Structured products: Questions and Answers
Answers to common questions about structured products
What is the primary market?
The primary market is where structured products are first made available to investors. It is similar to an Initial Public Offer (IPO), where you are able to order shares before they are publicly available. Products are issued in the primary market at a fixed price, which is called the par value.
Once the start date has passed the structured product will be available to sell on the secondary market. When you purchase a structured product it is important to remember that you are exposed to the credit risk of the issuer. If the issuer becomes insolvent, you could lose some or all of your investment.
Please note, Barclays Stockbrokers no longer offer the option to make new investments into structured products on the primary market.
Can I make investments into structured products listed on the primary market through Barclays Stockbrokers?
No. We no longer offer the option to make new investments into structured products on the primary market. If you bought such a structured product through us, it will automatically redeem at maturity. This means that we will sell the structured product and credit your Barclays Stockbrokers account with any payout you are due at the end of the term.
What is the secondary market?
Once the start date has passed the structured product will be available to sell on the secondary market in a similar way to stocks and shares. In the secondary market the unit price can go down as well as up. If you sell the product before the end of the term (before maturity), you may receive less than you invested.
At Barclays Stockbrokers structured products can be sold by placing an ‘At Best’ trade over the telephone. It should be noted that whilst some structured products provide for repayment of capital at maturity irrespective of the performance of the underlying asset, this only applies at maturity. If you hold a structured product and you sell, prior to maturity in the secondary market, the price may have gone down or up. If you sell the product before the end of the term, you may receive less than you invested.
What are the risks of investing into structured products?
When investing into structured products it is possible to lose all your initial capital. That’s even if you hold the product until maturity.
The payment of returns and the repayment of capital are dependent on the ability of the issuer to meet their obligations, i.e. to repay your initial capital and any income/return during the term. You may lose some or all of your investment.
If you decide to sell your product before maturity, you will receive the market value of the note on the sell-back date. The amount that you receive may be less than or more than the amount you originally invested.
You should note that these products may not be appropriate for you and may expose you to risks that fall outside your investment knowledge and experience. If you are at all unsure, please seek independent financial advice.
If you would like term sheets for any of our structured products or to obtain more information, please call us on 0845 601 7788*. The term sheet describes the features of the structured product and will let you know what the terms are for any products bought from our range.
Where can I find out more about a particular structured product?
What happens at the end of the term?
At the end of the term, the structured product will be redeemed. This means that we will automatically sell the structured product and credit your Barclays Stockbrokers account with any payout you are due. If you want the cash to be withdrawn from your account, simply use our online cash management service or give us the instruction over the phone on 0845 601 7788*.
How will I get my money?
It will be paid to your investment account on the redemption date or when you choose to sell the structured product.
How do I keep track of my investment?
Every six months you will receive a statement with updates on the valuation of your portfolio. The structured product you invest in will be one of the holdings listed on this valuation. You can also check the value at any time by calling us for an update on 0845 601 7788*.
Is there any income paid out?
There can be – it depends on the particular structured product. This will be detailed in the term sheet.
Is there a growth cap on my investment?
It depends on the type of structured product you invest in. Some do have a growth cap – you will be informed of this on the term sheet.
How much can I potentially lose?
Your risk with any structured product is that you could lose some or all of your original investment. The performance of the structured product depends on the underlying asset – the security or index that the product is tracking. If your structured product does not offer guaranteed repayment of capital at maturity, your investment will be at full exposure to the markets.
If I sell my structured product before the redemption date is there a penalty?
There is no specific redemption penalty. But if you sell early, you may get back less than your original investment. For this reason, you should not invest in a structured product if you are not likely to hold it for its full term.
Should I expect the returns from my investment to qualify for capital gains tax?
Returns from structured products would normally be subject to Capital Gains Tax, but UK residents have an annual exemption. You should seek taxation advice before investing. The bases and levels of taxation can change. The value to you of any particular tax treatment depends on your individual circumstances.