Marex Solutions, the derivatives-focused arm of London-based financial services provider Marex, has launched Coinbase ( COIN) link structured products have been announced.
A six-month barrier reverse convertible (BRC) note issued Wednesday by Marex Financial, the FCA regulator of Marex, offers a guaranteed annual 40% coupon paid monthly, offering holders regular cash provide the flow.
There is also a predefined “barrier” at 66% of the Nasdaq-listed stock price ($37.8 on the date of issue). As long as the stock remains above $25 for the duration of the term, Mallex Financial will pay back your investment in full at maturity. Once the barrier is hit or breached, partial downside protection is removed and holders are allotted COIN shares at $25, exposing them to market volatility.
One drawback is that owners miss out on potential COIN rallies. This is because notes are autocallable. By the end of the month, if the COIN shares trade higher than the opening date, Marex Financial will return the initial capital invested in the coupon and the product will be redeemed.
Barrier reverse convertibles are popular in traditional finance and are usually chosen when the underlying asset is expected to adjust or rise slightly.
Marex’s issuance of BRC notes tied to COIN shows that there is still demand for high-yield structured products despite the crypto bear market. COIN fell nearly 86% to $35 last year as a result of the Federal Reserve’s monetary tightening and the collapse of several crypto giants, including stablecoin issuer Terra and rival crypto exchange FTX. rice field. But the story is that the crisis bodes well for Coinbase.
“Many investors believe that Coinbase is one of the survivors, establishing itself as an anti-FTX, going public, fully U.S. regulated, and offering reliable corporate and custody services, which will help many. We believe we can win the market.” Ilan Solot, co-head of digital assets at Marex Solutions, said in an email.
“As COIN stocks are highly volatile and the short-term uncertainty is very high, many investors have expressed their views through structured products where they can get attractive guaranteed coupons and a lot of downside protection. I prefer to
A trader who invests $1 million in BRC notes is guaranteed to receive $33,333 monthly. When the automatic call function is triggered, the trader receives his $1 million in initial capital and the coupons earned and the instrument is redeemed.
If no automatic call is triggered after 6 months, the holder will receive a total of $200,000 in coupons regardless of the stock price of COIN. In addition, if the share price rises above her $25, the holder will also get back her original capital of $1 million.
However, if the price falls below $25, the initial capital invested is at risk. This is because the owner is allotted his $1 million worth of shares at $25 or above the prevailing market price, which exposes the owner to market price volatility.
“Taking into account the coupon payments, COIN stock needs to drop from its current price of $37.88 to about $20 (-47%) at the end of six months before clients start to lose money.” said Solotho.
1:41 UTC: Clarifies that the BRC Note was issued through Marex’s FCA regulated entity, Marex Financial.
