Cube

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Retail Investors

Structured products are “complex instruments” this means that they will only be appropriate for you if you have sufficient knowledge and experience. In order to access the site you need to be able to agree to all of the following statements

Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than ***. This includes any Prospectus. *** is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, *** shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes any warranty as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.

Risk Warnings

You should always bear in mind that;

  • You already hold other retail investments like funds, investment trusts or structured products
  • You would consider yourself to be a knowledgeable and informed investor
  • You understand the way that the investment return, the maturity value and any income are calculated by reference to the performance of underlying assets
  • You realize that you are not investing in the underlying assets but instead into a products whose performance is linked to these assets
  • You are prepared to invest into products where your capital is at risk
  • You have sufficient financial resources to be able to accept a loss on investments you make
  • You understand that the investment return and any coupon that you receive from structured products will depend on the performance of the underlying assets, and so you may not receive any investment return or income
  • The return of the capital may also be linked to the performance of the underlying assets. You understand how this is calculated, and appreciate that the amount that you receive back when a product matures may be less than you paid for it
  • The defined value of each product will only be realised if the product is held to the maturity date. You understand that if you sell a product before the maturity date you will not get the defined value, and the amount that you receive may be less than the amount that you invested.
  • You understand that if the issuer is unable to meet their obligations to pay the amount due when the product matures, that you will not receive the defined value and will loose some or all of the money you have invested
  • You understand that there are charges built into structured products.
  • You understand the personal tax implications associated with investing in structured products

United States Persons

The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.

Persons accessing this website in the European Economic Area.

Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than CET Capital Limited. This includes any Prospectus. CET Capital Limited is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, CET Capital Limited shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes any warranty as to the accuracy of any information or content on the website. The description of any Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on request and should be read prior to making any investment.

Risk Warnings

Investments of the type described therein may involve a high degree of risk, and the value of such instruments may be highly volatile. Such risks may include, without limitation, risk of adverse or unanticipated market developments, risk of counterparty or issuer default and risk of liquidity. Accordingly you must independently determine, with your own advisors, the appropriateness for you of the securities/transaction before investing or transacting. You should always bear in mind that;

  • The investment performance of any security referred to on this website can be volatile and can go up or down and you can lose your entire investment.
  • Past performance is not an indication of future performance.
  • Rates of exchange may affect the value of investments.
  • Applications to invest in securities referred to on this website must only be made on the basis of the relevant Prospectus.

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Please read and agree to the following statements

Structured products are “complex instruments” this means that they will only be appropriate for you if you have sufficient knowledge and experience. In order to access the site you need to be able to agree to all of the following statements

  • I already hold other retail investments like funds, investment trusts or structured products
  • I consider myself to be a knowledgeable and informed investor
  • I understand the way that the investment return, the maturity value and any income are calculated by reference to the performance of underlying assets
  • I realize that I am not investing in the underlying assets but instead into a products whose performance is linked to these assets
  • I am prepared to invest into products where my capital is at risk
  • I have sufficient financial resources to be able to accept a loss on investments I make
  • I understand that the investment return and any coupon that I receive from structured products will depend on the performance of the underlying assets, and so I may not receive any investment return or income
  • The return of the capital may also be linked to the performance of the underlying assets.
  • I understand how this is calculated, and appreciate that the amount that you receive back when a product matures may be less than I paid for it
  • The defined value of each product will only be realised if the product is held to the maturity date. I understand that if I sell a product before the maturity date I will not get the defined value, and the amount that I receive may be less than the amount that I invested.
  • I understand that if the issuer is unable to meet their obligations to pay the amount due when the product matures, that I will not receive the defined value and will lose some or all of the money I have invested
  • I understand that there are charges built into structured products.
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Glossary

Glossary

An accurate, reliable and transparent measure of the risk and return that an investor can expect is, in our view, one of the keys to allowing investors to appreciate the appeal of structured products. Unless investors know and understand the sort of return that a product offers, and the risks that they face they cannot realistically be expected to make a decision about a product. Similarly advisers need this sort of information to justify a product recommendation.  

Advisers need to know that a product is appropriate for the investor’s attitude to risk and their capacity for loss. Without this analysis an adviser is going to struggle to justify their recommendation. On the other hand, armed with this information, advisers can make recommendations with more confidence knowing that they have selected the most appropriate product for the investor, and with the audit trail for their file that documents the selection process. What does the Research actually do? 

What does the research actually do?

Cube Research offers you a transparent, accurate and reliable way to evaluate and select structured products and investments. Our research enables you to pick the products that match your investment objective and attitude to risk, and to rank them to create a short list of possible investments

Our evaluation allows you to compare one product with another, and to compare structured products versus other investments like funds and investment trusts. The two main outputs we offer on all products that we evaluate are:

·             Return

·             Risk 

How do Cube test products?

Our risk and return measures are based on a model that simulates how markets may behave in the future. Of course none of us know what is going to happen in the months and years to come. There will be periods when the market goes up, and periods when they fall. There will be unexpected events that cause markets to fall significantly, and there may be developments that cause markets to be revalued.

