INVESTOR
EDUCATION
INVESTOR
EDUCATION
Fixed Coupon Note (FCN)
Fixed Coupon Notes are a type of structured product that pays a fixed coupon to investors under a pre-defined schedule until an early redemption event occurs or upon maturity. Fixed Coupon Notes are usually linked to the performance of a single stock, a basket of stocks or stock indices, etc.
Key Features
A fixed coupon amount is made on the coupon payment date.
The minimum tenor period is normally at least 2 months or above and at most 12 months (negotiable with issuer).
A Knock-out (“KO”) barrier level is set as a percentage of the initial fixing level of the underlying asset(s). The KO event is deemed to occur when the closing price of its underlying asset(s) is at or above the KO barrier on the relevant KO observation date. FCN will be terminated early upon the KO event with 100% notional amount being returned to the investor. If the KO event does not occur, FCN will still be valid until its early redemption or maturity.
If the closing price of the underlying asset(s) is below the strike price on the final observation date, the investor will receive physical delivery of the underlying asset(s) at the strike price where physical settlement is applicable to that/those underlying asset(s).
Risk disclosure
FCN may involve some or all of the following risks:
Issuer’s credit risk
Market risk
Interest rate risk
Foreign exchange risk
Reinvestment risk
Liquidity risk
Limited secondary market
Fixed Coupon Note (FCN)
Fixed Coupon Notes are a type of structured product that pays a fixed coupon to investors under a pre-defined schedule until an early redemption event occurs or upon maturity. Fixed Coupon Notes are usually linked to the performance of a single stock, a basket of stocks or stock indices, etc.
Key Features
A fixed coupon amount is made on the coupon payment date.
The minimum tenor period is normally at least 2 months or above and at most 12 months (negotiable with issuer).
A Knock-out (“KO”) barrier level is set as a percentage of the initial fixing level of the underlying asset(s). The KO event is deemed to occur when the closing price of its underlying asset(s) is at or above the KO barrier on the relevant KO observation date. FCN will be terminated early upon the KO event with 100% notional amount being returned to the investor. If the KO event does not occur, FCN will still be valid until its early redemption or maturity.
If the closing price of the underlying asset(s) is below the strike price on the final observation date, the investor will receive physical delivery of the underlying asset(s) at the strike price where physical settlement is applicable to that/those underlying asset(s).
Risk disclosure
FCN may involve some or all of the following risks:
Issuer’s credit risk
Market risk
Interest rate risk
Foreign exchange risk
Reinvestment risk
Liquidity risk
Limited secondary market
