EUSIPA seeks to contribute to the industry’s wider efforts of standardising certain elements of the market infrastructure. Our main achievements are the EUSIPA Map, a comprehensive product overview which displays the various common pay-out schemes according to their riskiness and the EUSIPA Code of Conduct.

## Governance

## Supporting Partners

The following supporting market participants have agreed to integrate the EUSIPA categorization on their websites and other information material available to the public within the next months

###### Associations

###### Exchanges & Dataproviders

###### Issuers

## Categorisation

EUSIPA is a main supporter of the efforts for transparency and understandability of structured investment products. Thus, its members have agreed to set standards for a uniform categorization.

### 11 CAPITAL PROTECTION

###### 1140 Capital Protection with Coupon

##### Market Expectation

- Rising underlying
- Sharply falling underlying possible

##### Characteristics

- Minimum redemption at expiry equivalent to the capital protection
- Capital protection is defined as a percentage of the nominal (e.g. 100%)
- Capital protection refers to the nominal only, and not to the purchase price
- Value of the product may fall below its capital protection during the lifetime
- The coupon amount is dependent on the development of the underlying
- Any payouts attributable to the underlying are used in favour of the strategy
- Limited profit potential

###### 1130 Capital Protection with Knock-out

##### Market Expectation

- Rising underlying
- Sharply falling underlying possible

##### Characteristics

- Minimum redemption at expiry equivalent to the capital protection
- Capital protection is defined as a percentage of the nominal (e.g. 100%)
- Capital protection refers to the nominal only, and not to the purchase price
- Value of the product may fall below its capital protection during the lifetime
- Participation in a positive performance of the underlying until Knock-Out
- Possible payment of a Rebate following a Knock-Out
- Any payouts attributable to the underlying are used in favour of the strategy
- Limited profit potential

###### 1120 Capped Capital Protected

##### Market Expectation

- Rising underlying
- Sharply falling underlying possible

##### Characteristics

- Minimum redemption at expiry equivalent to the capital protection
- Capital protection is defined as a percentage of the nominal (e.g. 100%)
- Capital protection refers to the nominal only, and not to the purchase price
- Value of the product may fall below its capital protection during the lifetime
- Participation in a positive performance of the underlying up to the Cap
- Any payouts attributable to the underlying are used in favour of the strategy
- Limited profit potential (Cap)

###### 1110 Exchangeable Certificates

##### Market Expectation

- Rising volatility
- Sharply rising underlying
- Sharply falling underlying possible

##### Characteristics

- Minimum redemption at expiry equivalent to the capital protection
- Capital protection is defined as a percentage of the nominal (e.g. 100%)
- Capital protection refers to the nominal only, and not to the purchase price
- Value of the product may fall below its capital protection during the lifetime
- Unlimited participation in a positive performance of the underlying above the Strike (Conversion Price)
- Coupon payment possible
- Any payouts attributable to the underlying are used in favour of the strategy

###### 1100 Uncapped Capital Protection

##### Market Expectation

- Rising underlying
- Rising volatility
- Sharply falling underlying possible

##### Characteristics

- Minimum redemption at expiry equivalent to the capital protection
- Capital protection is defined as a percentage of the nominal (e.g. 100%)
- Capital protection refers to the nominal only, and not to the purchase price
- Unlimited participation in a positive performance of the underlying above the Strike (Conversion Price)
- Coupon payment possible
- Any payouts attributable to the underlying are used in favour of the strategy

### 12 YIELD ENHANCEMENT

###### 1260 Express Certificates

##### Market Expectation

- Underlying moving sideways or slightly rising
- Underlying will not breach Barrier during product lifetime

##### Characteristics

- Should the underlying trade above the Strike on the observation date, an early redemption consisting of nominal plus an additional coupon amount is paid
- Offers the possibility of an early redemption combined with an attractive yield opportunity
- Lower risk than a direct investment due to the conditional capital protection
- Larger coupon payments or lower barriers can be achieved at a greater risk if the product is based on multiple underlyings (multi-asset)
- Any payouts attributable to the underlying are used in favour of the strategy
- Limited profit potential

###### 1250 Capped Bonus Certificates

##### Market Expectation

- Underlying moving sideways or slightly rising
- Underlying will not breach Barrier during product lifetime

##### Characteristics

- Minimum redemption is equal to the Strike if the Barrier is never breached
- Lower risk than a direct investment due to the conditional capital protection
- Larger Bonus payments or lower barriers can be achieved at a greater risk if the product is based on multiple underlyings (multi-asset)
- Any payouts attributable to the underlying are used in favour of the strategy
- Limited profit potential (Cap)

###### 1240 Capped Outperformance Certificates

##### Market Expectation

- Rising underlying

##### Characteristics

- Reflects underlying price moves 1:1 when below the Strike
- Disproportional participation (Outperformance) in a positive performance of the underlying up to the Cap
- Risk comparable to a direct investment
- Any payouts attributable to the underlying are used in favour of the strategy
- Limited profit potential (Cap)

