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Exchange Traded Products Trading ETFs and structured products in a liquid and transparent way <ul><li>JANUARY 2011 </li></...
<ul><li>What are Exchange Traded Products? </li></ul><ul><ul><li>SG – offering ETP for 20 years  </li></ul></ul><ul><ul><l...
What are Exchange Traded Products?
<ul><li>A diversified range of products available on Stock Exchanges around the world </li></ul><ul><ul><li>Ease of access...
<ul><li>A diverse and innovative range of investments… </li></ul><ul><ul><li>Three different product categories </li></ul>...
Societe Generale launched their first ETPs 20 years ago – Covered Warrants on the Paris Stock Exchange
Lyxor AM – A subsidiary of Societe Generale    Lyxor ETFs are the most traded of the major European issuers
Exchange Traded Products – A closer look
1. Replication Lyxor ETFs ETNs Range Key Features A robust platform allowing easy low cost access to  benchmark equity, bo...
1. Comparing ETFs & ETNs to other passive investments
1. Replication – Example – MSCI Japan ETN <ul><li>The Japanese Yen is currently very strong against the British Pound, wit...
1. Replication  –  The full SG ETN Range <ul><li>Intraday on-exchange liquidity </li></ul><ul><li>Trading in GBP, EUR or U...
2. Investment Strategies – Yield Enhancement Protection Level Indicative information as of  08 th  Novùeber 2010 Source So...
2. Investment Strategies – Yield Enhancement <ul><li>“ Autocall” </li></ul><ul><li>High Target Annual Return  provided the...
2. Investment Strategies – Yield Enhancement <ul><li>“ Autocall Series I  –  5 Year FTSE 100 Planned Exit Securities” </li...
2. Investment Strategies – Yield Enhancement <ul><ul><li>Autocalls  are available to purchase in the secondary market </li...
2. Investment Strategies – Participation – PASSIVE PLUS <ul><li>“ FTSE - Accelerated Growth” </li></ul><ul><li>SG91 – 3 Ye...
“ Gold – Accelerated Growth” <ul><li>18 month securities traded on LSE </li></ul><ul><li>Available in USD or GBP with a cu...
3. Leverage – Covered Warrants Single Stocks FTSE 100 Stocks  (55 underlyings) Indices Commodities Foreign Exchange <ul><l...
<ul><li>Turbos offer an alternative way to obtain gearing, with the maximum loss limited to the initial investment. </li><...
Trading and regulatory aspects
How Listed Products trade: <ul><li>Listing requirements: </li></ul><ul><ul><li>Market supervision </li></ul></ul><ul><ul><...
Technical and regulatory information: LSE in GBP, EUR or USD SGA Netherlands Antilles SG Effekten Objectives / Pay-offs Cl...
<ul><li>Client-driven range of flexible and dynamic solutions </li></ul><ul><li>Regular new issues based on wealth manager...
Important Information: This document is issued in the UK by the London Branch of Société Générale. Société Générale is a F...
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Lyxor

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Transcript of "Lyxor"

  1. 1. Exchange Traded Products Trading ETFs and structured products in a liquid and transparent way <ul><li>JANUARY 2011 </li></ul>For Professional Customers only Exchange Traded Products 0207 762 5111 [email_address] Bloomberg: SGLP <GO> Reuters: SGLP www.sglistedproducts.com This document is not intended for use by or targeted at retail customers. Should a retail customer obtain a copy of this document they should not base their investment decisions solely on the basis of this document but must seek independent financial advice.
  2. 2. <ul><li>What are Exchange Traded Products? </li></ul><ul><ul><li>SG – offering ETP for 20 years </li></ul></ul><ul><ul><li>The Exchange Traded Product Family </li></ul></ul><ul><ul><li>Our offer in the UK </li></ul></ul><ul><li>Exchange Traded Products – A closer look </li></ul><ul><ul><li>Replication – Comparing ETFs and ETNs to other passive investments </li></ul></ul><ul><ul><li>Investment Products – Participation and Yield Enhancement </li></ul></ul><ul><ul><li>Gearing – Covered Warrants and Turbos </li></ul></ul><ul><li>Trading and regulatory aspects </li></ul><ul><ul><li>How Listed Products trade </li></ul></ul><ul><ul><li>Technical and Regulatory Background </li></ul></ul>Contents
  3. 3. What are Exchange Traded Products?
