Debt security issued by banks, the value of which is determined by an underlying (also frequently referred to in German as: the asset that must be delivered if a derivative contract is exercised, such as a put or call option). In addition to share indices, sector indices, index baskets and other financial products also serve as underlyings. In addition, there are also “exotic” forms (exotic variants) with sometimes very tricky structures. The issuance of such a certificate is relatively simple and is not subject to the strict regulations that apply to an investment fund. – The purchaser of an ordinary – i.e. not “exotic” – index certificate benefits from low transaction costs, comparatively good transparency, high liquidity, risk diversification and low minimum capital investment. – In German, index certificates are sometimes also called (which can very easily lead to confusion) participation certificates. – See call, derivative, express certificate, index funds, exchange-traded, index tracking, Capital Investment Code, credit derivative option, second value, certificate. – Cf. Deutsche Bundesbank Monthly Report, August 2004, p. 34 (explanatory overview).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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