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| Option Linked Deposits |
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Flexible Investment Product
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This is a structured product involving derivatives. The investment decision is yours but you should not invest in this product unless the intermediary who sells it to you has explained to you that this product is suitable for you having regard to your financial situation, investment experience and investment objectives.
This product is only principal protected if you hold it till maturity.
Before making any investment decision, you should assess your own financial situation, investment experience, investment objectives, willingness and ability to bear risks, and understand the nature and risks of the product. If in doubt, you should seek advice from independent financial advisers.
This document does not constitute any offer, solicitation or recommendation of any investment product or service.
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Disclosure related to the deposit protection
This product is not a protected deposit and is not protected by the Deposit Protection Scheme in Hong Kong.
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| Principal guaranteed with potential investment return |
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Option Linked Deposits is a flexible investment product that is moderate but also aggressive, and is linked to currency exchange rate. It provides an opportunity to use the FX option to earn a higher potential return according to personal investment preference and outlook on the relevant currency exchange price. Even if your forecast is inaccurate, you are guaranteed to get back the principal in full.
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| Real time pricing |
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You can set the strike price according to your needs. The strike price, interest rate and the notional amount of the option contract will be fixed at the time you enter into the transaction.
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| Wide variety of choices on currencies, tenor and investment amount |
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Deposit currency can be chosen HKD, USD, AUD, NZD, GBP, CAD, EUR and JPY, while the investment amount can be as low as HKD50,000 or its equivalent in another currency. The option contract currency can be chosen from AUD, NZD, GBP, CAD, EUR and JPY and you can choose HKD or USD as its settlement currency. Also, tenor can vary from 1 week, 2 weeks, 1 month, 3 months to 6 months with various combinations, diversified investment needs can be better served.
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| Transactions can be conducted through different channels |
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Transactions can be conducted through our manned trading hotlines, Internet Banking and designated branches of Nanyang Commercial Bank. Trading hours are from 9:00am to 5:00pm (Mondays to Fridays) for our branches, and from 9:00am to 7:00pm (Mondays to Fridays) for manned trading hotlines and Internet Banking.
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| When you enter into an Option Linked Deposits transaction, you need to choose whether to invest half or all of your interest amount in buying : |
A call option on the linked currency (if you expect the linked currency exchange price to rise), or
A put option on the linked currency, (if you expect the linked currency exchange price to drop)
We will instantly agree on a strike price with you and calculate the notional amount of the option contract (expressed in the linked currency).
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| Settlement amount |
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Settlement amount at maturity = Deposit principal + Net interest amount* + Investment return**
The "Deposit principal" and "Net interest amount" will be paid in the deposit currency while the "Investment return" will be paid in the settlement currency of the option contract (i.e. HKD or USD).
| * Net interest amount |
= zero (if you have chosen to invest all the interest amount in the option contract); or |
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= half of the interest amount (if you have chosen to invest half of the interest amount in the option contract). |
** Investment return
Call option on the linked currency :
If the spot price^of the linked currency at maturity is higher than the strike price# :
Investment return = notional amount of the call option contract x (spot price - strike price)
If the spot price at maturity is lower than or equal to the strike price :
Investment return = 0
Put option on the linked currency :
If the spot price at maturity is lower than the strike price :
Investment return = notional amount of the put option contract x (strike price - spot price)
If the spot price at maturity is higher than or equal to the strike price :
Investment return = 0
^We will take the rate quoted at 2:00pm on each business day as the spot price for maturity on the same day.
#"Spot price" and "strike price" each means, if the exchange rate is quoted as the number of units of HKD or USD (as chosen by you) required to purchase one unit of the linked currency, such exchange rate or, if the exchange rate is not quoted in the above manner, 1 divided by the quoted exchange rate.
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Example
NZD/USD exchange rate is expected to strengthen
| Deposit Currency: AUD |
Deposit Principal:AUD100,000 |
| AUD Fixed Deposit Interest Rate: 1.600%p.a. |
Interest is fully invested in the call option of the linked currency |
| Linked Currency:NZD |
Notional amount of the call option contract:NZD8,875 |
| Strike Price:0.7357 (NZD/USD) |
Deposit Period: 1 month (31 days) |
| AUD/USD:0.9247 |
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Analysis of Potential Return
| NZD/USD exchange rate at maturity |
Net interest(AUD) |
Investment return(USD) |
Total amount receivable at maturity |
Annual rate of return§ |
| 0.6957 |
0 |
0 |
AUD 100,000 |
0.00% |
| 0.7157 |
0 |
0 |
AUD 100,000 |
0.00% |
| 0.7357 |
0 |
0 |
AUD 100,000 |
0.00% |
| 0.7557 |
0 |
177.50 |
AUD 100,000
USD 177.50 |
2.2291% |
| 0.7757 |
0 |
355.00 |
AUD 100,000
USD 355.00 |
4.4583% |
| 0.7957 |
0 |
532.50 |
AUD 100,000
USD 532.50 |
6.6874% |
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§Annual rate of return is based on the assumption that the investment return (USD) will be converted into AUD at the exchange rate 0.9247 at the maturity of the contract and calculated on a 360-day basis.
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Remarks:
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The above example and graph are for reference only and do not guarantee or represent the final returns of Option Linked Deposits.
The returns shown in the graph are based on the interest rate, strike price and the option contract notional amount assumed in the example.
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Risk Disclosure Statement:
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Different from ordinary deposits : This product contains some risks which do not exist in ordinary deposit products. Therefore it should not be considered as a deposit substitute.
Credit risk : This product is not backed by any collateral. If you invest in this product, you will be taking the credit risk of Nanyang Commercial Bank Limited.
Exchange rate risk : The return of this product is linked to the performance of the linked currency. You shall bear any risk of the FX option you have invested in becoming worthless at maturity, in which case there will be no investment return.
Liquidity risk : Once the transaction for this product is confirmed, no partial or full withdrawal will be allowed before maturity.
Option Risk : This product is embedded with a FX option. Option transactions involve a high degree of risk. By investing in this product, you agree to use all or half of the interest amount to buy the FX option which may expire without value at maturity.
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Customer Service Hotline : (852) 2622 2633
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Website : www.ncb.com.hk
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