  4. 4. <ul><li>A diversified range of products available on Stock Exchanges around the world </li></ul><ul><ul><li>Ease of access for all investors </li></ul></ul><ul><ul><li>Tradable like ordinary shares (settlement and delivery) </li></ul></ul><ul><ul><li>Available through any broker dealer and bank </li></ul></ul><ul><ul><li>Over 1000 products listed in London </li></ul></ul><ul><li>Exposure to more than 350 underlyings across many asset classes </li></ul><ul><ul><li>Access to underlyings in different time zones </li></ul></ul><ul><ul><li>SG listed products tradable in several currencies </li></ul></ul><ul><li>Cost Efficient </li></ul>The SG Exchange Traded Platform A wealth of services
  5. 5. <ul><li>A diverse and innovative range of investments… </li></ul><ul><ul><li>Three different product categories </li></ul></ul><ul><ul><li>SG offer over 1,000 products listed on the LSE </li></ul></ul><ul><ul><li>All easily accessible in the secondary market </li></ul></ul><ul><ul><li>Ongoing product development and renewal </li></ul></ul>ETFs – part of the Exchange Traded Products family LISTED PRODUCTS REPLICATION INVESTMENT STRATEGIES LEVERAGE <ul><li>ETFs </li></ul><ul><li>ETNs </li></ul><ul><li>CAPITAL PROTECTION </li></ul><ul><li>GROWTH PARTICIPATION </li></ul><ul><li>YIELD ENHANCEMENT </li></ul><ul><li>COVERED WARRANTS </li></ul><ul><li>TURBOS </li></ul><ul><li>CALL & PUT SPREADS </li></ul><ul><li>TRACKERs </li></ul>
  6. 6. Societe Generale launched their first ETPs 20 years ago – Covered Warrants on the Paris Stock Exchange
  7. 7. Lyxor AM – A subsidiary of Societe Generale  Lyxor ETFs are the most traded of the major European issuers
  8. 8. Exchange Traded Products – A closer look
  9. 9. 1. Replication Lyxor ETFs ETNs Range Key Features A robust platform allowing easy low cost access to benchmark equity, bond and other indices: UK: FTSE 100, FTSE 250 and FTSE All Share Other regions & countries: Europe, USA, Brazil, South Africa, Kuwait, India, China, Japan, etc… Sectors: MSCI World & MSCI Asia ex Japan Other underlyings include: Bond indices, MSCI World, MSCI EM, E.Europe, CRB <ul><li> UCITS III Funds – rules limit concentration and counterparty risk (<10% SG Risk) </li></ul><ul><li> Easy way to diversify across a country or sector </li></ul><ul><li>Cost-efficient access to liquid underlying assets </li></ul><ul><li>Multiple market-makers </li></ul><ul><li> UK Distributor / Reporting Status* </li></ul><ul><li> Note (debt security – SG credit risk) </li></ul><ul><li> Broader range of underlying assets </li></ul><ul><li> Currency hedge available </li></ul><ul><li> Competitive Management Fees </li></ul><ul><li>Single market-maker (SG) </li></ul><ul><li>Typically CGT Eligible* </li></ul>A platform with greater flexibility, permitting more underlying assets and product features: Commodities: With/without GBP or EUR currency-hedge (“quanto”) Equity Indices: With GBP currency hedge <ul><ul><li>* More information on page 24 </li></ul></ul>
  10. 10. 1. Comparing ETFs & ETNs to other passive investments
  11. 11. 1. Replication – Example – MSCI Japan ETN <ul><li>The Japanese Yen is currently very strong against the British Pound, with one pound currently buying 129 Yen, compared to over 240 Yen in 2007*. </li></ul><ul><li>Investors in the Japanese stock market that don’t hedge their currency exposure would be negatively impacted if the Japanese Yen were to fall against the British Pound. </li></ul><ul><li>The ETN offers one-to-one exposure to the MSCI Japan Index, with a currency hedge into Pounds. The ETN is subject to the credit risk of Societe Generale. </li></ul>* Source: Bloomberg – Weekly data since 01/01/2001 Japanese Yen / British Pound Exchange Rate:
  12. 12. 1. Replication – The full SG ETN Range <ul><li>Intraday on-exchange liquidity </li></ul><ul><li>Trading in GBP, EUR or USD </li></ul><ul><li>Tight bid-offer spread </li></ul><ul><li>Low Management Fees </li></ul><ul><li>SG only market-maker </li></ul><ul><li>CGT Eligible, can be held in ISA & SIPP* </li></ul><ul><li>Investments are subject to SG Counterparty risk* </li></ul><ul><li>Invested Capital is at risk </li></ul><ul><ul><li>* More information on page 24 </li></ul></ul>
