About discount certificates
Discount certificates offer investors the opportunity to invest in an underlying instrument – such as an equity or an index – at a reduced entry price. In return for the discount that investors receive on entry, they accept a limit on the maximum potential return from the underlying instrument.
The discount certificate, therefore, only benefits from an upward price movement of the underlying instrument up to a pre-defined ceiling, or cap. If the underlying is trading above the cap on the certificate’s maturity, the investor will receive the equivalent value of the cap, but if the underlying is quoted at or below the cap at maturity, the investor will either receive a payout at the market price of the underlying instrument or the underlying instrument will be credited to the investor’s securities account.