Our testing process is based on the view that over the past 20 years or so we have gone through a wide range of different market scenarios. We have had bull markets, periods of irrational exuberance, military conflicts, financial crises, and periods of relative stability. We use the data that we have or daily returns since the beginning of 1993 to simulate how markets may behave in the future. We use these simulated levels to test each product about 5 million times through good and bad simulations. We are able to observe if products knockout, if coupons are paid, and what the maturity value would be. We then consolidate and evaluate this information to create our risk and return scores.

Does the research include back testing?

Yes. We also do a back-test for each product. Our back-test for each product also starts at the beginning of 1993. The back-test is the main form of product testing offered by providers. It provides some information, but is not, on its own, a reliable indication about how a product may behave in the future. You should also use the back-test information provided by providers carefully. Each provider will offer different statistics, and their back-test periods may be different. Our back-test data is standardized. You will be able to compare the back-test results to the simulated results.

How does Cube calculate risk?

All of our products will come with a Cube Risk score. We calculate the volatility of annualized returns that an investor may receive based on our stress test. We can use this volatility value to place the product on the SRRI 1 to 7 scale that is mandatory for all funds. The Cube Risk score is updated every week for every product before and after the strike date so allowing investors to keep on top of the investments that they own.

How does Cube calculate return?

We calculate the expected return from our stress test. This is the average compound annual growth rate. The Cube Return score allows an investor to compare the returns that they may receive with the returns that they may get from other assets.

How often is the Research updated?

We run our analysis every week on every product. The risk and return numbers for products that have not struck will be stable, but for products where the strike has been set, the risk and return numbers will change. The weekly analysis will take into account the value of the product and the level of the underlying assets

   

 GLOSSARY

 
Adventurous / Risk Category 7 Products where the expected volatility is more than 25% and less than 40%.
American Barrier

 

An American Barrier is a Barrier that is observed through the life of the Structured Product.  The observations may be based on the closing values of the Underlying Asset every day, or could include the price of the Underlying Assets through the day.  If the level of the Underlying Asset breaches the American Barrier the final value of the Structured Product may be less than 100% if the final level of the Underlying Assets is below the strike level.

Asset Type

Products may be offered in a number of formats. The most common are:
- Structured Notes or Bonds
- Deposits
- Securities issued by a specialist company

Autocall

Autocalls are Structured Products which can automatically mature early or 'Kick Out') prior to their scheduled maturity date if certain pre-determined market conditions have been met with regard to the Underlying Asset at specified Observation Dates (Kick out dates). Autocall Products may also be called Knock-Out Products.

Average Payoff

For each Stress Test / event / scenario combination the average total value received by the investor.

Balanced / Risk Category 5

Products where the expected volatility is more than 10% and less than 15%.

Barrier Level

The Barrier Level that is used to determine the maturity value of the Structured Product.  
If the final level of the underlying asset is below the barrier the maturity value of the Structured
Product will be less than Face Value.

Bid The price at which investors may sell the product.
Cautious / Risk Category 5
Products where the expected volatility is more than 5% and less than 10%

Chance of Barrier Hit For each Scenario the chance that the Barrier condition will have been satisfied,
and the capital value may be reduced.

Chance of Gain The Chance of Gain is the percentage of the occasions where the total pay-off received by
the investor is greater than the current price of the Structured Product.

Chance of Loss The Chance of Loss is the percentage of the occasions where the total pay-off received by
the investor is less than the current price of the Structured Product.
Closed

Products that are not open to new investment.

Compound Return

For each Scenario this is the expected average compound annual growth rate.  The compound
expected return allows an investor to compare the returns that they may receive with the average
returns that they may get from other assets.

Conditional Gain

For each Scenario the average annual return from the simulations where the total return to the
investor is greater than the current value of the product.

Credit Rating

An assessment of the creditworthiness of a borrower, usually with respect to a particular  debt of financial obligation.  A credit rating 
can be assigned to any entity that seeks to borrow money - an individual, corporation, state or provincial authority, or sovereign government.
Credit assessment and evaluation for companies and governments is generally done by a credit rating agency such as Standard & Poor's,
Moody's or Fitch.

Defensive / Risk Category 4

Products where the expected volatility is less than 5%.

Enhanced Products

Products where the investors capital is at risk.  These are also known as SCARP (Structured Capital At Risk Products)

European Barrier

A European Barrier is one that is observed only at the maturity date of the product.  Any
movement by the underlying asset between these points does not have a bearing on the return
of the initial capital.

Expected Return

The average annual return from the stress test is the probability and time weighted average
return of all of the scenarios from the stress test.

Face Value

The nominal value of one unit of each Structured Product.

Final Valuation Date               

The date at which the final level of the underlying assets is recorded.

Gain
(exc. redemption  at Face Value)

For each Scenario the average return from Scenarios where the maturity value of the product is greater than the
current value of the product.  For products trading below 100% the Gain will exclude the Scenarios where the maturity value is equal
to fair value.

Historic Risk

A Scenario based on the past performance of the underlying assets.