  13. 13. 2. Investment Strategies – Yield Enhancement Protection Level Indicative information as of 08 th Novùeber 2010 Source Société Générale 100% Payoff Underlying Payoff – equals the Synthetic Level unless the Underlying is below the the Protection Level upon expiry Underlying How the pay-off at maturity depends on the performance of the Underlying: Synthetic Level <ul><li>“ Synthetic Zero” </li></ul><ul><li>High fixed return equal to the Synthetic Level provided the underlying closes above the Protection Level at expiry. </li></ul><ul><li>Otherwise, capital is at risk, with the investor receiving the price of the underlying at expiry </li></ul><ul><li>Investors bear a credit risk on the issuer </li></ul><ul><li>Example – FTSE 100 – SZ16: </li></ul><ul><ul><li>On 10 th January 2011, the price was £57.74 / £58.24 </li></ul></ul><ul><ul><li>Upon expiry: </li></ul></ul><ul><ul><ul><li>If FTSE > 3,800, payoff = £71.15 </li></ul></ul></ul><ul><ul><ul><li>If FTSE ≤ 3,800, payoff = Index Level / 100 </li></ul></ul></ul>Underlying Index Level SZ Ask Price Protection Level Synthetic Level Expiry Protection Level (% of Index Price) Potential Yield Annualised Yield FTSE 100 5,956.3 £57.70 £3,800 £7,115 20 Dec 13 - 36% + 22.2% 7.0%
  14. 14. 2. Investment Strategies – Yield Enhancement <ul><li>“ Autocall” </li></ul><ul><li>High Target Annual Return provided the Index closes above the Reference Level on one of the anniversary dates. </li></ul><ul><li>Capital is at risk, with the investor receiving the Index Performance if it closes below the Protection Level at expiry (typically 3 or 5 years). </li></ul><ul><li>Investors bear a credit risk on the issuer </li></ul><ul><li>Example – UK 10% Autocall – SG01: </li></ul><ul><ul><li>1 to 3 Year FTSE 100 Planned Exit Security </li></ul></ul><ul><ul><li>Target Annual Return = 10% </li></ul></ul><ul><ul><li>Protection Level = 3000 </li></ul></ul><ul><ul><li>Reference Level = 5000 </li></ul></ul><ul><ul><li>Expiry Date = 3 rd September 2013 </li></ul></ul>Scenario Analysis – UK 10% Autocall – SG01
  15. 15. 2. Investment Strategies – Yield Enhancement <ul><li>“ Autocall Series I – 5 Year FTSE 100 Planned Exit Securities” </li></ul><ul><ul><li>Anniversary Dates = 3 rd September each year </li></ul></ul><ul><ul><li>Expiry Date = 3 rd September 2015 </li></ul></ul>
  16. 16. 2. Investment Strategies – Yield Enhancement <ul><ul><li>Autocalls are available to purchase in the secondary market </li></ul></ul><ul><ul><li>Real-time bid/ask prices are fed to the LSE – and are visible online </li></ul></ul>Indicative information based on closing levels on 10 th January 2010 (Source Bloomberg) “ Autocall – Secondary market prices”
  17. 17. 2. Investment Strategies – Participation – PASSIVE PLUS <ul><li>“ FTSE - Accelerated Growth” </li></ul><ul><li>SG91 – 3 Year FTSE 100 Accelerated Growth product </li></ul><ul><li>Provides a return at maturity equal to 3x the growth of the FTSE 100 above 5700, up to a maximum return of 48.96% . </li></ul><ul><li>If the Index is below 5700 after 3 years, capital is at risk, and the return equals the fall in the FTSE 100 below 5700. </li></ul><ul><li>Potential to significantly outperform moderate growth in UK equities. </li></ul><ul><li>Capital at risk – no downside protection </li></ul><ul><li>Assuming 2% pa net dividends, the product outperforms the FTSE 100 Index if it is between 5814 and 8148 after 3 years. </li></ul><ul><li>Investors bear a credit risk on the issuer </li></ul><ul><li>Intra-day liquidity with a 1% bid-ask spread </li></ul>Payout at Maturity – SG91 – FTSE Accelerated Growth <ul><ul><li>Assumes the product is purchased at 100% on Issue Date and a starting level of the FTSE 100 of 5700. </li></ul></ul>
  18. 18. “ Gold – Accelerated Growth” <ul><li>18 month securities traded on LSE </li></ul><ul><li>Available in USD or GBP with a currency hedge </li></ul><ul><li>200% participation in the growth of Gold up to a cap </li></ul><ul><li>Maximum return of 30% (SG89 USD) or 28% (SG90 GBP) </li></ul><ul><li>Capital at risk – no downside protection </li></ul><ul><li>Investors face the credit risk of SG </li></ul><ul><li>Launch Date – 12 th October 2010 </li></ul><ul><li>Expiration Date – 5 th April 2012 </li></ul><ul><li>CGT Eligible* </li></ul>2. Investment Strategies – Participation – PASSIVE PLUS *The tax statement is only a general guide. The tax treatment of investments will depend on an individual’s circumstances. If investors are in any doubt as to their tax position, they must consult with an appropriate professional tax adviser. This statement of the UK tax treatment of the product is based on our understanding of the laws and practice in force as of the date of this document and is subject to any changes in law and the interpretation and application thereof, which changes could be made with retroactive effect. For full details of the product, please refer to the SG listed products website
