Glossary

A B C D E F G H I J K L M
N O P Q R S T U V W X Y Z


Calculation Agent The company who is responsible for determining the maturity proceeds of a Structured Product that are due to investors. They are assigned by the Issuer of a Structured Product.
Call option A call option is a type of derivative that gives the holder the right, but not obligation, to purchase a set quantity of the underlying asset at a given price (the strike price) on or before a specified date (sometimes called the exercise date). Call options therefore benefit the owner if the price of theunderlying rises.
Call Overwriting A strategy, also known as Buy-Write or Covered Call writing, which generates a return from the purchase of an underlying share or shares and the simultaneous sale of a call option or options on that same underlying.
Call provision The issuer has the right to buy back (i.e. call) the instrument at preset prices and on predetermined dates. In effect, the issuer has a call option on the instrument
Cap A cap is a limit on the possible return a Structured Product can pay. This means that, if the final performance of the Underlying is above the cap, the return due on the structured product will not reflect this full performance. Instead, only performance up to the cap is used to determine the return.
Capital The amount of money an investor uses to purchase a Structured Product. Please also see ‘ Initial Investment’
Capital Protected A capital protected type of structured product is one that provides for a minimum return at maturity at least equal to the original sum invested.
Capital Return at Maturity The actual final return generated by the product at maturity
Capped Call A return based on a fixed participation in the rise of an underlying market that is capped at a fixed return
Capped Call/Put A return based on the rise (call) or absolute value of the fall (put) of an underlying, subject to a maximum capital return (cap).
Capped Put A return based on a fixed participation in the absolute value of the fall of an underlying market that is capped at a fixed return
Cash ISA Cash Individual Savings Account. An ISA is restricted to UK tax resident individuals only.
Cash-or-nothing call option An option which gives a fixed payoff once the price of the underlying asset has risen above the strike price
Cash-or-nothing options are frequently written as (binary) barrier options
Cash-or-nothing put option An option which gives a fixed payoff once the price of the underlying asset has fallen below the strike price
Cash-or-nothing options are frequently written as (binary) barrier options
Certificate A type of security issued by a bank that provides a return linked to one or more underlying indices, prices, rates or other financial variables. Certificates are either leverage or investment products and are typically listed on exchanges with a secondary market being supported by the provider.
Client Money Relates to the provisions of the FCA’s Client Assets Sourcebook relating to client money.
Cliquet option A series of consecutive forward start options (i.e. a ratchet option)
Collateral Providers of structured products typically enter into derivative contracts to ensure that they are able to generate the return that is being offered to their investors. Since the term of most structured products is many years there is a risk that the derivative counterparties may default.
To mitigate this risk in many cases the derivatives provider will post collateral in the form of cash, bondsor even shares, with a third party or custodian. The value of this collateral will be adjusted so that it is always equivalent to the cost of replacing the derivative should they go into default.
Commission Commission paid on the product. This could include Independent Financial Advisers commission (paid upfront, on a trail basis or as a combination of both), underwriting commission or sales commission.
Commodities Underlying is composed of physical commodities such as energy products, metals or agricultural products
Constant Proportion Portfolio Insurance (CPPI) Constant Proportion Portfolio Insurance (CPPI) is the name given to a trading strategy that is designed to ensure that a fixed minimum return is achieved either at all times or more typically, at a set date in the future.
Closing Level The closing level of an Underlying on a given Business Day representing the most up-to-date valuation until trading commences on the next Business Day.
Counterparty The institution (usually a bank) that is responsible for issuing the securities that make up a Structured Product. Investors are exposed to the risk that the Counterparty defaults and is therefore unable to repay their investment and any returns that might be due under the terms of the Structured Product. Please also see ‘Issuer’.
Counterparty Risk The risk that the Counterparty will default and will be unable to pay any amount due to an investor. For Structured Deposits, the Counterparty is the Deposit Taker, for Structured Investments, the Counterparty is the Issuer or Counterparty of the Securities.
Coupon A dividend, interest payment or any similar payment.
Credit Event When a company becomes insolvent, defaults on its payment obligations or is the subject of governmental intervention or a restructuring of its debt obligations in a manner that is detrimental to creditors.
Credit Ratings A scale of letters ranging from AAA to D assigned to companies by independent ratings agencies, intended to reflect the creditworthiness of that company. They are reviewed regularly and can go up or down in response to changes in the financial position of the institution being rated.
Credit Ratings Agency A company, such as Fitch Ratings, Moody’s or Standard & Poor’s, which assigns Credit Ratings to companies. A credit ratings agency does not rate individual consumers.
Custodian Is a financial institution that holds investors’ securities for safekeeping to minimise the risk of theft or loss. The custodian for structured products is generally a different company to the Plan Manager or Product Provider.