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Derivatives

UBS Closes Follow-Up Equity Deals

UBS has closed two retail equity-linked instrument products in Hong Kong, following up on the success of last month's decreasing call-strike feature (DW, 12/16).

UBS has closed two retail equity-linked instrument products in Hong Kong, following up on the success of last month's decreasing call-strike feature (DW, 12/16). The latest two structures also use a decreasing strike--which increases the likelihood the investment products redeem early--but also offer potential payouts every two months, instead of every quarter.

"The feedback we're getting from clients is that they want shorter callable dates," said UBS' Patricia Lau. She explained that given the strong performance for Hong Kong equities, investors believe such structures can be called back sooner.

The structures, dubbed VERA-ELI Series 2 and 3, are both linked to two Hong Kong stocks. After the first four months, a payout is made every two months linked to the number of days the worst-performing share is above its initial price. If the worst-performing share is above a designated level on the two-monthly call dates, the structure will be called back. The call strike date is 100% for the first three call dates, then falls by 1% for each three call dates, ending up with a strike level of 97% for months 20 and 22 of the two-year deal.

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