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Currency Linked Deposit. gain or loss scenarios and must not be relied on as an indication of the actual performance of the Currency Pair or the CLD. Example. Ref: B1/15C. G16/1C. 18 April Important Facts Statement (IFS) for Currency-Linked Instruments and. by the Deposit Protection Scheme in Hong Kong.


Risks relating to Renminbi – If the Deposit Currency or Linked Currency of a Currency Linked Deposit is CNH*, For example, the PRC government.

In financea dual currency deposit DCDalso known as Dual Currency Instrument or Dual Currency Product is a derivative instrument which combines a money market deposit with a currency option to provide a higher yield than that available for a standard deposit.

There is a higher risk than with the latter - the depositor can receive less funds than originally deposited and in a different currency. If an investor has a view on the initial investment currency a Dual Currency strategy allows the investor to benefit from higher returns. The returns are higher than the returns on normal deposits in compensation for the higher risks that are currency linked deposit example with DCDs due to being exposed to foreign exchange.

At maturity, if the local currency is weaker than the strike rate funds will be redeemed in the local currency linked deposit example. If the client is comfortable with risk the conversion level will be closer to the current level, currency linked deposit example interest currency linked deposit example will be higher as the risk of conversion increases.

The DCD is actually composed of a normal deposit and currency linked deposit example option. Normally in the options market the seller of an option is paid before the premium value date or spot datehowever in the case of the DCD the client is paid currency linked deposit example the end of the deposit period.

Adding this to the deposit redemption-amount means that the amount of currency that will need converting if the option strike is passed at expiry has now increased.

So the option face amount needs to be altered to take the extra interest into account. This affects the premium again, and so on. To avoid having to compute this to infinity one can use a geometric series with. From Wikipedia, the free encyclopedia. This article has multiple issues. Please help improve it or discuss these issues on the talk page. Learn currency linked deposit example and when to remove these template messages. This article does not cite any sources.

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Chong Hing Bank - Currency Linked Deposit (CLD)

In Hong Will hill casino mobile, currency-linked investments are a popular kind of investment product offered to retail investors. They are usually sold by banks as "currency-linked deposits". However, you should bear in mind that a currency-linked investment product is not equivalent to a time deposit and is not covered by the Deposit Protection Scheme in Hong Kong.

Also, depending on the terms of the individual product, it may be not principal-protected. A currency-linked investment product is a structured investment product that consists of a time deposit in the currency linked deposit example currency with currency option derivatives.

In general, if you purchase a non-principal-protected currency-linked investment product, you will be selling a put option on an alternative currency ie the linked currency of your choice to the offeror eg a bank. Investing in a currency-linked investment product is therefore not the same as buying the linked currency directly. The proceeds that you will receive at the end of the tenor will depend on the exchange rate of the base currency ie currency linked deposit example deposit currency and the linked currency.

Your return on a currency-linked investment product depends on whether the currency linked deposit example exchange rate is at or above the predetermined conversion rate upon maturity. Below is an example of a currency-linked deposit with the base currency in Show me the money game Kong dollar and the linked currency in Australian dollar:. In general, there is a online blackjack live dealer card counting investment amount and a selection of available currencies offered by the offeror.

For example, at the time you set up a currency-linked deposit with the bank, you choose a base currency, a linked currency currency linked deposit example the deposit tenor. Based on your forecast of the foreign exchange movement of the linked currency that you choose, you will agree with the bank currency linked deposit example conversion rate of the linked currency against the base currency ie the predetermined conversion rate. Upon maturity of the product, you will be paid the maturity proceeds which comprise the principal and interest in either the base or linked currency, depending on the click to see more market exchange best casino bonuses usa compared with the predetermined conversion rate of the linked currency.

If the linked currency moves in the direction you expect, you will receive the maturity proceeds in the base currency. On the contrary, if it moves in the opposite direction, your maturity proceeds received will be converted to the linked currency at the predetermined conversion rate accordingly.

Given that a currency-linked investment product is not equivalent to a time deposit and is often not principal protected, you should be aware that you could lose all your money in the worst scenario.

Some common key risks specific to this investment product include:. Currency-linked investment is an unlisted structured product embedded with derivatives. It is not equivalent to time deposit. Currency-linked investment is embedded with foreign currency option which involves risks, especially when selling an option. Although the premium received from selling an option is fixed, you may suffer a loss well in excess of such premium, and your loss could currency linked deposit example substantial in extreme cases.

If the offeror of the currency-linked investment product becomes insolvent or defaults on its obligations, you will not receive any maturity payout on the maturity date. You may only claim as an unsecured creditor of the bank.

If the currency-linked investment product is not principal-protected, in the worst case, you could lose your entire investment if value of the linked currency payable by the offeror currency linked deposit example you becomes valueless on the maturity date.

Even if the currency-linked investment product is principal-protected, the principal protection feature is only applicable if you hold the product till maturity. You could still lose your entire investment if the offeror becomes insolvent or defaults. The maximum potential gain is capped at the pre-determined interest amount on the currency-linked investment product. The return of currency-linked investment depends on the exchange rate movement of the base currency against the linked currency.

The exchange rate of a currency currency linked deposit example affected do i start online casino a number of unpredictable factors including macroeconomic and political factors. For example, the government of a country may impose exchange control or other monetary. Measures with little or no warning, which may impact significantly on the convertibility and exchange rate of a currency against other currency.

Generally you cannot early terminate or adjust the transaction terms of a currency-linked investment product. Pre-investment cooling off period PICOP source applicable to each particular deal of the currency-linked investment products if you are one of the following retail customer visit web page Under the PICOP arrangement, you should be given at least 2 calendar days of which the last day should be a business day to understand the currency-linked investment, consider the appropriateness of the investment and, if necessary, consult family members and friends.

The terms of transaction will be fixed on the day when you give instruction to the bank to confirm a purchase, currency linked deposit example. Currency-linked investment products issued by banks are not authoriszed by the Securities and Futures Commission but banks selling these products are required to comply with the requirements of the Hong Kong Australia online in roulette Authority HKMAthe banks' regulator.

To enhance product disclosure to retail investors purchasing currency-linked investment products issued by banks, banks selling these products are required by the HKMA to distribute an Important Facts Statement IFS to the clients. The product offering documents, including the IFS, provide you with detailed information about the key features and risks of the product. You should read and understand the product offering documents before deciding whether to invest.

As always, you should not invest in any financial products you do not know or understand. Therefore, you should fully understand the features currency linked deposit example risks of currency-linked investment products before deciding whether to invest.

You are also advised to check out with the banks or seek independent professional advice if you are in any doubt about the product or whether it is suitable for you before making a commitment. Home Currency-linked investment products Currency-linked investment products.


Dual Currency Deposit

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Currency-Linked Deposit comprise of a Deposit amount and interest at maturity will be paid in either the Deposit Currency or Linked Illustrative Example.
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Ref: B1/15C. G16/1C. 18 April Important Facts Statement (IFS) for Currency-Linked Instruments and. by the Deposit Protection Scheme in Hong Kong.
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Ref: B1/15C. G16/1C. 18 April Important Facts Statement (IFS) for Currency-Linked Instruments and. by the Deposit Protection Scheme in Hong Kong.
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Currency Linked Deposit Example: A currency-linked deposit is considered to be different from the conventional time deposit. It is a structured investment product.
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Not a time deposit - Deposit Plus is NOT equivalent to, If the deposit currency and/or linked currency is not your home currency, (for example, the PRC.
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