Daily Leverage Certificates (DLCs) are a form of structured financial instrument issued by banks and traded on the securities market. DLCs offer investors fixed leverage of 3 to 7 times the daily performance of the underlying index, be it a rising or falling market. The basic principle is simple – if the underlying moves by 1% from its closing price of the previous trading day, the value of the 3x DLC will move by 3%.
Leverage up to 7 times
DLCs offer fixed leverage of 3 to 7 times the daily performance of an underlying index. This means your gains could potentially be amplified – however your losses will also be enlarged.
Go Long or Short
DLCs offer the flexibility to trade both rising and falling markets over short periods of time, predominantly on an intra-day basis.
Low capital outlay and loss limited to invested amount.
No margins. No implied volatility impact. No time decay impact.
Transparent pricing due to tradability of the products on exchange. Trades with a designated market maker providing liquidity.
Daily Leverage Certificates (DLCs) are for investors who are willing to accept the risk of substantial losses up to the principal investment amount, possibly within a very short timeframe. Investors should also have sufficient understanding of the product and should possess either a high level of knowledge or sufficient trading experience to properly evaluate and assess the product structure, associated risks, valuation, costs and expected returns.
DLCS are products with features that might be more complex in nature and are only suitable for investors who possess the investment knowledge of more complex products and have a high risk tolerance. Hence, all investors need to be qualified to trade in Specified Investment Products (“SIP”) to be able to trade DLCs. Investors now have the opportunity to assess their qualifications to trade SIP or enhance their product knowledge through the SGX online portal available here. DLCs seek to achieve short-term investment results that correspond to the daily magnified performance of the underlying benchmarks.
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