Glossary - C

This section provides an explanation for some of the jargon used to describe structured retail products. If you would like us to add additional words then please let us know by clicking here.


This is an index of shares of the largest 40 companies by market capitalisation in France.

Call option

A call option is a type of derivative that gives the holder the right, but not obligation, to purchase a set quantity of the underlying asset at a given price (the strike price) on or before a specified date (sometimes called the exercise date). Call options therefore benefit the owner if the price of the underlying rises.

If the underlying of the option is an index then typically the option will cash settle. This means that the seller will make a cash payment to the buyer equal to the difference between the final price of the index and the strike price multiplied by the notional size of the option.

So for example, the buyer of a call option on the FTSE100 index with a strike price of 4000 would receive a payment from the seller if the final index level was higher than 4000 on the maturity of the option. If the notional size of the option was £10m then if the final index level was 4800 i.e. a 20% rise, then the seller would pay the buyer €10m x 20% = €2m. If the index was lower than 4000 at maturity then no payment would be made.

Call Overwriting

A strategy, also known as Buy-Write or Covered Call writing, which generates a return from the purchase of an underlying share or shares and the simultaneous sale of a call option or options on that same underlying.


A product that can be redeemed early by the provider.


See Callable.


Structured products provide for a minimum return irrespective of the performance of the underlying market to which the product is linked. In exchange for this protection however some products also specify a maximum return than can be paid should the market in fact rise. Such a maximum return is often called a cap and such products may be called capped.

For example a product might provide a minimum return of 100% of the sum invested at the end of five years plus 100% of any rise in the FTSE100 index with a cap at 60%. This means that if the index rise by 40% for example, the return from the product would be 40%. However if it rises by 75% the return from the product would be capped at 60%.

Capital Protected

A capital protected type of structured product is one that provides for a minimum return at maturity at least equal to the original sum invested.

It should be noted though that such products only provide this minimum return if the product provider itself, or the underlying asset(s) that is purchased to provide the return, does not default.

Capital Return at Maturity

The actual final return generated by the product at maturity.

Capped Call

A return based on a fixed participation in the rise of an underlying market that is capped at a fixed return

Capped Call/Put

A return based on the rise (call) or absolute value of the fall (put) of an underlying, subject to a maximum capital return (cap).

Capped Put

A return based on a fixed participation in the absolute value of the fall of an underlying market that is capped at a fixed return


A return based on the assets of an underlying basket. Usually, an asset is considered to have a fixed growth if it hasn't fallen. Otherwise, the fall is recorded. Other structures are based on a pre-determined number of top-performing assets to be given a fixed growth, while the remainder assets are recorded at their performance, positive or negative. These products are also commonly referred to as "Fixed Upside" products.

Cash ISA

An ISA is an Individual Savings Account and is a type of tax-free savings product offered in the UK. A Cash ISA is essentially a deposit with a bank or building society that does not attract tax. Individuals can only invest a limited amount each year in a Cash ISA, currently €3000.


This signifies whether a product is an Offshore, (Domestic) Retail, Institutional or Private Banking offering.


Certificate of Deposit. Type of debt instrument offered by US banks. CDs are FDIC-insured (US federal corporation that insures bank deposits up to $100,000 per Social Security number).


A capitalisation-weighted index of blue chips in Hungary, Poland and the Czech Republic.


Certificate (in Spanish)

Certificado Bursátil

Securitized-Assets wrapped in a Certificate (in Spanish). Local Wrapper in Mexico.

Certificado de Depósito Bancario

Bank Certificate of Deposit (in Spanish). Local Wrapper in Mexico.


Certificate (in French)


A type of security issued by a bank that provides a return linked to one or more underlying indices, prices, rates or other financial variables. Certificates are either leverage or investment products and are typically listed on exchanges with a secondary market being supported by the provider.

Certificato di deposito

Certificate of deposit


Certificate in Danish

Certyfikat depozytowy

Certificate of Deposit in Poland

Certyfikat inwestycyjny

Investment Certificate in Poland

Chránený Fond

A partially protected fund for the Czech Republic.

Click Fund

These are funds using a combination of a static bond and a call mechanism to achieve portfolio protection. The ratio of risky to non-risky assets is fixed, with a regular (usually monthly) rebalancing of the assets according to that ratio.


