Daily Leverage Certificates (DLCs) are financial instruments that replicate the underlying index linearly with a constant leverage effect (e.g. x3, x5 or x7), and is issued under the Structured Warrants Framework. DLCs are classified as high risk and high complexity products. Retail investors are required to be Specified Investment Products (SIPs) qualified in order to trade DLCs. 

Key Features

1) Easy to Understand

Daily Leverage Certificates (DLCs) performance can be simply calculated by

• Underlying index performance

• Leverage factor applied

• Cost & fess deducted

Unlike other instruments like Structured Warrants, DLCs track the performance of its underlying index linearly and does not change due to time, expiry of the contract, change in volatility of the underlying index etc.

2) Go Long or Go Short With Leverage

Daily Leverage Certificates (DLCs) amplifies returns, in both rising and falling markets.

3) Limited Losses

Losses incurred on DLC positions are limited to the initial capital invested.

4) Compounded Returns

DLCs are structured based on the daily performance of their underlying index, and are as such intended to be traded intraday. The price performance of the underlying index and DLC are reset at the end of each trading day. This means that the performances each day are  locked in and subsequent returns are based on what was achieved the day before. This process is referred to as compounding.

5) Air Bag Mechanism

The Air Bag mechanism is designed to slow down the rate of loss on the index during extreme market conditions. The Air Bag comes into effect at a predetermined drop in the underlying index. This level varies depending on the leverage ratio, as well as the nature of the underlying index. If this occurs, the Air Bag triggers an intraday re-set of the underlying index. The reset takes place over a period of 30mins. Following the reset, the performance of the underlying index is based on the new observed level. This is designed to reduce the impact of any subsequent fall.

The Air Bag Mechanism will reduce the impact if the index falls, but will also maintain a reduced exposure to the index in the event the index starts to rise after the Air Bag Mechanism is triggered, thereby reducing its ability to recoup losses. 

Available DLCs as of the launch on 17 July 2017

Single stock DLCs start trading from 7 November 2018