as commodity markets or emerging markets, but also cryptocurrencies, in which previously only institutional investors could invest. That’s why by any measure, structured products are an innovative alternative to traditional forms of investment such as stocks and bonds.
Who may issue and sell structured products in Switzerland?
Only Swiss banks, Swiss insurers, Swiss stock brokers and foreign institutes subject to Swiss prudential supervision may publicly sell, issue, guarantee or distribute structured products in or from Switzerland (Art. 5 of the Collective Investment Schemes Act, CISA). To publicly issue, guarantee or distribute structured products in Switzerland, foreign institutes must have a branch in Switzerland.
Where are issuer ratings posted?
Issuers of structured products are required by law to publish their rating and that of their guarantor, if any, in the simplified prospectus of the product concerned. Non-rated issuers must state this fact in the simplified prospectus. Issuers also publish their ratings on their websites.
The SSPA publishes on its website the credit ratings of its members in an overview, which is updated regularly.
Is it possible to insure against issuer risk?
Issuer risk has been secured with collateral secured instruments (COSI) since 2009. This innovation meets investors’ changing needs perfectly and has won national and international awards. The process provides suitable security against structured product issuers. Investors thus profit from increased protection on the invested capital.
How are structured products regulated?
The offering of structured products in Switzerland and from Switzerland is regulated by Art. 70 of the Financial Services Act (Finanzdienstleistungsgesetz – “FIDLEG”). In order to protect small investors, this provision stipulates that structured products may be offered to private clients only if they are issued, guaranteed or secured in an equivalent manner by a supervised finance company.
If structured products are to be publicly offered for purchase in Switzerland or admitted for trading on a market such as the Swiss stock exchanges SIX Swiss Exchange or BX Swiss, Art. 35 FIDLEG stipulates an obligation to publish an approved prospectus. As a matter of principle, the prospectus must be submitted to a review body approved by the Swiss Financial Market Supervisory Authority FINMA before publication and must be reviewed and approved by this body. The review body examines the prospectus for completeness, coherence and comprehensibility. SIX Exchange Regulation and BX Swiss are approved review bodies.
However, there are a number of exceptions to the prospectus and audit requirements. In particular, foreign prospectuses that have been approved in a country whose prospectus approval procedures are recognised as equivalent and appears on a corresponding list of review bodies are automatically deemed to have been approved in Switzerland. In addition, in the case of structured products with a maturity of 30 days or more, the prospectus can be reviewed only after publication.
The prospectus contains the essential information for an investment decision. The minimum required prospectus content for structured products is listed in Appendix 3 of the Swiss Financial Services Ordinance (Verordnung über die Finanzdienstleistungen – “FIDLEV”). Inter alia, information about the issuer must be provided and the product terms and conditions as well as the risks must be specified.
Specifically in the case of structured products that are issued repeatedly, the prospectus may be prepared in the form of a basic prospectus. A special aspect of the basic prospectus is that it does not contain the definitive product terms and conditions. These must be made and published in a separate document, the definitive terms and conditions, at the time of the public offer or admission to trading.
Furthermore, when structured products are offered to private clients who do not purchase such products exclusively within the framework of an asset management agreement, the issuer must prepare an easily comprehensible key information document in advance. The purpose of this document is to enable investors to make informed investment decisions and compare different financial instruments. The key information document essentially contains information about the nature, risk profile and costs of the product and may not be more than three pages long. The content must be regularly reviewed by the issuer and updated in the event of material changes, as long as the structured product is offered to private clients. Documents under foreign law that are equivalent to the key information document, such as the key information document pursuant to the EU PRIIPs regulation, may be used instead of a Swiss key information document.
Finally, it is important to note that in the case of structured products offered to private clients after FIDLEG came into force on 1 January 2020, the (previous) simplified prospectus may for a period of two years after FIDLEG came into force continue to be published pursuant to Art. 5 Para. 2 of the Swiss Collective Investment Schemes Act (Bundesgesetz über die kollektiven Kapitalanlagen – “KAG”) instead of the key information document.
How does the Association protect investors?
The Association endeavours to strike the optimum balance between regulatory requirements and the personal responsibility of investors. The Association is actively involved in regulatory innovations and continuously optimises existing information channels for knowledge transfer and education about structured products, such as our awareness campaign. The aim is a structured product marketplace of equal benefit to investors, issuers and the authorities. Investor autonomy should be preserved at all times. What makes structured products complex is the protection against investor losses. It would be wrong to equate greater complexity with greater risk of loss.
Which investors should make use of structured products?
Structured products are particularly suitable for investors seeking innovative and flexible investment instruments. They constitute an attractive alternative and a sensible supplement to other investments. They are sufficiently flexible to accommodate any risk profile, even in a challenging market. Unlike direct investments, structured products make it possible to target reduced risk or increased profit.
Are structured products transparent?
Transparent knowledge transfer and information have always been a central focus of interest of the Association and the industry. There are numerous instruments and measures to explain the products in the best possible way and to inform investors of the advantages as well as the risks associated with structured products, from the documentation (prospectus, key information document, guideline for informing structured product investors, etc.) and comprehensive investor information (issuer creditworthiness, risk indicators, comprehensive quality control of structured product trading by SIX Swiss Exchange, etc.) to tools for simple knowledge transfer (training videos, Swiss Derivative Map, etc.). Furthermore, the Swiss Structured Products Association (SSPA) has prepared a comprehensive cost-transparency concept that fulfils the requirements of the Directive “W-02/2103 Statement of Asset Management Costs” and was approved by the Occupational Pension Supervisory Commission (Oberaufsichtskommission Berufliche Vorsorge – “OAK BV”) on 21 November 2019. This means a structured product is considered cost-transparent if the agreed cost information is made available to Swiss pension funds.
The SSPA glossary has been developed to give quick access to definitions of terms and concepts used in the foreign exchange, money, equity, commodity and debt markets. Terms used in technical analysis and macro-economics are also included. It is fully cross-referenced and many terms have links to other websites that give additional information.
That investors or their advisors need a degree of basic knowledge to be successful applies as much to structured products as it does to any other form of investment. Enough specialist literature is available to convey basic structured product knowledge. The SSPA supports measures to educate investors by issuing interesting publications, such as the short introduction to the world of structured products or the comprehensive standard work on structured products. In addition, interested parties – beginners as well as experienced investors – will find information on additional literature on the subject of structured products and information on seminars offered in Switzerland.
The further education in Finance offers various courses in the area of derivative financial instruments and structured products, which are taught in a theoretically sound and practical manner. The distance learning, blended learning or face-to-face courses can be taken as individual modules or as part of a Certificate of Advanced Studies (CAS).Contact
The independent Swiss Derivative Institute (SDI) holds courses for executives on structured products in Switzerland. The Institute also offers individually designed seminars for banks and institutional investors.Contact