| Accrual |
A return based on the number of days in the period when the underlying stayed above, below or within pre-specified levels. |
| Adviser Charging |
How investors pay for financial advice has changed since the Retail Distribution Review. For structured products, advisers are no longer able to take commission for recommending a Structured Product to a client (please note that commission can still be charged for a Structured Deposit). Instead, investors may pay a fee to their adviser for the advice given (or the execution-only service, as appropriate). Most providers of structured products will facilitate the payment of an adviser charge on an investor’s behalf. In this case, an investor will pay one lump sum to the provider, and the provider will then pay the proportion of the amount that makes up the adviser charge directly to the adviser. Please also see ‘Intermediary Fee’. |
| Airbag Product |
This is another name sometimes given to a Tracker product. The idea is that these products provide some protection against a market crash, rather like the airbag system in a motor car that cushions the driver against the effects of a car crash. |
| Alternatives |
Underlying is composed of non-traditional asset classes such as hedge funds |
| American Barrier |
An American Barrier is often referred to in relation to Non-Protected products. It is the level of the Underlying (usually expressed as a percentage of its Start Level) that if breached, puts the investors' capital at risk at Maturity. The difference between an American Barrier and a European Barrier is the frequency at which it is monitored. An American Barrier will be breached if,on any dayduring the Term of that product, the Underlying (typically its closing level) is below the American Barrier. By contrast, a European Barrier will only be breached if the Underlying closes below the European Barrieron a set date(usually the End Date). For example, a product with a 60% American Barrier will put investors' capital at risk at Maturity if the Underlying is 40% or more below its Start Level on any day during its Term. |
| American Option or Style |
American style options are options that can be exercised at any time |
| Annual Management Charges |
The charges levied every year for the length of investment. See the product description, for details on whether additional annual charges will apply. (Continuous products). |
| Appropriateness |
Structured Products are defined as ‘complex’ investments under the Market in Financial Instruments Directive (‘MiFID’), and it is therefore important that investors understand how the product works and confirm that it is appropriate for their needs and objectives. If an investor is not taking advice from a financial adviser, they will be asked to complete an Appropriateness questionnaire to confirm that this is the case. This questionnaire will include questions on the investor’s experience and knowledge as well as confirming that they understand how the product works. If an investor provides information on the questionnaire that indicates the product may not be appropriate for their needs, this may impact their eligibility to invest in the product. |
| Asian Option or Style |
Asian options are options that use averaging in determining either the strike price or the final settlement price |
| Asset-or-nothing call option |
An option whose payoff equals the value of the underlying asset, provided it exceeds the strike price |
| Asset-or-nothing call options are frequently written as (binary) barrier options |
| Asset-or-nothing put option |
An option whose payoff equals the value of the underlying asset, provided it is below the strike price |
| Asset-or-nothing put options are frequently written as (binary) barrier options |
| Asset or Fund Manager |
A financial institution that manages money on behalf of an external client |
| At-the-money |
A term used to describe any option that has its strike price close to the level of the underlying price |
| Autocall |
An Autocall is a feature often used in Structured Products that allows for the product to mature early and a fixed return to be paid, provided certain market conditions are met (for example, if the Underlying closes at or above a given level on a set date). |
| Averaging |
Many structured products measure either the starting index level or the final index level (or both) usingaveraging. This means that the index levels used in the calculation of the product’s final return are the average index levels calculated during some pre-specified period.
So for example, if the product uses a final index level that is the average taken over the last 12 months then this would mean that the level of the index is recorded every day (or possibly weekly or monthly) during the last 12 months and then averaged. It is this average figure that is used in the calculation. |
