In light of the economic environment in Europe and the recent market volatility, the Securities and Futures Commission and Hong Kong Exchanges and Clearing Limited (HKEx) would like to remind investors holding uncollaterised structured products, such as derivative warrants and Callable Bull/Bear Contracts, that they should pay close attention to the financial strength and credit worthiness of structured product issuers.
Uncollateralised structured products are not asset backed. In the event that a structured product issuer becomes insolvent and defaults on its listed securities, investors will be considered as unsecured creditors and will have no preferential claims to any assets held by the issuer.
Investors should ensure that they understand the nature of structured products and study the risk factors set out in the listing documents and, where necessary, seek professional advice before making investments in structured products.
Disclosure of issuers’ credit risk and credit worthiness can be found in issuers’ listing documents posted on the HKExnews website.
Credit ratings of issuers are available on the HKEx website under the section Products and Services and the headings Securities Products, Derivative Warrants, Issuers Credit Rating.
If an issuer suffers a credit downgrade, it will be required to publish an announcement on the HKExnews website.
For further information on risks associated with structured products, please visit the HKEx website section Products and Services and see the headings Securities Products, Understanding Risks of Securities Traded on the Exchange, Understanding Risks of Structured Products.
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