What are Listed structured products?
Listed structured products are financial instruments issued by authorized financial institutions (Issuers) and traded on the cash market of HKEX. The payoff of structured products is based on the performance of the underlying asset(s), which can be stocks, stock indices, fixed income, currencies, commodities or a basket of assets. Structured products can be designed to allow investments under different expectations on price movements of underlying asset(s), such as direction and range. The maximum level of investors’ capital at risk will not exceed the initial investment amount.
The following listed structured products are currently available for listing and trading on the equity market of HKEX:
Derivative warrants are an instrument that gives an investor the right to "buy" or "sell" an underlying asset at a pre-set price prior to a specified expiry date. They may be bought and sold prior to their expiry in the market provided by HKEX. At expiry settlement is made in cash rather than a purchase or sale of the underlying asset. Derivative warrants can be issued over a range of assets, including stocks, stock indices, currencies, commodities, or a basket of securities. They are issued by a third party, usually an investment bank, independent of the issuer of the underlying assets. Derivative warrants traded in Hong Kong normally have an initial life of six months to two years and when trading in the market each derivative warrant is likely to have a unique expiry date.
CBBC are a type of structured product that tracks the performance of an underlying asset without requiring investors to pay the full price required to own the actual asset. They are issued either as Bull or Bear contracts with a fixed expiry date, allowing investors to take bullish or bearish positions on the underlying asset. CBBC are issued by a third party, usually an investment bank, independent of HKEX and of the underlying asset.
CBBC are issued with the condition that during their lifespan they will be called by the issuers when the price of the underlying asset reaches a level (known as the " Call Price ") specified in the listing document. If the Call Price is reached before expiry, the CBBC will expire early and the trading of that CBBC will be terminated immediately. The specified expiry date from the listing document will no longer be valid.
CBBC may be issued with a lifespan of three months to five years and are settled in cash only. They are traded on the cash market of HKEX.
Inline Warrants are a type of structured product that entitles the investors to receive a pre-determined fixed payment at expiry. At expiry, investors will receive HK$1 per inline warrant held when the underlying asset falls at or within the Upper and Lower Strikes (In-The-Range) or HK$0.25 per inline warrant held when the underlying asset falls outside the Upper and Lower Strikes (Out-of-The-Range).
Due to the pre-determined fixed maximum payment at expiry of HK$1, an inline warrant should not be traded above HK$1. Investors will suffer a loss by buying an inline warrant above HK$1.
Inline Warrants may be issued with a lifespan of six months to five years. They may be bought and sold prior to their expiry on the cash market of HKEX. At expiry, settlement is made in cash only.
Inline Warrants are issued by a third party, usually an investment bank, independent of HKEX and of the underlying asset.
Please refer to the Inline Warrants – Product Factsheet for details.