Equity-Linked Notes

Tailor your Investment to suit your market views


Equity-linked notes (ELNs) are short term investments (typically lasting 1 to 4 months) that give you the opportunity to buy shares of a selected company at a discount to market price1. It potentially pays higher interest income but carries the risk of exposure to share price market movements.

Reverse equity-linked notes (RELNs) utilise your existing shares for potentially higher returns by giving you the opportunity to sell your existing shares at a premium to market price1, but carry the risk of exposure to share price market movements.

Regardless of the note type, you will also enjoy flexibility in customising your investment by selecting your underlying shares or index, number of shares and strike price (conversion rate).

To understand the different types of ELNs, please click here for more.


1
At the inception of the ELN/RELN




Benefits

Interest income

Opportunity to earn potentially higher interest income


Better yield from shares

Yield Through RELNs; Opportunity to obtain a better yield from the shares in your existing portfolio


Lock-in price

Opportunity to buy or sell underlying shares at a pre-agreed strike price chosen by you, at a discount or premium to market price1


Flexibility

Flexibility for you to choose your preferred underlying shares, index, number of shares and strike price





Risks

Market risk

Since product performance is linked to underlying performance, the value of the underlying shares may fluctuate, which could adversely affect the value of the ELN. In the case of a put option, the market value of the underlying shares may continue to decline after investors take delivery of the shares.


Foreign exchange risk

Losses could result from unfavorable fluctuations in currency exchange rates, if the ELN or underlying shares are based on a currency other than that of the investment currency.


Credit risk

ELNs are backed by the issuer and not by the company which issued the underlying shares. If the issuer defaults, investors may lose all or part of their investment.


Liquidity risk

The secondary market is typically illiquid, and bid prices are likely to be unattractive. Investors should not invest in an ELN unless they have sufficient funds to stay invested until maturity.


Early Termination/Redemption risk 

Investors may incur a substantial loss on the principal investment amount in the event they choose to terminate or redeem the investment before its maturity date.


Principal-at-risk

ELNs are not principal-protected. There is a risk that investors could lose part or their entire principal investment amount.







ELNs are available for Accredited Investors only.

An Accredited Investor means: 

(i) an individual —
(A) whose net personal assets exceed in value $2 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;
(B) whose financial assets (net of any related liabilities) exceed in value $1 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount, where “financial asset” means —
(BA) a deposit as defined in section 4B of the Banking Act;
(BB) an investment product as defined in section 2(1) of the Financial Advisers Act; or (BC) any other asset as may be prescribed by regulations made under section 341; or
(C) whose income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;

(ii) a corporation with net assets exceeding $10 million in value (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe, in place of the first amount, as determined by —
(A) the most recent audited balance-sheet of the corporation; or
(B) where the corporation is not required to prepare audited accounts regularly, a balance-sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance-sheet, which date shall be within the preceding 12 months;  

(iii) the trustee of such trust as the Authority may prescribe, when acting in that capacity; or

(iv) such other person as the Authority may prescribe.

 


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Trade shares and other listed securities online or with a broker.

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