Benchmark Certificate

Who are these Benchmark Certificates for?

This type of Certificate is for investors with a significant risk appetite as the investment is subject to the potential loss of the entire capital invested. The Benchmark Certificate, in fact, aims to reflect the performance of the underlying asset without limits (upwards and downwards) and, when the Annual Management Fee is applied, is subject to a fee charged to the investor.

Financial instruments that reflect the performance of underlying assets

Listing and trading of Benchmark Certificates

The Benchmark Certificates are financial instruments that, in Italy, can be bought and sold both on SeDeX and EuroTLX, Multilateral Trading Facilities of the Italian Stock Exchange. Trading methods and hours of such multilateral trading facilities are specified in the relevant rule books, available on the website of the Italian Stock Exchange. For example, trading in the continuous phase may take place on the open market days, from 9:05am to 5:30pm on SeDeX and from 9:00am to 5:30pm on EuroTLX.

Characteristics of Benchmark Certificates

UNDERLYING: the global or sector equity index, commodity, currency, ETF or fund whose performance the Certificate is designed to replicate;
MATURITY: the date the Certificate is paid off and ceases to exist;
ISSUER: the financial institution that issued the Certificate;
MINIMUM LOT: the minimum number of Certificates that can be bought or sold;
ISIN: the alphanumeric code that uniquely identifies the Certificate;
AMF Percentage: an annual percentage value, which is part of the formula with which the AMFₜ is calculated;
Annual Management Fee or AMFₜ: fee charged to the investor, calculated on a daily basis taking into account the AMF Percentage and expressed as an adjustment coefficient (less than 1), calculated progressively and daily during the life of the Certificate. It is applied to the value of the underlying asset and determines the actual contribution of the performance of the underlying asset to the performance of the Certificate. This coefficient is updated after the daily close of the trading market;
MULTIPLIER: the amount of underlying controlled in abstract by each Certificate.

How do Benchmark Certificates work

Benchmark Certificates are financial instruments that aim to replicate the performance of the underlying financial asset. The settlement amount for the investor is reduced by any remuneration in favour of the Issuer (Annual Management Fee or AMFₜ ). An investment in Benchmark Certificates does not benefit directly from the dividends distributed over time by the underlying financial asset and entails the waiver of such dividends, unless the underlying financial asset is a Total Return index, the performance of which benefits from the dividends distributed over time by the 'components' of the index.

Example of Benchmark Certificate operation

Assuming a Benchmark Certificate which has as underlying asset the Alfa index and with the following features:

Initial reference value of the Alfa index (day T₀)	10,000 points
Maturity	2 years
Issue Price	100 €
Annual Management Fee Percentage (AMF Percentage)	0,50%
Multiplier	0,01

At the maturity of the Certificate the value of the underlying financial asset is measured and possible scenarios for the investor are:

The final evaluation level of the Alfa index at the maturity of the Certificate will amount to 12,000 points, with a positive performance over the life of the Certificate of 20%. The AMFₜ (fee charged to the investor, calculated on a daily basis taking into account the AMF Percentage and expressed as an adjustment coefficient ) will be 0.99005654 after 2 years. The payoff value of the Certificate becomes 118.81 Eur:
12,000 x 0.01 x 1 x 0.99005654 = 118.81 Eur (+18.81% compared to the issue price)
The final evaluation level of the Alfa index at the maturity of the Certificate will amount to 8,000 points, with a negative performance over the life of the Certificate of -20%. The payoff value of the Certificate becomes 79.20 Eur.
8,000 x 0.01 x 1 x 0.99005654 = 79.20 Eur (-20.80% compared to the issue price)

Benchmark Certificate (with amf) trend simulation chart

For further information on the terms you can consult the appropriate section GLOSSARY

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