Professionals

16. What mechanisms are considered to be to the clients' advantage and hence not taken into account for determining the number of mechanisms?

Mechanisms that are considered to be to the clients' advantage are those that provide a minimum return or that limit the volatility of the underlying. For the purposes of the moratorium, only the mechanisms described below are considered mechanisms that fulfil these criteria:

  • a mechanism that provides for a minimum fixed amount that is paid out whether on interim due dates or at maturity (minimum annual fixed coupon, repayment of the nominal amount at maturity);
  • a mechanism that fixes the performance of the underlying, and this fixed performance constitutes the minimum basis for a payment, whether on interim due dates or at maturity;
  • an observation value established on the basis of an arithmetic average performance over a specific period or on the basis of the minimum value during a specific period (initial value) or of the maximum value during a specific period (closing value). Where the closing value is established on the basis of an average, the latter may not be calculated for a period exceeding one-third of the product's lifetime (calculated between the date of issue and the date of maturity);
  • a mechanism that gives the client the absolute value of the performance of the underlying.

The following do not fall within this category: a multiplier, memory coupon, 'best of' features, magnet effect or air bag.