Income Products 

Products that offer a regular coupon payment.  The coupon may be fixed, variable or conditional.

IPR / Expected Return For each Scenario the IPR Return or Expected Return is calculated using the probability weighted
average payoff that an investor may receive and the probability weighted average holding period to
the maturity of the product.
IPR Risk

 

All of our products will come with a IPR Risk Score.  We calculate the volatility of annualised returns that an investor
may receive based on the stress test.  We can use this volatility value to place the the product on the SRRI 1 to 7 risk
scale that is mandatory for all funds. The IPR Risk score is updated ever week for every product before and after the
Strike Date so allowing investors to keep on top of the investments that they own.

Issuer

The Issuer is the Bank or other entity that has issued the product.  Issuers are typically large investment banks.



Kick Out

Kick Out products are products that may mature early.  Typically the early maturity depends
on the level of the underlying being equal to or greater than the Kick Out Level at the Observation Dates.  
Kick Out products are also called Autocall's and Knock Out products.

Kick Out Level

The Kick Out Level is the minimum level that the underlying must meet or exceed for a
product to mature early.  This may also be called Trigger Level.

Loss
(exc. redemption at Face Value)    

For each Scenario the average return from Scenarios where the maturity value of the product
is less than the Face Value of the product.  For products grading above 100% the Loss will exclude
the Scenarios where the maturity value if equal to fair value. 

Market and Issuer Risk

A Scenario based on an estimate how the underlying assets may behave in the future and
we also include the chance that the issuer may default.

Market Risk

A Scenario based on an estimate how the underlying assets may behave in the future.

Maturity Date

The date at which investors will receive the maturity proceeds.

Model

The collection of individual securities that you own through the Service.

Objective There are three main investment objectives
- Return
- Income
- Participation

Offer

The price at which investors may buy the product.

Offer close

The date at which the product is closed to new investment.

Open

Products that investors can buy now, these may be pre-strike (primary) products,
or post-strike (secondary) products.

Participation Products

Products that offer exposure to the change in the level of an underlying asset, strategy
or other variable.  Typically participation products will offer exposure to the growth in
the level of the stock market.  

Post Strike

Products are described as post-stirke after the Strike Date

Pre Strike

Products are described as pre-strike before the Strike Date

Private Offer

Product issued by a Private Placement are only available to professional investors,
investors that will invest EUR100,000 in the product, or a small number of investors that invest
less than EUR100,000.  Private placements do not have to comply with the same level regulation and so can
be quicker and cheaper to issue.

Product Shape

The Product Shape is the name used to describe a particular type of Structured Product.  Common
shapes include:
- Autocall
- Reverse Convertible
- Supertracker
- Range Accrual

 Promoter

The Promoter of a product is responsible for the design, promotion and distribution of the product.
Protected Products

 

Products that offer complete or partial capital protection regardless of the performance
of the underlying assets.  Investors will remain exposed to the solvency of the issuer.

Public Offer

Products issued by a Public Offer are available to all investors.  The issuer is required to
comply with various regulations to ensure that investors have all of the information that
they require to evaluate the product.

Redemption at Face Value

For each Scenario the average return from Scenarios where the maturity value of the product
is equal to the Face Value of the product.

Return Products

Products that aim to offer a fixed return, potentially conditional on one or more underlying
conditions being satisfied.

Reverse Convertible

Reverse Convertibles are Structured Products that offer regular income and a return of capital
at maturity that may depend on the performance of the underlying asset.  The income may be
fixed of conditional.

Risk Categories
All of our products will come with  Cube Risk score/category.  We calculate the volatility of
annualised returns that an investor may receive based on our stress test.  We can use this volatility
value to place the product on the SRRI 1 to 7 scale that is mandatory for all funds. The Cube Risk score
is updated every week for every product before and after the Strike Date so allowing investors to keep on top of the investments that they own.
Scenario

 
We test product in three different scenarios:
- A historic scenario
- Market Risk
- Market and issuer risk

Speculative 8

Products where the expected volatility is more than 25%.

SRRI
The SRRI risk score is based on volatility.  The SRRI Risk Score was defined by 2009 by the Committee of European Securities regulators with 
the aim of providing investors with a standard method of assessing risk.  It has a 1 to 7 scale that is used by all retail product providers.  

Strike Date The date when the Initial Level of the underlying assets is recorded.
Structured Product

Structured Products are investments designed to offer capital growth, or income,
or a combination of both.  The coupon, investment return and the final value are determined
by reference to the performance of an underlying asset.

Synthetic Zero

Synthetic Zeros offer a fixed return of the maturity date provided that the final
level of the index is above a Trigger Level.

Trigger Level

The Trigger Levels are the levels used to determine if a Structured product will mature early.

Underlying Asset

The variable that is used to determine the investment return, capital return and coupon.  
The Underlying Asset may be a stock market index, share price, fund price, fund or
strategy value or other financial structure.

Volatility Volatility is a measure of how variable, or spread out the returns from a product may be.  
The returns from a product with a low level of volatility will be very similar.  The returns
from a product with a high level or volatility could vary over a wide range.