Glossary
Barrier
A Barrier is a pre-defined price threshold in structured products whose being touched or downward breach changes the product's payout structure. In Barrier Reverse Convertibles, for example, breaching the barrier leads to physical delivery of the underlying asset or to a corresponding loss.
At a glance
01
Barriers are typically set as a percentage of the initial price of the underlying asset, for example 60 per cent.
02
Continuous barriers apply throughout the entire term; European barriers apply only at maturity.
03
Breaching the barrier can result in significant losses.
Frequently asked questions
For most barrier products, such as Barrier Reverse Convertibles, the holder loses the conditional capital protection. At maturity, instead of the nominal amount, the holder receives the underlying asset or its equivalent at the closing price, which can result in a significant loss. The precise conditions are set out in the issuance prospectus.
Part of the topic
AMC & Structuring
