1. What are Daily Leverage Certificates (DLCs)

DLCs offer investors fixed leveraged returns of up to 7 times of the daily performance of the underlying asset. DLCs are designed to be traded over short periods of time. The DLC offers the flexibility to trade both rising and falling markets.

For each underlying asset and leverage level, there is a long and short DLC available; a bullish investor can trade long DLCs, and a bearish investor can trade short DLCs.

With the potential for enhanced returns, the investor also faces a high level of risk if the market moves against the investor’s expectation.

If held over a period longer than one day, actual returns will deviate from the projected leverage exposure.

2. Can I trade DLCs? And how?

DLCs are for investors who are willing to accept the risk of substantial losses up to the principal investment amount, possibly within a very short timeframe. Investors should also have sufficient understanding of the product and should possess either a high level of knowledge or sufficient trading experience to properly evaluate and assess the product structure, associated risks, valuation, costs and expected returns.

DLCs are currently available on a range of market indices and single stocks. DLCs are listed on SGX and can be traded through a stockbroker in a regular brokerage account.

All investors in Singapore need to be Specified Investment Products (SIP) qualified to invest in DLCs*. Korean investors are allowed to trade DLCs through their broker’s HTS and MTS after assessment designed by each broker in Korea.

3. How do I get myself SIP qualified? (For Singapore Investors only)

Under MAS’ guidelines to enhance safeguards to retail investors, brokers must assess if investors have the relevant knowledge and experience before they can invest in “Specified Investment Products”. SIPs are products that have structures, features and risks that may be more complex and include DLCs, structured warrants, synthetic ETFs, futures and options. Investors who wish to trade DLCs need to complete a customer account review with their respective broker. The criteria used to qualify the investor in the customer account review consist of (1) Educational Qualifications, (2) Work Experience and (3) Investment Experience. Investors will need to satisfy one of the 3 criteria above to qualify. Alternatively, investors may assess their qualifications to trade SIP or enhance their product understanding through the SGX online education program. Please speak to your broker to find out more on how you can qualify to trade SIPs.

4. What are Trading hours?

Trades can be placed during the Singapore Stock Exchange market hours which are between 09:00 and 17:00 (Singapore time). This is equivalent to 10:00 and 18:00 (Korea Time).

5. Who is Market Maker?

Mirae Asset acts as both issuer and market maker for its DLCs, which means that we provide a price for each product (a bid/offer spread) on the SGX Order Book.

6. What are Cost & Fees?

Investors trading in and out of a DLC in the same day pay a brokerage commission and SGX trading and clearing fee, and the spread on the bid & ask prices. Stockbrokers will charge a brokerage fee for trading DLC in the same way as when investors buy or sell a share. The difference between the buy price and sell price of a DLC is known as the Bid/Ask spread. The wider the spread, the greater the costs of selling back your DLC before it expires.

Overnight positions will incur additional cost charged by the issuer and is reflected in the price of the DLC.The leverage and hedging costs and fees will only apply when the Daily Leverage Certificates are held overnight. Costs and fees are transparent and can be computed with published data using the formula. The specific costs and fees for each product can be found on this website or the relevant listing documents.

7. What happens to the DLC when the underlying stock is halted/ suspended?

Investors should note that if trading in the underlying stock is halted or suspended on the relevant stock exchange, trading in the respective DLCs will be halted or suspended for a similar period.

8. How would corporate actions on the underlying stock affect the DLC?

For corporate actions, the issuer will determine the corresponding adjustment that needs to be made to the DLC in order to preserve economic equivalent. The adjustments to the relevant DLCs will be published on SGX website under “Company Announcements” as well as our website.

9. Is my invested capital at risk?

Your entire invested capital is at risk. Before trading you should understand the nature of DLCs and the extent of your exposure to risk. In the event the value of a DLC reaches zero/becomes worthless, Mirae Asset as the issuer may request that the DLC be suspended and subsequently apply for them to be de-listed. Investors should also refer to the other risks listed in Mirae Asset’s listing documents which are published under “Company Information” on the SGX website or in this website.

Prior to any investment, you should make your own appraisal of the risks from a financial, legal and tax perspective, without relying exclusively on the information provided by us in the terms and conditions for the products. We recommend that retail investors consult their own independent professional advisers before making an investment decision.

10. What happens at expiry?

DLCs have a limited life with a maximum tenure of 3 years. At expiry the final exercised value of the DLC is calculated and automatically paid to investors.

11. What is the intrinsic close of a DLC and where can I find it?

The intrinsic closing value is the theoretical closing price of the DLC. This value is computed on a daily basis and published on Issuer’s website.

12. What is an Air Bag mechanism?

An Air Bag mechanism is built into the DLC to slow the rate of loss in the value of the DLC in extreme market conditions. Each DLC listed will have a pre-set trigger for the Air Bag mechanism. This trigger is usually activated upon a predetermined percentage movement of the underlying asset.

The Air Bag Trigger level for 3x DLCs issued by Mirae Asset is 20% for Index Underlying.

The Air Bag mechanism will only be triggered upon movements of the underlying asset that go against the direction of the product.

Investors should read all listing documents provided by the issuer for the specific Air Bag mechanism for each product.

13. How does the Air Bag mechanism work?

If the underlying asset moves more than the Air Bag Trigger level, the Air Bag mechanism is triggered for the relevant DLCs. Mirae Asset as their issuer will request SGX to suspend trading in the relevant DLC for 30 minutes, and the New Observed Level is determined using the lowest value of the underlying asset for the Long DLC or the highest value of the underlying asset for the Short DLC during the 15-minutes period after the Air Bag mechanism is triggered. The performance of the DLC after the suspension will be based on the NOL.

14. How do I find out when the airbag has been triggered?

Mirae Asset will publish an early warning announcement on the website once the underlying asset is near the Air Bag trigger level, followed by a second announcement when the Air Bag has been actually triggered. We will also make announcements on the SGXNet website.

15. How does the Airbag Mechanism apply to US index underlying, such as Nasdaq100 and S&P500?

The Air Bag Mechanism is triggered only when the index or the underlying security is calculated or traded, not triggered by its futures. The Air Bag Mechanism for DLCs over US index underlying is triggered if the US index moves more than the Air Bag Trigger level during US trading hours, which does not overlap with SGX trading hours. It means that the Air Bag Mechanism cannot be triggered during SGX trading hours even though the price of the DLCs moves against the direction of the product and reach the trigger level during SGX trading hours.

If the Air Bag Mechanism is triggered during US trading hours, announcement will be published on SGXNet website before SGX opens for trading the next day and DLC performance will be based on the reference value determined at US market close. For more details, please read listing documents of each product carefully.

16. How are DLCs different from Leverage and Inverse ETFs?

Leverage & Inverse ETFs have a fund structure while the DLC is a structured product issued by a securities company or bank. Also, Leverage & Inverse ETFs are only one to two times leverage while the DLCs have three, five and seven times leverage. (Mirae Asset DLCs currently offer only three times leverage)

17. How are DLCs different from other leveraged instruments?

Please see the below table.

DLCs CFDs Structured Warrants
Trade Exchange OTC Exchange
Clearing Cleared by CDP No central clearing Cleared by CDP
Leverage Factor and Type 3x – 7x
Leverage on return		 10x – 20x
Leverage on capital		 ~ 5x – 50x
Leverage on option
Losses Capped at the total invested capital Potentially more than invested capital Capped at the total invested capital
Issuer Investment bank Not issued, broker exposure Investment bank
Margin Call None Yes None
Airbag Mechanism Yes No No