What is a Constant Leverage Certificate?

Constant Leverage Certificates are financial instruments without capital protectionThe term protection means the minimum percentage of invested capital that is returned at maturity. that offer the opportunity to invest with the aim of replicating the performanceThe performance of a financial instrument indicates the percentage change in the value of the same in a given time frame. Performance can be expressed both in absolute and relative terms. of a Leverage Index managed by an index administrator, i.e. a third party other than the IssuerThe issuer is the entity that issues financial instruments in order to raise finance. The most common issuers of financial instruments tend to be: Public and private companies, the State or transnational organizations. and from the latter independent. The Leverage Index in turn amplifies the daily performanceThe performance of a financial instrument indicates the percentage change in the value of the same in a given time frame. Performance can be expressed both in absolute and relative terms.¹ of a Reference Asset (such as, for example, a stock index, a share, a commodityThe term commodity essentially indicates a basic good such as, for example, metals, minerals, agriculture and livestock and other physical assets, on which investors can trade through the use of derivatives. or its related future contract) by applying the Constant Leverage, with an upward (Long Leverage Indices) or downward (Short Leverage Indices) strategy.
Constant Leverage Certificates provide for a fee charged to the investor called Variable Management Fee or VMF_t which is calculated by applying a predetermined formula that takes into account the AMF Percentage and the VMF Percentage and that implies a decrease of the settlement amount reserved to the investor. Being calculated progressively and daily, it affects the market value of the CertificateCertificates are securitized instrument derivatives linked to the performance of an Underlying, whether, for example, shares, a stock index, a currency, a commodity or an interest rate. Certificate are traded, in Italy, both on the SeDeX as well as on the EuroTL X multilateral trading facilities of the Italian Exchange. throughout its entire life.
Such Certificates are designed for shortWhen a financial instrument is sold a short position (or short) is open. and very shortWhen a financial instrument is sold a short position (or short) is open.-term transactions, including intra-day transactions.


1 With the exception of the occurrence of an intra-day reset which may cause a significant misalignment between the performanceThe performance of a financial instrument indicates the percentage change in the value of the same in a given time frame. Performance can be expressed both in absolute and relative terms. of the Leverage Index and the performanceThe performance of a financial instrument indicates the percentage change in the value of the same in a given time frame. Performance can be expressed both in absolute and relative terms. of the Reference Asset multiplied by the Constant Leverage.