Glossary
Participation Certificate
A Participation Certificate is a structured product that participates in the performance of an underlying asset, often with an adjusted participation rate. It may allow above-proportional profit participation, but generally offers no capital protection. Losses correspond to the negative underlying asset performance, potentially amplified by the participation rate.
At a glance
01
The participation rate may exceed 100 per cent, which also increases loss risk in falling markets.
02
No capital protection; a total loss is possible with a corresponding underlying asset performance.
03
Issuer Risk exists independently of market performance.
Frequently asked questions
With a participation rate of 150 per cent, the certificate gains 1.5 per cent for every one per cent rise in the underlying asset. Conversely, in falling markets it loses proportionally more than the underlying asset itself. The higher profit potential is directly coupled with a higher loss risk.
Part of the topic
AMC & Structuring