###### 1240 Capped Outperformance Certificates

##### Market Expectation

- Underlying moving sideways or slightly rising
- Falling volatility
- Underlying will not breach Barrier during product lifetime

##### Characteristics

- Should the Barrier never be breached, the nominal plus coupon is paid at redemption
- A Barrier Reverse Convertible turns into a Reverse Convertible after breaching the barrier
- The probability of a maximum redemption is larger due to the conditional capital protection, the coupon achieved however is smaller
- The coupon is always paid, irrespective of the development of the underlying
- Lower risk than a direct investment due to the conditional capital protection
- Reduced loss potential compared to a direct investment
- Larger coupon payments or lower barriers can be achieved at a greater risk if the product is based on multiple underlyings (multi-asset)
- Any payouts attributable to the underlying are used in favour of the strategy
- Limited profit potential (Cap)

###### 1220 Reverse Convertibles

##### Market Expectation

- Underlying trades sideways to slightly higher
- Falling volatility

##### Characteristics

- Should the underlying close below the Strike at expiry, the underlying and/or a cash amount is redeemed
- Should the underlying close above the Strike at expiry, the nominal plus the coupon is paid at redemption.
- The coupon is always paid, irrespective of the development of the underlying
- Reduced loss potential compared to a direct investment
- Larger coupons can be achieved at a greater risk if the product is based on multiple underlyings (multi-asset)
- Any payouts attributable to the underlying are used in favour of the strategy
- Limited profit potential (Cap)

###### 1210 Barrier Discount

##### Market Expectation

- Underlying moving sideways or slightly rising
- Falling volatility
- Underlying will not breach Barrier during product lifetime

##### Characteristics

- Barrier Discount Certificates enable investors to acquire the underlying at a lower price.
- The maximum redemption amount (Cap) is payed out if the Barrier is never breached.
- A Barrier Discount Certificate turns into a Discount Certificate after breaching the Barrier
- The probability of a maximum redemption is larger due to the conditional capital protection, the discount achieved however is smaller
- Lower risk than a direct investment due to the conditional capital protection
- Reduced loss potential compared to a direct investment
- Larger discounts or lower barriers can be achieved at a greater risk if the product is based on multiple underlyings (multi-asset)
- Any payouts attributable to the underlying are used in favour of the strategy
- Limited profit potential (Cap)

###### 1200 Discount Certificates

##### Market Expectation

- Underlying moving sideways or slightly rising
- Falling volatility

##### Characteristics

- Should the underlying close below the Strike at expiry, the underlying and/or a cash amount is redeemed
- Discount Certificates enable investors to acquire the underlying at a lower price.
- Corresponds to a buy-write-strategy
- Reduced loss potential compared to a direct investment
- Larger discounts can be achieved at a greater risk if the product is based on multiple underlyings (multi-asset)
- Any payouts attributable to the underlying are used in favour of the strategy
- Limited profit potential (Cap)

### 13 PARTICIPATION

###### 1340 Twin-Win Certificates

##### Market Expectation

- Rising or slightly falling underlying
- Underlying will not breach Barrier during product lifetime

##### Characteristics

- Unlimited participation in the development of the underlying
- Minimum redemption is equal to the Strike if the Barrier is never breached
- Profits possible with rising and falling underlying
- Falling underlying price converts into profit until the Barrier
- A Twin-Win Certificate turns into a Tracker Certificate after breaching the Barrier
- Any payouts attributable to the underlying are used in favour of the strategy

###### 1330 Outperformance Bonus Certificates

##### Market Expectation

- Rising underlying
- Underlying will not breach Barrier during product lifetime

##### Characteristics

- Unlimited participation in the development of the underlying
- Minimum redemption is equal to the Strike if the Barrier is never breached
- Disproportional participation (Outperformance) in a positive performance of the underlying
- An Outperformance Bonus Certificate turns into an Outperformance Certificate after breaching the Barrier
- Lower risk than a direct investment due to the conditional capital protection
- Any payouts attributable to the underlying are used in favour ..of the strategy

###### 1320 Bonus Certificates

##### Market Expectation

- Underlying moving sideways or rising
- Underlying will not breach Barrier during product lifetime

##### Characteristics

- Unlimited participation in the development of the underlying
- A Bonus Certificate turns into a Tracker Certificate after breaching the Barrier
- Minimum redemption is equal to the Strike if the Barrier is never breached
- Lower risk than a direct investment due to the conditional capital protection
- Larger Bonus payments or lower barriers can be achieved at a greater risk if the product is based on multiple underlyings (multi-asset)
- Any payouts attributable to the underlying are used in favour of the strategy

###### 1310 Outperformance Certificates

##### Market Expectation

- Rising underlying
- Rising volatility

##### Characteristics

- Unlimited participation in the development of the underlying
- Disproportional participation (Outperformance) in a positive performance of the underlying
- Reflects underlying price moves 1:1 when below the Strike
- Risk comparable to a direct investment
- Any payouts attributable to the underlying are used in favour of the strategy

