Fixed Coupon Notes

At a Glance

Fixed regular coupon payments

Potential to earn enhanced returns if the performance of the underlying financial instrument is in line with the expected view

Invest easily on digibank, with real-time pricing and the ability to customise investment ideas

What are Fixed Coupon Notes (FCNs)?FCNs are a type of equity-based structured notes that offer regular coupon payments regardless of market conditions. Investors can receive:

their principal in full (plus coupons), or

they may be obligated to buy the Least Performing Equity (or the worst performing stock) in a basket of equities, in addition to receiving the agreed-upon coupon payments.

FCNs are sophisticated investment products that carry significant risks and are not suitable for investors who do not comprehend the product or are risk averse. Additionally, FCNs are only available to accredited investors.

How do FCNs workSelection:
Investors agree with their bankers on a basket of stocks, “strike” levels, “knock-in” levels, “knock-out” levels, the "tenor" of the note and the nominal or principal amount to invest.Regular Check-ins (On Observation Dates):
On scheduled observation dates, if all stocks are at or above the knock-out level, the investment ends early and you receive your principal plus pro-rated coupons. If not, the note continues to maturity.Maturity (Final Valuation Date):
At maturity, if the Least Performing Equity (LPE) is at or above the strike price, you receive your original investment and the agreed coupon. If the LPE is below the strike price, you get shares of the worst-performing stock plus the agreed coupon. Illustrative Example of an FCN with 2 underlying shares:Let us assume an investor invests S$200,000 to purchase an FCN based on the following parameters:

Underlying

Basket of Company A and Company B

Strike level

85% of initial level

Tenor

6 months

Call (Knock-out) level

98%

Call frequency

Monthly periodic

Knock-in level

N.A.

Scenario 1: Early redemptionIf the share prices of both companies close above their knock-out price on the first observation date, a knock-out event occurs.You will receive the pro-rated coupon for the first month, and your principal.

Scenario 2: Full principal redemption and coupon payout (no knock-out event occurred)
If the share prices of both companies close below their knock-out price on every observation date, the knock-out event does not occur.On the Final Valuation Date, if both companies’ share prices are above their respective strike prices, you will receive all agreed-upon coupons, and your principal.

Scenario 3: Least Performing Equity physical settlement with full coupon payout (no knock-out event occurred)
If the share prices of both companies close below their knock-out price on every observation date, the knock-out event does not occur.On the Final Valuation Date, if the least performing stock closes below its strike price, you receive all agreed-on coupons. You will also be obligated to acquire the LPE shares at the agreed price.

Scenario 4: Full principal loss with full coupon payout (Least Performing Equity drops to zero)If the market value of the shares is zero at maturity, you receive the agreed-upon coupons, and your principal is lost.

Scenario Summary

Scenario

Is Knock-out Triggered?

Fixing price of LPE

Redemption

Yes

Above strike

Principal + Pro-rated coupon
(Early redemption)

Above strike

Principal + Coupons

Below strike

Principal converted to LPE share at strike + Coupons

Benefits of FCNs

Regular coupon payments
Investors will receive fixed coupon payments.

Potential yield enhancement
Enhanced yields may be earned if the investor’s view of the underlying equities is correct.

Tailored to the investor’s needs
An FCN can be tailored to suit the investor’s needs, based on his/her choice of parameters, such as the underlying equity, strike price, and tenor.

Varied underlying instruments
Investors have a wide selection of equity securities, exchange traded funds, and indices as the underlying equity in the FCN.

Risks of FCNs

Market risk
The investor risks receiving the worst performing stock in the basket if the stocks are below their strike price on maturity.

Potential loss of capital
The final redemption amount depends on underlying asset’s performance and could be zero. Investors could face a partial or entire loss of principal.

Issuer risk
FCNs are issued by financial institutions and investors are exposed to the credit risk of the issuer.

To understand the product-related terms, visit our Glossary.Disclaimer for Investment Products.

How to Place Your FCN OrdersInvest effortlessly in FCNs via digibank, Monday–Friday (9am–6pm SGT), except on Singapore public holidays. How to View Your Holdings and Orders Access FCN on digibankSimply login, select ‘Invest' tab, and tap on Fixed Coupon Notes.

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Fixed Coupon Notes (FCN)

Do I receive dividends from the underlying stock(s) when investing in an FCN?

No. Investing in a FCN differs from purchasing the underlying stocks directly. As such, you will not receive dividends from the underlying stock(s) during the FCN investment period.

For FCNs with a basket of underlying stocks, which stock will be used to determine the payoff at maturity?

The payoff at maturity is determined by the least-performing underlying stock, which is the stock with the lowest percentage return. If physical settlement applies, this least-performing underlying stock will be delivered.

Are there any special requirements for investing in FCNs linked to US stock(s)?

You must have submitted a valid W-8BEN Form to us before placing an order for any FCN linked to US stocks.

Eligibility Criteria

What are the eligibility criteria to subscribe to FCNs?

You need to be an “Accredited Investor” (as defined under the Securities and Futures Act of Singapore) and complete an onboarding application. For more details, please contact your Relationship Manager.

What type of account do I need to subscribe to FCNs?

You will need a Wealth Management Account to subscribe to FCNs.

What are the requirements for trading FCNs Online?

In addition to being an Accredited Investor and having a Wealth Management Account, you need to complete the Risk Suitability framework. The Risk Suitability framework can be done online or you can contact your Relationship Manager for more details.

FCN Online

What shall I do if there is no quotation from Online FCN after I submit a quotation request?

If you do not receive a quotation after submitting an Online FCN request, it typically means the parameters you have configured are currently out of market. To find an optimal outcome, we recommend adjusting your parameters progressively:

Start by setting a higher knock-out price (e.g., 100%).
Consider a higher knock-in price (e.g., 85%).
Try a higher strike price (e.g., 90%).
Alternatively, set a lower coupon rate (e.g., 5% p.a.). Once you receive a quotation, you can then progressively adjust these parameters towards your desired levels."

Will I be informed if I place an FCN order or my FCN reaches maturity?

You will receive notifications. Delivery channels, such as email and push notifications, will depend on your notification channel preferences set in digibank.

What are the trading hours for FCN Online?

You can trade online from 9:00 AM to 6:00 PM SGT (Monday to Friday, excluding Singapore public holidays).