Societe Generale introduces new Daily Leverage Certificates in Asia

Fixed leverage up to 7 times to meet investor demand for higher leverage products

Societe Generale today announces the launch of six Daily Leverage Certificates (DLCs) to be listed on the Singapore Exchange (SGX) with the highest leverage level to date in the Singapore market.

The new products include Long and Short DLCs offering a fixed leverage of up to seven-times the daily returns of three underlying indices [1] : MSCI Singapore, Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI). This adds to the existing range of DLCs listed by Societe Generale offering three- and five-times daily leverage on the same indices.

These products were introduced on the back of an increasing retail investor demand with about S$14 million of average daily turnover [2] of the first batch of 10 DLCs launched by Societe Generale in Singapore six months ago, vis-à-vis the S$58 million of average daily turnover of all structured warrants traded on SGX in the full year of 2017. Currently, the 10 DLCs are still the only ones available on SGX and in Asia.

Designed for sophisticated retail investors [3] who have strong market knowledge, DLCs amplify market moves, be they up or down, over the short-term. The seven-times DLCs operate with a 10% air bag mechanism [4] which protects investors in extreme market conditions, thus limiting the risk of capital loss to the initial investment. They will officially commence trading on the SGX on 24 January 2018.

Keith Chan, Head of Cross Asset Listed Distribution at Societe Generale’s Global Markets in Asia Pacific, said: “DLCs are proving to be an effective investment vehicle of growing popularity for investors looking to capture short term market opportunities. Societe Generale is expanding its DLC product range in Singapore together with the SGX to further meet the growing demand we’ve seen from Asia.”

Key to the demand is the transparency and flexibility of DLC products and the fact that Societe Generale offers quality liquidity with consistency, as well as the commitment to investor education, thus further boosting investors’ confidence in trading DLCs.

Keith added: “We are encouraged to hear the positive feedback on our market-making quality especially the tight bid-ask spread we have maintained, from traders who have been trading our DLCs since the launch.”

Luuk Strijers, Head of Products, Equities and Fixed Income, SGX, said, “SGX is pleased that Societe Generale is expanding its DLCs offering in Singapore, after its inaugural launch six months ago. DLCs remain one of the fastest growing type of listed structured products in Europe since 2012, and we are delighted to offer this product to investors in Singapore, where market interest for listed structured products continues to grow.”

In 2017, Societe Generale celebrated over 30 years of expertise in derivatives. In Hong Kong, Societe Generale has developed a strong warrant franchise since 1996. Societe Generale was the first DLC issuer in Asia with an introduction of 10 long and short DLCs with daily leverage of 3x and 5x in Singapore in July 2017, bringing to the region its leading market making and product manufacturing expertise originated from Europe. It has currently more than 600 DLC products listed across nine countries in Europe covering multiple asset classes including major indices, single stocks, foreign exchanges and commodities.

[1] The underlying indices are respectively the Net Total Return version for Long DLCs and the Total Return version for Short DLCs. The term sheets with full details of the products, including the associated risk factors, are available on dlc.socgen.com
[2] Source: Bloomberg, from 17 July to end December 2017
[3] Investors who are eligible to invest in Specified Investment Products (SIPs) as defined by the Monetary Authority of Singapore (MAS) 
[4] Refer to Appendix for details