|Investment involves risk. Investors should read the offering documents and the relevant risk disclosure statement before making any investment decision. Investors should note that value of investments can go down as well as up and past performance is not necessarily indicative of future performance.
Plain Vanilla Callable Deposit
Callable Deposit (tenor less than 5 years)
A callable deposit provides the Bank with the option to call back or extend the deposit at pre-specified future date (call date). The deposit, embedded with a call option, compensates the depositor with a higher yield (call premium) than normal time deposit for the callable feature.
Inverse Floating Rate Deposit
Inverse Floating Rate Deposit
Inverse Floating Rate Deposit has the special feature in contrast to traditional floating rate deposit. Investor enjoys higher interest rate at times when the reference index declines and vice versa. Inverse Floating Rate Deposit is a good investment alternative during low interest rates environment.
Callable Inverse Floating Rate Deposit
Callable Inverse Floating Rate Deposit is medium and long-term title with fixed interest rate at non-call period and inverse floating interest rate after the call date. The special feature of the deposit is that floating rate in this structure will increase/decrease with respect to fall/rise in the reference index.
Target Redemption Deposit
Investor earns a substantial upfront interest for taking additional interest rate risk over the life of the deposit. Interest will accrue until a targeted return has been reached, then the deposit is redeemed. Investor will receive the target lifetime accumulated interest at maturity or redemption, whichever comes first.
Capped / Floored Floating Rate Deposit
Capped Floating Rate Deposit
Investor sells an interest rate cap
, the premium will be embedded in the floating rate deposit and the investor will receive interest capped at a pre-determined level.
Step up Capped Floating Rate Deposit
An interest-rate step-up cap is embedded in a floating rate deposit. It involves the sale of a step-up cap
at a strike higher than market interest rate. If the underlying index (Hibor/Libor) +/- quoted margin is higher than the capped rate, the investor receives a maximum interest, i.e. the cap strike rate.
Floored Floating Rate Deposit
It is a deposit embedded with an interest-rate floor
option. The deposit involves the purchase of a floor at a strike lower than market interest rate. If the underlying index (Hibor/Libor) +/- quoted margin is lower than the floored rate, the investor receives a minimum interest, i.e. the floor strike rate.
Collared Floating Rate Deposit
It is a deposit embedded with an interest-rate collar
option. It involves the purchase of a floor
to hedge the floating-rate income at a specific strike rate and the sale of a cap
at a higher strike to offset the cost of purchasing the floor.
(Callable) Daily Rate Range Accrual Deposit
Investor will receive an above-market interest if the reference index is traded within a pre-determined lower and upper band. Interest is usually accrued on a daily basis by observing the reference index that trades within the band. Further yield enhancement can be obtained through the additional call feature, where the Bank has the option to redeem the deposit in full at a pre-determined time interval.
Allow the buyer of a cap to create an upper limit on the cost of floating-rate liabilities by paying an upfront premium.
Allow the buyer of a floor to protect the total rate of return of an asset by paying an upfront premium.
Involve the purchase of a cap
to hedge a floating-rate liability at a higher strike rate and the sale of a floor
at a lower strike rate to offset the cost of purchasing the cap.
A swaption is an option on a swap. Buyer of a swaption has the right, but not the obligation, to execute an interest rate swap
at a predetermined rate during the exercise period by paying a premium upfront.
Forward Rate Agreement
Forward Rate Agreement (FRA) is a contract for a notional loan or deposit for an agreed amount, a specific contract period and at an agreed contract rate.
An FRA relates solely to interest rates and does not imply any obligation to make a loan or deposit. It provides a means to fix interest rates for a specific period at a future date, enabling investors to cover themselves against adverse interest rate movements, whether that movement is upward or downward.
Interest Rate Swap
A swap contract obligates two parties to exchange, or swap, some specified cash flows at specified intervals, in which the cash flows are determined by two different interest rates.
Cancellable Swap is a variation of an interest rate swap
. Investor can reduce the swap cost in the first few years by taking a view in forward swap rates and the swap will be cancelled if the swap rates move against the customer's view in later years.
An Arrears Swap is a variation of an interest rate swap
under which a floating rate index is reset at the end of each interest period rather than at the beginning of each interest period.
These are structured products involving derivatives. The investment decision is yours but you should not invest in a structured product unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
Nothing herein shall constitute as offers or solicitation of offers to buy or sell foreign exchange contracts, securities, financial instruments or other investments. This is not intended to provide investment advice and should not be relied upon in that regard. The products mentioned herein may not be suitable for all investors. Investors must make investment decisions based on their own investment objectives, financial position and particular needs and consult their own independent investment advisers where necessary. Investment involves risk. Investors should read the offering documents and the relevant risk disclosure statement before making any investment decision. Investors should note that value of investments can go down as well as up and past performance is not necessarily indicative of future performance.
Structured product is not normal time deposit and thus should not be considered as normal time deposit or its derivative. Except for Callable / Bermudan Callable Deposit with tenor less than 5 years, structured product is not a protected deposit and is not protected by the Deposit Protection Scheme in Hong Kong.
Investment in structured products is subject to the credit risk of the Bank.