Equity Derivatives
Our specialised Equity Derivatives units are located in Amsterdam and London. They provide institutional, corporate and private banking clients with innovative, high-performance equity and fund-linked products.
In addition to a comprehensive range of options, we offer retail-listed products such as Warrants, Certificates, Convertible Bonds and Reverse Convertibles, Alternative and Mutual Fund Derivatives and Equity Financing Solutions that include Equity Swaps, share buy-back programs and employee share plans.
The Equity Derivatives Unit also provides specialised expertise in alternative investment. Our experts can structure, price and risk-manage a sophisticated and diversified low-volatility portfolio with a low correlation to traditional markets. Whatever your alternative investment needs, we're listening.
Related products
Certificates are a convenient and cost-efficient way of investing compared to directly investing in shares.
A certificate allows investors to make a single investment rather than having to develop a portfolio of individual shares. The underlying basket can consist of a single index or stock or a group of indices or stocks. The risk is comparable to the risk of direct investment in those same shares and depends upon the shares’ underlying value.
Convertibles are attractive because of their relatively low risk level.
A convertible can be compared to a bond with a call option. Investors receive a periodical, usually annual, interest payment. Payment of the invested amount on the maturity date is guaranteed. Convertibles generally pay a lower interest rate than most bonds. However, unlike a regular bond, they provide investors with the opportunity to benefit from any increase in the value of the underlying security.
Guaranteed Investment Certificates offer a guaranteed rate of return over a fixed period of time, typically between one to five years. This type of investment is most commonly issued by trust companies or banks.
With this type of investment the capital is always guaranteed, but the interest is determined by the performance of the specific stock market in which the capital is invested (such as the TSX or S&P500). If the underlying market does well, returns can be high.
Because of the guaranteed rate, returns tend to be lower than those of other investments, like mutual funds. The main benefit of a guaranteed investment certificate is that it is risk-free. A number of guaranteed certificates also offer the possibility of annual interest payments.
Reverse Convertibles are a variant of Convertibles.
In contrast to convertibles, a reverse convertible gives the issuer has the right to opt for payment in shares instead of cash at maturity. If the value of the shares is lower than the value of the invested amount at maturity, the issuer will most likely decide to make payment in shares. Consequently, this kind of investment is not guaranteed, as it is linked to the price of the underlying shares. However, the risk associated with this kind of investment is offset by the fact that the investor receives a high annual interest rate.
Special Structures are investment products excluded from the other product categories due to their specific or exotic features.
A warrant is a security that entitles the holder to buy or sell a certain additional quantity of an underlying security.
This transaction takes place over an agreed-upon price, exercised within a period of time and at the holder’s discretion. In this way, a warrant is very similar to an option. However, unlike with an option, which calls upon existing shares, a new share of stock is created when a warrant is exercised.
A warrant can yield relatively high returns compared to direct investment in the underlying share itself. However, warrants also entail a greater risk of incurring losses than if the investor was to buy the shares directly. Warrants allow the investor to profit from the so-called leverage effect. If the value of the underlying security decreases, risk is be limited to the premium paid for the warrant. Compared to shares, warrants offer the possibility to make a higher capital gain with a relatively limited investment.