Collateral secured certificates from Switzerland are now also tradable on Scoach, the Frankfurt exchange for structured products. The collateral deposited for these collateral secured instruments (COSI) minimizes counterparty risk for structured products. COSI enables investors to protect themselves against the possibility of issuer insolvency.
The issuer EFG Financial Products is offering COSI for the first time in Germany, exclusively on the Scoach trading platform. A total of 17 COSIs are currently tradable on Scoach in Frankfurt; the volume invested thus far amounts to €61.5 million.
For COSI, the issuer deposits collateral in the form of securities or cash at Swiss custodian SIX SIS. All depository rules of the SIX Swiss Exchange apply. The issuer has to align the value of the collateral to the certificate’s performance during its term. In the event of issuer insolvency, the collateral is sold to the benefit of the investor.
COSIs have already been traded via Scoach’s Swiss trading venue in Zurich sinceSeptember 2009. They are listed on SIX Swiss Exchange. Investors can currently choose from amongst 700 products there; volume of funds invested amounts to more than CHF 1.8 billion (€1.4 billion).
COSI serves to expand the range of secured products offered by the Frankfurt exchange Scoach. Secured certificates from DWS Go have been offered in Germany since the end of 2008, and later from Commerzbank and Morgan Stanley too. Commerzbank and Morgan Stanley deposit the collateral with Germany’s central securities depository Clearstream, a Deutsche Brse subsidiary. DWS Go offers certificates for which collateral is deposited with a trustee.
COSI has already received numerous awards. In spring 2010, the service received the “Special Award” of the Swiss Derivative Awards and just recently garnered the FOW Award for innovative solutions on the derivatives market.
D.C.