Digital Capital Protection Certificate

What is a Digital Capital Protection Certificate?

Digital Capital Protection Certificates are financial instruments that allow investments in an underlying financial asset such as a share, a stock index, a currency, a commodity or an interest rate. One of the characteristics of this type of instrument is the possibility for the investor to receive a periodic income, determined at the time it is issued, in addition to the protection of all or part of the principal sum at maturity.

Who are Digital Capital Protection Certificates suitable for?

This type of Certificate (long version) is suitable for investors who have bullish or relative stability expectations of the value of the underlying asset. It is a suitable investment for those who have a propensity for low risk wanting to protect the capital completely as the investor may benefit by protecting the capital while at the same time receiving a periodic income when certain conditions are met.

Investment with capital protection that offers a regular income if certain conditions are met

Listing and trading of Digital Capital Protection Certificate

Digital Capital Protection Certificates are financial instruments that can be bought or sold, in Italy, on SeDeX or EuroTLX, Multilateral Trading Facilities of the Italian Exchange. Methods and trading hours of such multilateral trading facilities are specified in the relevant Rule books, available on the website of the Italian Exchange. For example, trading in the continuous phase may take place on the open market days from 9:05am to 5:30pm on SeDeX and from 9:00am to 5:30pm on EuroTLX.

Features of Digital Capital Protection Certificates

UNDERLYING: a share, share index currency, commodity or any other financial asset upon which the value of the Certificate is dependant;
INITIAL EVALUATION VALUE or STRIKE PRICE: the initial evaluation price of the underlying asset on the date fixed at the time the Certificate is issued;
MATURITY: the date on which the Certificate ceases to exist or 'matures';
ISSUER: the financial institution issuing the Certificate;
MINIMUM LOT: the minimum number of Certificates that can be bought and sold;
ISIN: the alphanumeric code that uniquely identifies the financial instrument;
DIGITAL AMOUNT: a premium paid determined at the time of issue which is paid to the certificate holder on the occurrence of a digital event;
DIGITAL LEVEL: the level established at the time of issue determining a digital event.

Operation and pay-off of a Digital Capital Protection

The Long version of a Digital Capital Protection Certificate, provides the investor with the opportunity to receive a regular predetermined income. This remuneration is called a Digital Amount and is paid at the occurrence of a digital event. It occurs when the reference value of the underlying asset, during the respective digital evaluation periods, is at or above the Digital level. At maturity, there are two possible scenarios the investor holding the Digital Capital Protection Certificate may encounter:

If the value of the underlying financial asset is quoted at a level equal to or higher than the initial evaluation, he receives the return of the issue price of the Certificate plus the last Digital Amount determined at the time the instrument was issued;
If the value of the underlying financial asset is quoted to a level below that of initial evaluation he receives only the issue price of the Certificate.

Example of how they work.

Assuming a Digital Capital Protection Certificate having as its underlying asset the Euro/USD exchange rate with the following characteristics:

Maturity	3 years
Issue Price	100 Eur
Initial Evaluation Date	21/07/2014
Initial Reference Value	1,35
Intermediate Evaluation Date	21/07/2015 – 21/07/2016
Final Evaluation Date	21/07/2017
Digital amount	5€

Below are some possible scenarios that an investor may encounter throughout the life of a Digital Capital Protection Certificate:

First Digital valuation Date, July 21, 2015:
- The Euro/USD exchange rate is quoted at a level equal to or higher than the initial evaluation (e.g. 1,3670). In this case, the digital event condition has occurred. The investor will then receive a digital amount of 5 euro for each Certificate held;
- The Euro/USD exchange rate is quoted at a level below that of the initial evaluation (e.g. 1,34). In this case, the digital event condition has not occurred. The investor does not receive the amount of digital.
Second Digital valuation Date, July 21, 2016:
Final maturity July 21, 2017:
- The Euro/USD exchange rate is quoted at a level equal to or higher than the initial evaluation (e.g. 1,37). In this case the digital event condition has occurred and the investor receives the digital amount and the issue price of the Certificate. In total, the settlement value paid to the investor is 105 euros for each Certificate held;
- The Euro/USD exchange rate is quoted at a level below that of the initial evaluation (e.g. 1,3480). In this case the digital event condition has not occurred and the investor does not receive the digital amount. The settlement price is equal to the issue price (100 euro), given that the protection is equal to 100% of the issue price.

Graph showing Digital Capital Protection Certificate pay-off

For further information on the terms you can consult the appropriate section GLOSSARY

In order to have access to the documentation and the information included herein relating to the financial instruments (the "Securities"), please represent, warrant and accept without reserve or exception the entire Terms of Use and confirm what follows.

The offer of the Securities (the "Offer") is made to the general public in a specific jurisdiction and any offer, solicitation of an offer, distribution of marketing material relating to the Securities will not be made in the United States of America, Canada, Australia, Japan or any other country where such acts are forbidden without specific exemptions or authorizations from the relevant competent authorities (the "Other Countries").

No Offer may be made in the United States of America, or to any citizen, resident, taxable person in the United States of America ("U.S. Person" or "United States Person" within the meaning of U.S. Securities Laws or other relevant local regulations, a US Person) and no distribution of any documents relating to the Offer may be made in the United States of America. The Securities have not been and will not be registered nor under the United States Securities Act of 1993, as from time to time amended, neither under any financial rules applicable in the United States of America. Neither the Securities and Exchange Commission ("SEC") nor any other supervisory authorities in the United States of America has approved or has not approved the issuance and/or the Offer of the Securities or has taken any position as to the accuracy or inaccuracy of the Prospectus and/or the Final Terms/Condizioni Definitive of the Securities. According to the provisions of the United States Commodity Exchange Act, trading in the Securities has not been approved by the United States Commodity Futures Trading Commission ("CFTC").

The Securities have not been and will not be registered under the existing Securities rules applicable in Canada, Japan, Australia or in the Other Countries, and therefore they may not be, directly or indirectly, offered, sold or otherwise delivered in Canada, Japan, Australia and in the Other Countries or to any citizen, resident, taxable person in Canada, Japan, Australia and the Other Countries and the documentation relating to the Offer may not be distributed in Canada, Japan, Australia and the Other Countries. In any event no person, being US Person under the US Securities Laws or under any other local applicable rule or resident in Canada, Japan, Australia and the Other Countries, may join the Offer.
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I hereby declare that I have read and fully understood and that I agree to comply with the above selling restrictions and undertake not to transmit, directly or indirectly, any document relating to the Offer of the Securities in the United States of America, Canada, Australia, Japan or in the Other Countries.

WARNING: the above declarations constitute self-certification pursuant to Decree by the President of the Republic No. 445 of 28 December 2000, as subsequently amended. False declarations are punishable by law.

I hereby declare that I am not an US Person nor a citizen, a resident or a taxable person of the United States of America or Canada, Australia, Japan or of the Other Countries, nor will I purchase on behalf of or for the benefit of one or more of such persons and I will be responsible for any consequences of such declaration. I hereby further declare that I am not physically present in the United States of America or Canada, Australia, Japan or in the Other Countries.

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