  19. 19. 3. Leverage – Covered Warrants Single Stocks FTSE 100 Stocks (55 underlyings) Indices Commodities Foreign Exchange <ul><li>These geared products offer leveraged exposure to the underlying asset above (Calls) or below (Puts) the specified Strike Price </li></ul><ul><li>The value of puts and calls depends on many factors, not just the underlying asset. </li></ul><ul><li>Calls and Puts issued by SG with a listing on the London Stock Exchange </li></ul><ul><ul><li>Rapid issue process (5 business days) </li></ul></ul><ul><ul><li>Full support for Investment Managers with pricings, simulations of outcomes and factsheets. </li></ul></ul>US Stocks (3 underlyings)
  20. 20. <ul><li>Turbos offer an alternative way to obtain gearing, with the maximum loss limited to the initial investment. </li></ul><ul><li>Can be easier to use than calls and puts because the value prior to maturity is less affected by time to maturity or changes in the volatility of the underlying asset: </li></ul><ul><ul><li>Negligible theta impact (time decay) </li></ul></ul><ul><ul><li>Negligible vega impact (volatility) </li></ul></ul><ul><li>Can be held in UCITS III funds or SIPPs. Typically CGT eligible* </li></ul><ul><li>Listings in GBP, USD, EUR </li></ul><ul><li>Potentially suitable for: </li></ul><ul><ul><li>Hedging strategies and straightforward geared exposure </li></ul></ul><ul><ul><li>Intraday trading thanks to the tight bid-offer spreads </li></ul></ul>3. Leverage – Turbos Source: Reuters Past performance is not an indicator of future performance <ul><ul><li>* More information provided on page 24 </li></ul></ul>Chart illustrating the performance of a Short Turbo (red curve in GBP – right-hand side scale) compared to the Performance of the FTSE 100 Index (black line - left-hand side scale)
  21. 21. Trading and regulatory aspects
  22. 22. How Listed Products trade: <ul><li>Listing requirements: </li></ul><ul><ul><li>Market supervision </li></ul></ul><ul><ul><li>Transparency </li></ul></ul><ul><ul><li>Standard T+3 CREST Settlement </li></ul></ul>Issue process (5 business days) Execution-only / Advisory Stockbrokers Discretionary Managers RETAIL CLIENTS Private Wealth Managers Asset Managers Market scenarios Ease of access, trading, settlement and follow-up TRADE Bid Offer 750,000 0.133 0.135 750,000 0.14 2,000 SQ34 in the order-book of the LSE via the Winner system
  23. 23. Technical and regulatory information: LSE in GBP, EUR or USD SGA Netherlands Antilles SG Effekten Objectives / Pay-offs Closed-end strategies Open-end Notes Range Issue process 5 business days issue process for the listing, diversity of underlyings More than 1,000 products - Covered Warrants and Turbos - Investment Strategies ETNs on Indices and Commodities Underlyings Equities, Indices, Commodities, FX Full flexibility in terms of pay-offs and/or combination of pay-offs / underlyings Equities, Indices, Commodities, FX Full flexibility in terms of combination of underlyings Listing Tax Treatment <ul><ul><li>CGT eligible* (option wrapper) </li></ul></ul><ul><ul><li>SIPPs and SASS eligible * </li></ul></ul><ul><ul><li>UCITS III eligible </li></ul></ul>ISSUER Guarantor SOCIETE GENERALE * <ul><ul><li>* Please see important information on page 24 </li></ul></ul><ul><ul><li>CGT eligible* (Excluded Index Security) </li></ul></ul><ul><ul><li>SIPPs and SASS eligible * </li></ul></ul><ul><ul><li>UCITS III eligible </li></ul></ul>Financial Services Compensation Scheme Not available
