Based on the Framework Agreement, the collateral provider undertakes to grant SIX Swiss Exchange a right of lien on selected securities. The COSI® and the collateral itself are valued on each banking day. The collateral provider is obliged to adjust the amount of collateralization in the event of any changes in market value. If during the term of the COSI® product, a contractually defined liquidation event occurs (e.g. in the event of insolvency of the issuer), SIX liquidates the collaterals and takes care of the payment of investors.
The service can be illustrated as follows:
The issuer is obliged to post ongoing bid prices for the COSI® in the secondary market (market making).