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By Celia Rodriguez On Jul 25, 2021
Buy certificates – only from trustworthy issuers
From a purely legal point of view, certificates are bearer bonds that are traded on the stock exchange. For the investor, this means that by purchasing a certificate, he is lending money to the issuer of the bond. Listed certificates are issued by banks, which are also known as issuers. There are tens of thousands of different certificates on the stock exchange, issued by issuers such as Deutsche Bank, the Société Générale, UBS or other institutions.
As an investor, you can buy certificates on the stock exchange or from the issuing bank. Each certificate has a unique securities identification number (WKN or ISIN), which you must specify when trading the certificate, i.e. in your buy or sell order.
Most certificates have one thing in common: their price development is linked to an underlying asset to which the security relates. This can be a share, for example the Daimler or BASF share. But it can also be a stock index such as the DAX, the Euro Stoxx 50 or the Dow Jones. Certificates based on investment strategies created by the banks can also be of interest. These include, for example, the CROCI certificates from db-X markets or the certificate on QIX Germany from UBS, in which Forex-news.com.net also contributed to the index development. In addition, investors can also rely on actively managed investments, for example with the certificate on the Value Stars Germany Index, which relies on particularly promising small caps and has thus achieved astonishing success since it was launched in 2013 (article on the Value Stars certificate ).
There are also certificates on currencies, for example on the euro-dollar ratio or the exchange rate between the euro and the British pound. Commodities can also serve as a base value, such as gold, silver, oil, but also coffee or orange juice, to name just a few examples. According to the German Derivatives Association (DDV), you have a total of around one million tradable certificates on more than 3,000 base values available, with which you can implement any stock exchange strategy, no matter how unusual. According to DDV, the market volume for certificates was around 68 billion euros in January 2016 alone.
Tip: Certificates are bearer bonds. If the issuer of the certificate goes bankrupt, your claim against the issuer and thus your certificate are worthless. You should therefore only acquire certificates from issuers that you consider trustworthy. This is usually the case with banks. Nevertheless, there have already been cases in which even well-known investment banks such as the US bank Lehman Brothers slipped into difficulties and bankruptcy and the certificate buyers had to accept severe losses or even total loss.
Thankfully >>> forex-news.com
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