Stocks
Why trade in DLCs with Us?
Clients who trade Daily Leverage Certificates ("DLCs") are able
to gain exposure to the underlying index linearly with a
constant leverage effect of up to 7 times. Clients have the
option of going long or short with the leverage.
DLCs are designed for active investors who have financial
knowledge and experience in trading leverage products and
willing to take higher risk. It is designed for sophisticated
investors who are looking for the potential to make enhanced
returns from the daily benchmark indices. All DLC investors need
to be SIP qualified with full understanding on the products in
order to trade DLCs.
How it Works
Daily Leverage Certificates ("DLCs") are financial instruments that are issued under the Structured Warrants Framework and classified as high risk and high complexity products. You can trade DLCs the same way you buy and sell shares and other securities listed on SGX-ST. Simply execute the trades through your broker. No separate account is needed for the trading of different securities. Trades are settled on the same basis as share transactions - on the third business day after the trade date.
Go Long or Go Short with Leverage of up to 7 times
Daily Leverage Certificates (DLCs) amplifies returns, in both rising and falling markets.
Daily Long
Leverage - 3X, 5X or 7X.
Returns - Rises in value as the underlying rises.
More information on
Daily Leverage Certificates
Daily Short
Leverage - 3X, 5X or 7X.
Returns - Rises in value as the underlying rises.
Risks of Trading in DLCs
Investors should consider the following risks which are applicable to trading in DLCs:
Leverage Risk
Leverage is a "double-edged" sword. In addition to
magnifying gains, DLCs can also magnify losses when the
value of the underlying index moves against the DLCs
position. For instance, a fall in the price of the
underlying index can lead to a larger percentage loss in the
value of the long DLCs.
Currency Risk
In the event that a DLC or underlying index is denominated
in a currency other than SGD, you will be subject to
exchange rate fluctuations that may have an adverse effect
on the value, price or return of the DLC.
Market Risk
Similar to other investments in the securities market, the
market value of a DLC is susceptible to events that affect
its demand and supply. Hence, the market value of your
investment will fluctuate accordingly.
Liquidity Risk
Liquidity risk occurs when a warrant holder is unable to
sell his DLCs for a reasonable price in the market. This is
due to insufficient buy orders, which affects the market
price of the DLCs.
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FAQs
How do you calculate the performance of DLCs?
Daily Leverage Certificates (DLCs) performance can be simply
calculated by
- Underlying index performance
- Leverage factor applied
- Cost & fees deducted
What are the key features of DLCs?
Limited Losses
Losses incurred on DLC positions are limited to the initial capital invested.
Compounded Returns
DLCs are structured based on the daily performance of their underlying index, and are as such intended to be traded intraday. The price performance of the underlying index and DLC are reset at the end of each trading day. This means that the performances each day are locked in and subsequent returns are based on what was achieved the day before. This process is referred to as compounding.
Air Bag Mechanism
The Air Bag mechanism is designed to slow down the rate of loss on the index during extreme market conditions. The Air Bag comes into effect at a predetermined drop in the underlying index. This level varies depending on the leverage ratio, as well as the nature of the underlying index. If this occurs, the Air Bag triggers an intraday re-set of the underlying index. The reset takes place over a period of 30mins. Following the reset, the performance of the underlying index is based on the new observed level. This is designed to reduce the impact of any subsequent fall. The Air Bag Mechanism will reduce the impact if the index falls, but will also maintain a reduced exposure to the index in the event the index starts to rise after the Air Bag Mechanism is triggered, thereby reducing its ability to recoup losses.
Click here for the list of Daily Leverage Certificates (DLCs) available.
Losses incurred on DLC positions are limited to the initial capital invested.
Compounded Returns
DLCs are structured based on the daily performance of their underlying index, and are as such intended to be traded intraday. The price performance of the underlying index and DLC are reset at the end of each trading day. This means that the performances each day are locked in and subsequent returns are based on what was achieved the day before. This process is referred to as compounding.
Air Bag Mechanism
The Air Bag mechanism is designed to slow down the rate of loss on the index during extreme market conditions. The Air Bag comes into effect at a predetermined drop in the underlying index. This level varies depending on the leverage ratio, as well as the nature of the underlying index. If this occurs, the Air Bag triggers an intraday re-set of the underlying index. The reset takes place over a period of 30mins. Following the reset, the performance of the underlying index is based on the new observed level. This is designed to reduce the impact of any subsequent fall. The Air Bag Mechanism will reduce the impact if the index falls, but will also maintain a reduced exposure to the index in the event the index starts to rise after the Air Bag Mechanism is triggered, thereby reducing its ability to recoup losses.
Click here for the list of Daily Leverage Certificates (DLCs) available.
