Introduction to Structured Products
Structured Products offer investors the opportunity to purchase investments with exposure to a specified underlying asset class such as a basket of shares over a period which matches with their investment strategy. Structured Products have a preset formula for calculating risk and return. In other words, you know the potential risk and return from the outset of your investment.
Primary and Secondary Market
Similar to an IPO (Initial Public Offering), there is a primary market for Structured Products where investors can invest for a period before they are made freely available to buy and sell on a secondary market bourse such as the LSE (London Stock Exchange). On the primary market investors will pay a fixed price known as the ‘par’ value. Once available on the secondary market the Structured Product is available to buy and sell much like an ordinary share and the price will rise and fall based on the value of the underlying asset class on which it is built. It will remain on the secondary market until it reaches the term period agreed from the outset and expires.
When you purchase a structured product, whether in the primary or secondary market, it is important to remember that you are exposed to the credit risk of the issuer. Interactive Investor has partnered with two of the leading providers on the market, Societe Generale and Investec, for the issue of Structured Products. If the issuer becomes insolvent, you could lose some or all of your investment. Furthermore, if you sell the product before the end of the term, you may receive less than you invested, so it is highly important to read and fully understand the risks involved before investing in this type of financial instrument.
Investing in Secondary Market Structured Products
Existing CustomersWhen providing dealing services to you that involve trading in "complex" instruments, we are committed to protecting your interests. We do this by ensuring you meet the regulatory requirements to have relevant knowledge and experience in the investment field for the course of dealing you wish to undertake. We have a standard list of questions we use to assess your investment knowledge and experience. This is called the appropriateness assessment. To complete the assessment:
- Login to your account
- Choose 'personal details and preferences' from the 'account' menu, then select the 'Appropriateness Assessment Form' link in the Account Information section
- Complete the assessment and submit your answers
- You’ll first need to open an account with us
- Then follow the actions relating to existing customers above
If you have any queries or wish to place an order for a Primary Market Structured Product call our team on 0345 607 6001