Glossary · from the DESK dictionary
Certificate
A structured product that tracks the performance of an underlying (index, stock, commodity), usually one-to-one or leveraged.
In plain words
A simple way to participate in the performance of an underlying without owning it directly.
In more detail
A certificate is a bearer note whose redemption is linked to the performance of an underlying. Legally it is not segregated fund property but a claim against the issuer — which is its essential difference from a fund. On the issuer's insolvency the investor is an unsecured creditor, regardless of how the underlying performed.
Example
An investor holds a 40,000 euro index certificate. The index is unchanged; after the issuer's insolvency he receives a 6 percent estate dividend.
What it means for traders
A very common retail investment product in Europe (especially German-speaking markets).
Common pitfalls
Issuer credit risk — if the issuing bank fails (see Lehman certificates in 2008), a total loss is possible.
Related terms
Structured Product
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.