Be careful if you wish to redeem your credit linked notes

Dear Mr Tan.

I brought $X pinacles note 15. I have complained to F1 for mispresentation , but received a negative reply.

Thinking of putting the all matter behind because I have seen little actions done postively, I decided to cut loss.

I went to direct to the bank. They give me the email price of 84.75% as pricing today at 2pm. Beside I have an sms from business manager with the same pricing. I signed the forms and they do not allow me to put the pricing. They give me the assurance that there will be little changes to it.

In the evening,they called and tell me nicely they have sold it at 76.76 % as a bad news. No explanation are given , they only sympathise with me.

Yes, the only alternative to complain again or sue. I wonder what the banker have become? I getting very tired.

Please be very careful if anyone wish to made redemptions. Dun trust banker 's words anymore. Make sure the pricing are written black and white.

JP

REPLY
A unit trust also adopt the same practice - they given an indicative price and calculate the actual price at the close of the market. The is called "forward pricing"

But tjhere is a big difference. The forward pricing adopted by the unit trust is based on the actual closing price of the underlying shares. It is possible to audit the forward price to be a fair price.

In the case of the forward pricing of the credit-linked notes, there is no such transparent process. We do not know how the bank calculate the forward price to redeem the contract. If there is a drop of 8%, it could be profit of the bank that bought the credit linked note from the investor. If so, this will be grossly unfair.

I suggest that the investor should make a written complaint to the bank and ask to receive a written explanation. You can bring the case to FIDREC.