Scoach: The New European Exchange for Structured Products

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1 Scoach: The New European Exchange for Structured Products State of the Art Technology Day of the Deutsche Boerse Group in Almaty September 2008

2 Who is Scoach? On 1 January 2007, both partners, SWX Group Overview and Deutsche Börse AG have integrated their current business in structured products to the respective national subsidiary. The Scoach 50% + 1 share Scoach Holding SA 50% -1 share holding company is located in Luxemburg. 100% 100% Scoach Schweiz AG and Scoach Europa AG will be regulated by the national entities that are currently responsible, i.e. for the Swiss market the Eidgenössische Bankenaufsicht, and for the German market the Börsenaufsicht in Wiesbaden and the BAFin. Europa Agent (partly) for FWB FWB segment Structured Products D/EU Open Market Schweiz Agent of Scoach Schweiz Scoach Schweiz Exchange Structured Products CH Ownership Scoach The Future for Trading Structured Products September 2008 page 2

3 Exchange landscape in Frankfurt and Zurich Frankfurt Exchange SWX Swiss Exchange Shares Funds Bonds REITs More than Certificates Warrants Turbos Reverse Convertibles More than Certificates Warrants Mini Futures Reverse Convertibles Shares Funds ETFs Scoach The Future for Trading Structured Products September 2008 page 3

4 Key benefits of Scoach Tailor-made services for order-flow providers, issuers, financial consultants and retail investors in the area of securitizes derivatives Largest trading venue for structured products, offering the widest and most international product choice and the fastest execution platforms at best prices (currently more than structured products are traded) Trading inside and outside the EU through one partner Strong parent companies with a successful history in cooperating (Eurex, STOXX) Scoach strives for innovative clearing & settlement solutions Scoach strives for new functionalities (e.g. multi currency trading) Scoach The Future for Trading Structured Products September 2008 page 4

5 Advantages of structured products Many self-directed investors in Europe prefer investing in structured products (warrants, certificates, reverse convertibles) instead of trading stocks. Why have structured products become so popular? Innovation and variety Instruments for any market expectation, time period, underlying or risk-taking Flexibility -Suitable for both institutional and retail investment sizes Cost-efficiency Usually no upfront fees apply Simplicity -Participation in exotic indices or complex baskets with just one security Transparency -Redemption amount and/or coupon payments according to clear rules Liquidity -Permanent liquidity provided by quote providers Scoach The Future for Trading Structured Products September 2008 page 5

6 How does a structured product work? Example: Bonus-Certificate a share with a safety buffer Possible underlyings: e.g. a share or a share index Fixing of a bonus-barrier and safety-barrier At maturity, often after a lifetime of 1-3 years, three basic payoff scenarios are conceivable (please see the following slides) Safety mechanism is financed by the retained dividend of the underlying share Bonus Certificate on Siemens AG: Remaining lifetime: 2 years Underlying: 1 Share of Siemens AG Bonus-barrier: 80 Safety-barrier:55 Price certificate: 70 Price underlying: 70 Scoach The Future for Trading Structured Products September 2008 page 6

7 How does a structured product work? profit Scenario 1: loss 0 safety-barrier bonus-barrier underlying certificate During the lifetime of the certificate the Siemens share did not touch the safetybarrier of 55 and, at maturity, the share price is at or below the bonusbarrier of 80. The payoff will be 80 -even in case of a slight decrease of the underlying price. Scoach The Future for Trading Structured Products September 2008 page 7

8 How does a structured product work? profit Scenario 2: 0 At maturity, the Siemens share price is above the bonus-barrier of 80, e.g. 90. loss safety-barrier bonus-barrier underlying certificate The investor receives the current equivalent of the price of the underlying (90 ), so he fully participates in rising prices of the underlying share. Scoach The Future for Trading Structured Products September 2008 page 8

9 How does a structured product work? profit Scenario 3: 0 The Siemens share touches the safety-barrier of 55 during the certificate s lifetime. loss underlying certificate The safety-mechanism omits. The payoff corresponds 1:1 to the current share price. Scoach The Future for Trading Structured Products September 2008 page 9

10 Thank you for your attention! Scoach The Future for Trading Structured Products September 2008 page 10

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