Effective as of 28 September 2009, collateral-secured instruments («COSI») can now be listed on SIX Swiss Exchange and traded on SIX Structured Products Exchange Ltd through the deposit of appropriate collateral backing. For investors, this means: safety in the event of an issuer’s insolvency.
The financial industry has searched intently for a way to satisfy the call for a higher degree of investment security and, under the leadership of SIX Group, has developed a pathbreaking solution: collateral-secured certificates. Securities held on deposit serve as the asset pool that can be liquidated in favor of the investors should the issuer become insolvent.
The type and functionality of the securities used to back collateral-secured products must fulfill a wide range of requirements. The solution devised through the collaboration of SIX Swiss Exchange, SIX Structured Products and several issuers meets the needs of investors, exchanges and issuers, alike.
By means of collateral-secured products, investors can benefit from the flexibility and novelty of certificates while simultaneously eliminating to the greatest extent possible the default risk associated with a given issuer. These instruments are suitable for investors who desire to minimize issuer-related risk and are prepared to accept a somewhat lower yield in return for this «insurance protection». Collateral-secured certificates are designated as such by the «COSI» extension following their name. In addition, SIX Swiss Exchange has created a seal of approval for COSI products. It is intended as a means of identifying those products that are secured by collateral. It can be portrayed as a distinguishing mark on prospectuses, factsheets, advertisements, websites and the brochures of issuers who offer COSI products.
Bank Vontobel and EFG Financial Products launched the first collateral-secured instruments on 28 September 2009 already and, as such, were the pioneers of this successful segment. Since February 2012, COSI-Products with collateral providers from the UK can be listed on SIX Swiss Exchange, which marks another milestone in the internationalization of the COSI service.
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