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Our investment products can provide both individual and institutional investors with flexible investment vehicles, which can accommodate varying appetites for risk, asset exposure and capital protection.

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Cancellation Risk – the risk that if you decide to cancel the investment after assets have been purchased you could lose some of your money if the market(s) or asset(s) to which your contract is linked have fallen since the purchase date.

Counterparty Risk   – the risk that a financial institution with whom we arrange the assets to provide investment returns does not, or cannot, pay the amounts due, which could cause you to lose some or all of your money and any investment returns that would have otherwise been payable.

Early Encashment Risk – the risk that if you decide to encash the investment before maturity you could get less back than you invested. Administration charges for early encashment will increase any losses.

Inflation Risk – the risk that inflation will reduce the real value of your investment over time.

Investment Risk – The risk that the market(s) or asset(s) to which your investment is linked fall in value, which could cause you to lose money.

ISA Transfer Risk – if you wish to transfer an existing ISA this must be done in cash, which means your existing ISA manager will sell your investments and you may be charged an exit or transfer fee. There is the potential for loss of income or growth if markets should rise while your transfer remains pending.

Liquidity Risk – the risk that you may not be able to immediately access the value of your investment.

Pricing Risk – the risk that a financial institution with whom underlying investments have been arranged may not be able to quote regular prices making it difficult to value your investment and delaying any early encashment request you may make.

Product Risk – the risk that the product design could produce a return that is lower than a direct investment in the market(s) or asset(s) to which the product is linked.

Tax Risk – The values of any tax reliefs will depend on your individual circumstances. You should note that the levels and bases of taxation could change in the future and these changes may be applied retrospectively.

It is important that you read any product literature carefully and in full so that you understand how the product works and can decide whether or not you are prepared to accept the risks and the possible consequences of investing in a particular contract, before proceeding with an investment.

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Regulation & Corporate Actions

Corporate Action: Royal Dutch Shell takeover of BG Group

In April 2015, Royal Dutch Shell and BG Group issued announcements concerning Royal Dutch Shell’s proposed takeover of BG Group.

In April 2015, Royal Dutch Shell and BG Group issued announcements concerning Royal Dutch Shell’s proposed takeover of BG Group.

After the agreement of shareholders in early 2016, the takeover became effective from Monday 15th February 2016. BG Group shareholders will receive 383 pence in cash plus 0.4454 Royal Dutch Shell B shares for each BG Group Share they held on Friday 12th February 2016. BG Group Shares’ last day of being listed on the London Stock Exchange was 12th February 2015.

For products which reference BG Group shares, reference will now be made to Royal Dutch Shell B shares. The strike prices of Royal Dutch Shell B shares for those Plans is the original BG Group strike price multiplied by 1.43599 in accordance with the Corporate Action Notice issued by ICE Futures Europe; the Notice can be viewed on the link below:

https://www.theice.com/publicdocs/liffe/corporate_actions/2016/CA-2016-106-Lo.pdf

The calculation

The theoretical closing value of BG shares on the London Stock Exchange on Friday 12th February 2016 was calculated as follows:

Theoretical BG value = 383p + (0.4454*Royal Dutch Shell B closing price on 12/02/2016)

As the closing price of Royal Dutch Shell B Shares on that date was 1526, this leads to a value of:

383 + (0.4454*1526) = 1062.68

To get the ratio to be applied to the original BG strike prices:

((1062.68 – 383) * (1 / 0.4454)) / 1062.68 = 1.43599

Example based on a Meteor product

A structure including BG Group struck on 15th August 2014 with an opening level for BG Group of 1163.5. Its level on 12th February 2016 was 1062.68, 91.33% of its opening level.

Applying the ratio of 1.43599 to the original strike of 1163.5 gives a new strike level of 1670.776 to be applied to the ongoing Royal Dutch Shell B share price.

As we know from the above, Royal Dutch Shell B shares were trading at 1526 at close on 12th February 2016, which is 91.33% of the new strike level.


Posted: 18 February 2016
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