Question 1

How is title to the asset held?

Accepted Answer

Title is held at the broker/platform in the name of the investor’s nominee or custodian where an investor invests into the Certificate/Note.

Question 2

Is the asset represented by physical script?

Accepted Answer

No

Question 3

Is the asset held in safe custody?

Accepted Answer

Yes, assets are entrusted with the custodian for safekeeping.

Question 4

How is script delivered?

Accepted Answer

The Issuer issues the Certificates via the Custodian, and the proceeds from the acquisition of the Certificates received from the Holders will be included into the Compartment Assets. Thereupon, the Issuer acquires the Reference Assets and entrusts the Reference Account Custodian or the Custodian with their safekeeping.

Question 5

How is settlement effected?

Accepted Answer

The clearing system used is Clearstream Banking AG, and the settlement type is cash.

The Issuer issues the Certificates via the Custodian, and the proceeds from the acquisition of the Certificates received from the Holders will be included into the Compartment Assets. Thereupon, the Issuer acquires the Reference Assets and entrusts the Reference Account Custodian or the Custodian with their safekeeping. The Issuer receives interest payments and/or distributions and/or redemptions under the Reference Assets.

Question 6

How are unit holders protected?

Accepted Answer

There is no capital protection under the Certificates and the Redemption Amount may also be zero (0), but holders cannot lose more than their capital investment.

Insolvency remoteness of this structure also protects the holders from issuer risk as the compartments are ringfenced and each compartment forms a distinct and independent part of the Company's estate which is segregated from other compartments of the Company and the general estate of the Company.

Question 7

How is fraud dealt with?

Accepted Answer

There are several role players involved in the process of assuring reliable and independently verified implementation. The agents have been appointed to carry out various activities from an operational perspective. These agents have their own insurance in place which covers their operations and any potential liability they may assume in the carrying out of their appointed duties. Hence the issuer has protection from the operational and business risks of its agents, which is important.

Question 8

How is liquidity dealt with?

Accepted Answer

The calculation frequency of this compartment is daily so it has daily liquidity and investors can enter or exit the Certificates/Notes at any time.

Pricing and liquidity can be verified on Bloomberg with the following steps:
Step 1) Load the ISIN on BBG: for example - BW210641 Corp
Step 2) Load "HP"
Step 3) Make Source "CINM"
Step 4) Adjust date range

Question 9

What is the exercise date?

Accepted Answer

The exercise date (put in place for the investor) and the call date (put in place for the issuer) is simply a legal requirement that the issuer must comply with for open-ended (no maturity) products like these should either party want to wind it down permanently (once all capital has been repaid).

The certificates/notes have daily liquidity which means that you can buy/sell it daily (daily pricing is available) – exercise date does not speak to liquidity.