Glossary - L

This section provides an explanation for some of the jargon used to describe structured retail products. If you would like us to add additional words then please let us know by clicking here.

Ladder

If the price of the underlying assets rises above a certain threshold level during the product term, investors are then guaranteed a minimum payout at maturity, even if the price subsequently falls. There may be a number of such steps. Investors can therefore lock in the increase in value.

Ladder Option

A ladder option is a type of call option that locks in the return as the underlying rises. It is used to create structured products that provide a lock-in of the return as the underlying rises.

For example, a product might offer 100% participation in any rise in the FTSE100 index but with the additional feature that each 10% rise is locked-in. This means that even if the index subsequently fell back, the minimum return would be increased by the highest level that had been locked-in during the investment term.

Launch Date

Date when the product was first available for investment (Continuous products).

Leverage

Products that provide leverage long or leverage short position in an underlying, usually including a stop-loss feature. These products are typically known as turbos.

Leverage Long with stop loss

The product provides a return equivalent to a leveraged long position in an underlying. If the underlying falls to a specified Stop Loss level the product ends and returns the original investment less the leveraged loss at that time. The Stop Loss level is adjusted every month depending on the level of the underlying and the implied financing of the leveraged position.

Leverage Short with stop loss

The product provides a return equivalent to a leveraged short position in an underlying. If the underlying rises to a specified Stop Loss level the product ends and returns the original investment less the leveraged loss at that time. The Stop Loss level is adjusted every month depending on the level of the underlying and the implied financing of the leveraged position.

Leverage with Stop Loss

The product provides a return equivalent to a leveraged long or short position in an underlying. If the underlying rises (leverage short) or falls (leverage long) to a specified Stop Loss level the product ends and returns the original investment less the leveraged loss at that time. The Stop Loss level is adjusted every month depending on the level of the underlying and the implied financing of the leveraged position.

LIBOR

LIBOR stands for the London Interbank Offered Rate. It is the benchmark interest rate at which the wholesale banks lend money to each other in the money markets. It is set each day at 11am London Time and there are different rates for different maturity loans i.e. one month, three month, etc.

Life Bond

A Life Bond is a term used to describe a Life Assurance policy that provides a fixed or variable return based on the performance of underlying funds (unit linked) or based on a Life Company guarantee (index linked).

The returns on an onshore, UK based, Life Bond are net of basic rate tax for a UK investor.

Life Insurance

Life insurance contract

Listed

The note is listed on a stock exchange and can be bought/sold there

Local cap

The term local cap is used to describe a feature of a cliquet product. It is the maximum return in each period of the product that is used in calculating the overall return (see cliquet).

Local floor

The term local floor is used to describe a feature of a cliquet product. It is the minimum return in each period of the product that is used in calculating the overall return (see cliquet).

Lokata

Deposit in Poland

Long

A “long” position is the term used to describe a situation where one is holding i.e. one has purchased, a quantity of some financial asset i.e. a share, bond or derivative.

For example, if one is “long of £1m of HSBC options”, it means one is the owner of £1m of HSBC options.

Lookback

See Hindsight option.

Lux. verzekering / Assurance luxembourgeoise

Assurance investment liable to the Luxembourg law.

Luxemburgse bevek / Sicav luxembourgeoise

Investment fund liable to the Luxembourg law. This is an investment fund in which the amount of capital in the fund varies according to the number of investors. Shares in the fund are bought and sold based on the fund's current net asset value.