Equity-Linked Notes (ELNs)

An Accredited Investor refers to:

(i) an individual --
(A) whose net personal assets exceed in value $2 million (or its equivalent in a foreign currency) or;
(B) whose financial assets (net of any related liabilities) exceed in value $1 million (or its equivalent in a foreign currency), where "financial asset" means --
(BA) a deposit as defined in section 4B of the Banking Act;
(BB) an investment product as defined in section 2(1) of the Financial Advisers Act; or 
(BC) any other asset as may be prescribed by regulations made under section 341; or 
(C) whose income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency);

(ii) a corporation with net assets exceeding $10 million iin value (or its equivalent in a foreign currency) as determined by --
(A) the most recent audited balance-sheet of the corporation; or 
(B) where the corporation is not required to prepare audited accounts regularly, a balance-sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance-sheet, which date shall be within the preceding 12 months;

(iii) the trustee of such trust when acting in that capacity

An Equity-Linked Note is a short-term investment linked to the performance of an underlying stock. It allows you to earn an annualised yield while positioning to buy the stock at a predetermined strike price. At maturity, you receive either cash or shares depending on where the stock price closes relative to the strike price.

An ELN works by allowing you to choose a stock, strike price and tenor, and then paying a discounted amount to enter the note. You receive 100% of the principal amount at maturity in either cash or shares depending on the valuation outcome. The quoted annualised yield reflects the difference between your upfront payment and the principal amount.

An ELN offers the opportunity to earn interest while waiting for your preferred entry price, whereas direct share purchases do not provide this income. ELNs may deliver higher returns if the stock price trades sideways during the tenor. However, unlike buying shares outright, an ELN may result in receiving shares only at maturity and carries principal-at-risk.

Accredited Investors are individuals or entities that meet specific asset or income thresholds under Singapore's regulations. Only Accredited Investors are eligible to invest in ELNs through the iOCBC trading platforms. Investors must confirm their Accredited Investor status before applying.

The key benefits include the ability to earn interest while waiting for your target entry price and the potential for higher returns if the stock price trades sideways. You can also customise the underlying stock, strike price and tenor. This flexibility allows you to tailor the note to your investment preferences.

ELNs carry market risk because their performance depends on the movement of the underlying stock. They also carry credit risk of the issuer and are not principal-protected, meaning investors can lose part or all of their investment. Liquidity risk applies as the secondary market is typically illiquid. The risks described are illustrative examples of ELNs investment risks and do not constitute a complete or exhaustive list of all possible risks.

You can customise the underlying stock, strike price and tenor of your ELN. Your Trading Representative can help you tailor an ELN to meet your needs.

ELNs typically have short tenors ranging from 1 to 12 months. The exact tenor available depends on market conditions and the structure of the note. Your Trading Representative can provide daily available options.

If the stock price closes at or above the strike price on the valuation date, you receive the full principal amount in cash. The annualised yield you earn reflects the difference between your initial payment and the principal amount. This outcome occurs when the stock performs at or above your target level.

If the stock price closes below the strike price on the valuation date, you receive the principal amount in shares. The number of shares delivered is based on the strike price used in the ELN structure. This outcome means you acquire the shares at the agreed-upon strike price.

The principal amount in an ELN is not protected. Investors may receive shares instead of cash, and the value of those shares may be lower than the invested amount. Investors should be prepared for potential capital loss.

ELNs are not designed for early exit because the secondary market is typically illiquid. Investors should only invest if they can remain invested until maturity. Early redemption, if available, may be at unfavourable pricing.

You can obtain the daily list of eligible stocks and corresponding yields from your Trading Representative. This allows you to compare available options and select the ELN terms that suit your objectives. Customised structures may also be available on request.

Local investors can apply in-person at the OCBC Securities Investors Hub with the required identification and address documents. Overseas investors can apply by mailing completed application forms together with certified true copies of their identification and supporting documents to:

OCBC Securities Investors Hub
18 Church Street
#01-00 OCBC Centre South
Singapore 049479