A cliquet is the name given to a type of structured product where the return is calculated from the performance of the underlying in a number of sub-periods during the term of the product.

For example, a five-year maturity Cliquet product linked to the FTSE100 index might offer investors a minimum return of 100% of the sum invested at the end of five year plus a bonus calculated as the sum of the individual performances of the index in each year of the five year term.

In many cases the performance of the underlying would be limited, or capped, in each sub-period. This is sometimes called a Local Cap. There may also be a limit on the size of any falls in the sub-periods that are used in the calculation of the final return. Such a limit is sometimes called a Local Floor.

If we assume that the example product described above has a local cap of 10% and a local floor of -10% then the table below illustrates how the return would be calculated.

Sometimes a Cliquet product will have a minimum return greater than 100% of the sum invested. In this case if the calculated sum of sub-period returns is less than this specified minimum return, then the minimum return is paid anyway.

Finally, some Cliquet products have no local floor i.e. any size of fall in any sub-period will be used in the calculation. Such products are sometimes called Downside Cliquets.

Close-ended Investment Company

Many structured products are offered to investors in the form of shares in a Close-ended Invested Company. Such a company is simply a corporate entity that is set up solely for the purpose of providing the specified investment return.

A Close-ended investment Company will have a limited offer period meaning that investment can only be made during a limited time period. It will also have a limited term meaning that it will be designed to be liquidated at a pre-specified date in the future in order to pay out the pre-specified return to the shareholders.

Closing index level

This is the level of the index taken at the time when the stockmarket is closing. As it is the final published level of the index and it is often used for reference purposes.


Providers of structured products typically enter into derivative contracts to ensure that they are able to generate the return that is being offered to their investors. Since the term of most structured products is many years there is a risk that the derivative counterparties may default.

To mitigate this risk in many cases the derivatives provider will post collateral in the form of cash, bonds or even shares, with a third party or custodian. The value of this collateral will be adjusted so that it is always equivalent to the cost of replacing the derivative should they go into default.

In this way the product provider knows that should his derivative counterparty default, he will have access to sufficient liquid assets, via the third party or custodian, such that they can be sold in order to purchase another derivative contract to cover the remaining term of the product.

Commercial Bank

A financial institution that focuses on corporate clients.


Commission paid on the product. This could include Independent Financial Advisers commission (paid upfront, on a trail basis or as a combination of both), underwriting commission or sales commission.


Underlying is composed of physical commodities such as energy products, metals or agricultural products

Constant Proportion Portfolio Insurance (CPPI)

Constant Proportion Portfolio Insurance (CPPI) is the name given to a trading strategy that is designed to ensure that a fixed minimum return is achieved either at all times or more typically, at a set date in the future.

Essentially the strategy involves continuously re-balancing the portfolio of investments during the term of the product between so-called risky assets (usually shares) and non-risky assets (usually bonds or cash).

As the value of the risky assets rise so more of the portfolio is placed in these assets but conversely as they fall in value, more of the portfolio is placed in the non-risky assets. By following the rules set out by the strategy the minimum return can be achieved as long as the value of the risky assets does not fall too sharply. In this case however the product provider offering such a product would rely on a guarantee or option provided by a third-party bank to ensure that the minimum return was achieved.

The key features of CPPI based capital protected products as opposed to option-based products are:

Continuous product

Continuous products (also called open-ended products) are products which have no fixed subscription period or maturity date.

Structured products that are available for investment during a limited period only are called tranche products.

Do note that "Leverage" and "Flow & Others" products are not considered as being "Tranche" or "Continuous" in our "Product Style" categorisation.

Counterparty Risk

The risk of a counterparty defaulting on a transactional obligation resulting in consequential loss to the other counterparty.


The risk of default (credit risk) associated to various companies

Credit Default

A product linked to the risk of default (credit risk) from usually a basket of companies.

Credit Rating

The Credit Rating of the provider(s) of the bond(s) underlying the product by a credit rating agency such as Moody's or Standard & Poor’s.


An US identification number assigned to each fund by the Committee on Uniform Security Identification Procedures.


Contratos de Venta de Opción. Contract on the sale of options (in Spanish).