Maybank - DLC

Why trade in DLCs with Us?

Clients who trade Daily Leverage Certificates ("DLCs") are able to gain exposure to the underlying asset with a fixed leverage of up to 7 times. Clients have the option of going long or short with the leverage.

DLCs are designed for active investors who have financial knowledge and experience in trading leverage products and willing to take higher risk. It is designed for sophisticated investors who are looking for the potential to make enhanced returns from the underlying assets. All DLC investors need to be SIP qualified with full understanding on the products in order to trade DLCs.

How it Works

Daily Leverage Certificates ("DLCs") are financial instruments that are issued under the Structured Warrants Framework and classified as high risk and high complexity products. You can trade DLCs the same way you buy and sell shares and other securities listed on SGX-ST. Simply execute the trades through your broker. No separate account is needed for the trading of different securities. Trades are settled on the same basis as share transactions - on the third business day after the trade date.

Go Long or Go Short with Leverage of up to 7 times

Daily Leverage Certificates (DLCs) amplifies returns, in both rising and falling markets.

Daily Long

Leverage - 3X, 5X or 7X.
Returns - Rises in value as the underlying rises.

More information on Daily Leverage Certificates

Daily Short

Leverage - 3X, 5X or 7X.
Returns - Rises in value as the underlying falls.

Risks of Trading in DLCs

Investors should consider the following risks which are applicable to trading in DLCs:

Leverage Risk

Leverage is a "double-edged" sword. In addition to magnifying gains, DLCs can also magnify losses when the value of the underlying index moves against the DLCs position. For instance, a fall in the price of the underlying index can lead to a larger percentage loss in the value of the long DLCs.

Currency Risk

In the event that a DLC or underlying index is denominated in a currency other than SGD, you will be subject to exchange rate fluctuations that may have an adverse effect on the value, price or return of the DLC.

Market Risk

Similar to other investments in the securities market, the market value of a DLC is susceptible to events that affect its demand and supply. Hence, the market value of your investment will fluctuate accordingly.

Liquidity Risk

Liquidity risk occurs when a DLC holder is unable to sell his DLCs for a reasonable price in the market. This is due to insufficient buy orders, which affects the market price of the DLCs.

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FAQs

How do you calculate the performance of DLCs?

Daily Leverage Certificates (DLCs) performance can be simply calculated by

Underlying index performance
Leverage factor applied
Cost & fees deducted

DLC Performance = Underlying Index Daily Performance x Leverage Minus Costs & Fees

What are the key features of DLCs?

Limited Losses
Losses incurred on DLC positions are limited to the initial capital invested.

Compounded Returns
DLCs are structured based on the daily performance of their underlying index, and are as such intended to be traded intraday. The price performance of the underlying index and DLC are reset at the end of each trading day. This means that the performances each day are locked in and subsequent returns are based on what was achieved the day before. This process is referred to as compounding.

Airbag Mechanism
The airbag mechanism is designed to slow down the rate of loss in the value of the DLC during extreme market conditions. The airbag comes into effect at a predetermined percentage movement in the underlying asset. This level varies depending on the leverage ratio, as well as the nature of the underlying asset. If this occurs, the airbag triggers an intraday reset of the underlying asset. The reset takes place over a period of 30mins, during which trading is suspended. Following the reset, the performance of the underlying asset is based on the new observed level. This is designed to reduce the impact of any subsequent adverse price movement. The airbag mechanism will reduce the impact of any further adverse movement in the underlying asset, but will also maintain a reduced exposure to the asset in the event the price starts to move favourably after the airbag mechanism is triggered, thereby reducing its ability to recoup losses.

Click here for the list of Daily Leverage Certificates (DLCs) available.

Daily Leverage Certificates