Warrants
Warrants grant the right to buy or sell the asset at a predetermined price within or at the end of a specified period.
In contrast, options are standardized rights and not securities. Warrants, on the other hand, represent option rights in the form of a security. They are issued by banks and can have a wide variety of features (regarding term, exercise price, subscription ratio etc.), which the issuer (the bank) can determine on a case-by-case basis.
Certificates
Structured products – particularly certificates – are gaining popularity internationally. Certificates are debt securities issued by banks. The purchaser of a certificate is a creditor of the issuing institution, i.e., the bank that issues the certificate and offers the investor the opportunity to invest the capital transparently and cost-effectively. The focus is not on earning interest, but on participating in a specific return profile. Certificates represent the right to participate in the performance of an underlying investment, such as stocks, indices, currencies, commodities, zero-coupon bonds, futures, options, or other financial instruments. Depending on client needs, market expectations, risk tolerance, and investment horizon, banks use certificates to develop customized investments for their clients.
Benefits for retail investors
One of the key benefits for retail investors is that they can invest small amounts in markets that were previously reserved only for institutional investors and banks. Unlike traditional bonds, certificates are customized investment cases. The issuer determines the structure, which explains the impressive variety of different certificates available. It is advisable to review the terms of issuance before purchasing a certificate and to consult an investment advisor or the certificate’s issuer to learn about the exact composition and risk profile of the specific certificate.