  24. 24. <ul><li>Client-driven range of flexible and dynamic solutions </li></ul><ul><li>Regular new issues based on wealth managers requests and market conditions </li></ul><ul><li>Low minimum size </li></ul><ul><li>Liquidity offered by Société Générale as a market maker </li></ul><ul><li>Dedicated services (marketing supports, factsheets and hotline) </li></ul><ul><ul><li>www.sglistedproducts.co.uk </li></ul></ul><ul><ul><li>www.sgturbos.co.uk </li></ul></ul><ul><ul><li>www.lyxoretf.co.uk </li></ul></ul>SG Listed Products – A wealth of services Listed Products Team 0207 762 5111 [email_address] www.sglistedproducts.com Trading Lines 0207 588 7109
  25. 25. Important Information: This document is issued in the UK by the London Branch of Société Générale. Société Générale is a French credit institution (bank) authorized by the Autorité de Contrôle Prudentiel (the French Prudential Control Authority). Société Générale is subject to limited regulation by the Financial Services Authority in the UK. Details of the extent of our regulation by the Financial Services Authority are available from us on request.   Although information contained herein is from sources believed to be reliable, Société Générale makes no representation or warranty regarding the accuracy of any information. Any reproduction, disclosure or dissemination of these materials is prohibited.   The product described within this document is not suitable for everyone. Investors' capital is at risk. Investors should not deal in this product unless they understand its nature and the extent of their exposure to risk. The value of the product can go down as well as up and can be subject to volatility due to factors such as price changes in the underlying instrument and interest rates.   Prior to any investment in this product, you should make your own appraisal of the risks from a financial, legal and tax perspective, without relying exclusively on the information provided by us, both in this document and the Pricing Supplement of the product available on the website www.sglistedproducts.co.uk. We recommend that you consult your own independent professional advisors. Investors should note that holdings in this product will not be covered by the provisions of the Financial Services Compensation Scheme, nor by any similar scheme in Curacao. The securities can be neither offered nor transferred in the United States. The tax statement is only a general guide. The tax treatment of investments will depend on an individual’s circumstances. If investors are in any doubt as to their tax position, they must consult with an appropriate professional tax adviser. This statement of the UK tax treatment of the product is based on our understanding of the laws and practice in force as of the date of this document and is subject to any changes in law and the interpretation and application thereof, which changes could be made with retroactive effect. Lyxor and Lyxor ETFs are names used by Société Générale to promote the products of Lyxor Asset Management All gains on the sale of Lyxor ETFs shares and dividend distributions made by Lyxor ETFs may be subject to tax on the basis of applicable tax regulations. Investors must seek their own Tax advice for any further information. The ETF maybe denominated in a currency different to that of the index that it tracks, which means that exchange rate fluctuations could have a negative effect on returns. ETF Trading Currency refers to the currency or currencies in which the ETF can be traded on the London Stock Exchange. Underlying Index Currency refers to the currency of the index tracked by the ETF. Through Lyxor ETFs, investors are exposed to counterparty risks resulting from the use of an OTC (Over-the-Counter) Swap with Société Générale. In-line with UCITS guidelines, the exposure to the Swap Counterparty, Société Générale, cannot exceed 10% of the total fund assets. It is recommended that potential investors study the Prospectus before investing. This document is not aimed at persons who reside in the United States, Canada or any province or territory thereof, where the funds are not authorised or registered for distribution and where no prospectus for the funds has been filed with any regulatory authority. The complete prospectuses for all LSE-listed Lyxor ETFs are available online and can be downloaded from www.lyxoretf.co.uk For more information: see the Terms and Conditions available on our website www.sglistedproducts.co.uk
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