Financial products, structured (structured [financial] products)

Combinations of two or more financial instruments; at least one of them must be a derivative. They are traded either on or off the exchange. Each structured product contains its own particular risk profile, which mitigates, amplifies or attempts to offset the risks arising from the individual investment products. – The latter group mainly includes structured products with capital protection. They consist of – a fixed-income investment and – an option. Their combination makes it possible to participate in the development of one or more underlying assets, namely through the option part: the participation part, while limiting the risk of loss, and this through the bond: the capital protection part. – There are various classifications of structured financial products. Their evaluation requires precise expertise from the market participants in any case. – See composite, derivative, financial engineering, investment bank, quality control, rating grades. – Cf. Deutsche Bundesbank Monthly Report of April 2004, p. 27 ff. (explanations; overviews), BaFin Annual Report 2007, p. 167 (supervision primarily with regard to risk management), BaFin Annual Report 2008, p. 45 (transparency requirements for trading; post-trade transparency).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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