Structured products

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Definition

Definition of structured products according to the Swiss Financial Market Supervisory Authority (FINMA): "Investments in the form of a bond or debenture, in which a cash instrument (e.g. a security with a fixed interest rate) is firmly connected with one or more derivative financial instruments to form a legal and economic unit. The derivative financial instruments refer to one or more base values (e.g. stocks, obligations, interest, exchange rates)."

  • From a legal perspective, a structured product is a bearer bond, for the fulfilment of which the issuer is liable with all of his/her assets.
  • Unlike funds, structured products are not subject to the Federal Act on Collective Investment Schemes (KAG) and are not defined by this act as separate assets.
  • The repayment conditions of a structured product are precisely defined in what is referred to as the term sheet and in the final documentation of the issuer; the repayment however depends on the credit rating of the issuer.
  • Structured products do not require approval before each issue; only the certificate / warrant or note programme of the issuer requires the approval of FINMA before an issuer may issue a structured product in Switzerland.
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