###### 1300 Tracker Certificates

##### Market Expectation

- Tracker Certificate (Bull): Rising underlying
- Tracker Certificate (Bear): Falling underlying

##### Characteristics

- Unlimited participation in the development of the underlying
- Reflects underlying price moves 1:1 (adjusted by conversion ratio and any related fees)
- Risk comparable to a direct investment
- Fees generally in the form of management fees or through the retention of payouts attributable to the underlying during the lifetime of the product

### LEVERAGE PRODUCTS

###### 2100 Warrants

##### Market Expectation

- Warrant (Call): Rising underlying, rising volatility
- Warrant (Put): Falling underlying, rising volatility

##### Characteristics

- Small investment generating a leveraged performance relative to the underlying
- Increased risk of total loss (limited to initial investment)
- Suitable for short term speculation or hedging
- Daily loss of time value (increases as product expiry approaches)
- Continuous monitoring required

###### 2110 Spread Warrants

##### Market Expectation

- Spread Warrant (Bull): Rising underlying
- Spread Warrant (Bear): Falling underlying

##### Characteristics

- Small investment generating a leveraged performance relative to the underlying
- Increased risk of total loss (limited to initial investment)
- Daily loss of time value (increases as product expiry approaches)
- Limited proﬁt potential (Cap)
- Continuous monitoring required

###### 2200 Knock-Out Warrants

##### Market Expectation

- Knock-Out (Call): Rising underlying
- Knock-Out (Put): Falling underlying

##### Characteristics

- Small investment generating a leveraged performance relative to the underlying
- Increased risk of total loss (limited to initial investment)
- Immediately expires worthless in case the Barrier is breached during product lifetime
- Suitable for short term speculation or hedging
- Small inﬂuence of volatility and small loss of time-value
- Continuous monitoring required

###### 2205 Open-End Knock-Out Warrents

##### Market Expectation

- Open-End Knock-Out Warrants Call: rising underliying
- Open-End Knock-Out Warrants Put: falling underlying

##### Characteristics

- Small investment generating a leveraged performance relative to the underlying
- Increased risk of total loss (limited to initial investment)
- Immediately expires worthless in case the Barrier is breached
- Daily adjustment of the Barrier
- Open-End Maturity
- Suitable for short term speculation or hedging
- Small inﬂuence of volatility Continuous monitoring required
- Continuous monitoring required

###### 2210 Mini-Futures

##### Market Expectation

- Mini-Future (Long): Rising underlying
- Mini-Future (Short): Falling underlying

##### Characteristics

- Small investment generating a leveraged performance relative to the underlying
- Increased risk of total loss (limited to initial investment)
- Stop-Loss level differs from strike
- A residual value may be redeemed following a stop loss event
- Suitable for short term speculation or hedging
- No inﬂuence of volatility
- Continuous monitoring required

###### 2300 Constant Leverage Certivicate

##### Market Expectation

- Bull: Rising underlying
- Bear: Falling underlying

##### Characteristics

- Small investment generating a leveraged performance relative to the underlying
- Increased risk of total loss (limited to initial investment)
- Suitable for short term speculation
- The leverage is constant for the deﬁned period (e.g. daily) only
- Successions of price movements of the underlying in the same direction tend to have a positive effect on the performance, price movements of the underlying in opposite directions a negative effect
- A Stop Loss and/or an automatic reset feature prevent the value of the instrument to become negative
- Continuous monitoring required

###### 2230 Double Knock-Out Warrants

##### Market Expectation

- Underlying moving sideways
- Falling volatility

##### Characteristics

- Small investment generating a leveraged performance relative to the underlying
- Increased risk of total loss (limited to initial investment)
- Suitable for short term speculation Immediately expires worthless in case one of the barriers is breached during product lifetime

Limited proﬁt potential (Cap) - Continuous monitoring required

## Categorisation Committee

The Legal Committee is a main technical working body of the association. It is composed of senior legal and technical experts who are delegated by national associations and bring in strong expertise and first hand practical experience. The Legal Committee monitors and discusses regulatory developments of possible concern. It also drafts the position papers in which we publicly express our members’ views.

brunner@eusipa.org

arbter@eusipa.org

brandau@eusipa.org

myhrberg@eusipa.org

blotta@eusipa.org

soubigou@eusipa.org

## Principles

It is our conviction that harmonisation of the EU internal markets should take place under a self-regulatory approach wherever possible. Therefore we have established a set of principles for the issuance and marketing of Structured Investment Products to retail investors in Europe. The aim of these principles is to make the governance standards in our business transparent for international investors and to give guidelines for the national associations.

Please click on the following link to access the document:

## Principles Committee

- Frank Weingarts
weingarts@eusipa.org

- Lars Brandau
brandau@eusipa.org

- Daniel Haeberli
heaberli@eusipa.org