Introduction to Daily Leverage Certificates (DLC)

Daily Leverage Certificates are designed to multiply the daily performance of an underlying asset by a fixed factor of 3 or 5 times with bullish (Daily Long) and bearish (Daily Short) view.

  • Liquidity - listed on Exchange
  • Flexibility - buy/sell throughout the trading day
  • Simplicity - with a fixed daily leverage, 3x or 5x
  • Transparency - every investors sees the same price

How do Daily Leverage Certificates work?

There are 2 types of DLCs. Daily Long for bullish investors and Daily Short for bearish investors. DLCs offer a fixed leverage return (3x or 5x) on the underlying asset's daily performance.

Process of choosing a DLC:

  • Choose the Underlying Asset
  • Choose Daily Long or Daily Short Certificates
  • Choose the leverage Level (3x or 5x)

How do you trade Daily Leverage Certificates?

DLCs are listed and traded on the Singapore Stock Exchange (SGX) in a similar way to shares. DLCs are classified as Specified Investment Products (SIPS).

When you trade DLCs intra-day, the costs and fees mainly consists of the brokerage fee, trading fees and the bid/ask spread from trading which are typically the same as trading shares on the exchange.

When you hold DLCs overnight, you will need to bear the leverage and hedging costs and fees, such as the funding cost, rebalancing cost, the gap premium and the management fee, which are calculated daily and applied to the value of the DLCs.

What is Compounded Return?

Gains and losses are compounded over periods of more than one trading day, and as such will deviate from the leveraged performance of the underlying asset.

This difference may be amplified in a volatile market with a sideways trend, where market movements are not clear in direction that could generate significant losses for investors.

What is Air Bag Mechanism?

The Air Bag Mechanism is a safety mechanism that is built into the Daily Leverage Certificates. It is designed to reduce the negative impact of an extreme move in the Underlying Asset during the day.

Products Airbag Trigger
3x Daily Long -20%
3x Daily Short +20%
5x Daily Long -10%
5x Daily Short +10%

How to calculate profit and loss from trading DLCs?

DLCs can potentially deliver an amplified performance compared to the underlying asset. This video aims to tell you how DLCs theoretically moves with the Underlying Asset and how to calculate profit and loss

What is Intrinsic Close?

Daily performance of DLC is calculated by using the daily performance of the Underlying Asset multiplying by the times of leverage. This video aims to introduce the concept of Intrinsic Close which should act as a better reference to reflect the performance of DLCs

Is DLC only for day trading? How do investors utilise DLCs?

The DLC name Daily Leverage Certificate highlights the fact that the amount of leverage it provides is on a daily basis. This video aims to discuss if DLC is only for day trading or it can be held for longer