Structured Products

There needs to be a good reason to buy a structured product, in preference to vanilla products that may well provide an effective hedge for your exposure.

The general principle is –  “if it is not easy to price, then it may offer you poor value for your money, and hidden risks” –  It is vitally important that you understand how the product is constructed.

Dual-Currency Deposits are a popular product for companies with multi-currency cash flows. Make sure you are getting a fair return. You are selling a call option on the currency that you have deposited. That’s why the deposit-taker is able to pay you an above-market interest rate.

Don’t assume that you can reduce your hedging costs by buying complex products with additional leverage and barriers (knock-out and knock-in) These features are often to be found in “zero-cost” structures. You may end up with a nasty surprise if you don’t fully understand the consequences of these deals.

We can break all of these non-vanilla products into their constituent parts and analyse the risk/reward, and carefully explain it to you. This will ensure you are well placed to make an informed decision on the suitability of the product for your needs.

Don’t ask your Bank contact to do this for you – you may not get impartial advice.