Frequently Asked Questions
About Us
Leverage Shares exchange traded products (ETPs) seek to deliver five times (5x) three times (3x), two times (2x), minus one time (-1x), minus two times (-2x), minus three times (-3x), minus five times (-5x) & delta one (1:1) the daily performance of individual household name stocks and ETFs.
Leverage Shares ETPs:
- Can be efficient tools for gaining magnified exposure to individual stocks
- Achieve leverage through margin borrowing
- Have physical ownership of the underlying stocks, and therefore do not use swaps or other derivatives to achieve their exposure
- Do not have credit risk, because each series of the special purpose vehicle (SPV) has physical ownership of the underlying stocks and does not use derivatives, like swaps, to achieve its leverage
- Trade in real time on the London Stock Exchange (LSE), Euronext Amsterdam (XAMS) and Borsa Italiana (XMIL)
- Prevent investors from losing more than their initial investment
The term “Exchange Traded Product” (ETP) is a broad term that encompasses Exchange Traded Funds (ETFs), Exchange Traded Commodities (ETCs), and Exchange Traded Notes (ETNs). ETPs seek to provide returns based on the price movements of an underlying asset or benchmark, such as an index, commodity, or individual stock. However, ETFs, ETCs, and ETNs represent different structures for achieving this exposure and can pose different risks.
ETPs, such as ETCs and ETNs, are structured as debt securities, but unlike conventional bonds, these instruments pay no interest and are not rated. ETPs can give investors a means of diversifying investment portfolios without the need to:
- Enter into swap agreements or forward contracts
- Take physical delivery of the underlying commodity
- Hold securities that constitute the underlying index
Leverage Shares Exchange Traded Products (ETPs) are debt instruments issued by a special purpose vehicle (SPV). Each ETP is a separate Series of the SPV, and is a debt security that delivers the returns of the assets held by the Series. Each Series invests its own assets and the assets borrowed on margin in a single stock, such as the common stock of Apple Inc. (AAPL), to achieve leveraged exposure to that equity as per its investment objective.
- Exposure to the underlying stock is managed to deliver two times the return (gain or loss) of the underlying stock on a daily basis (net of fees and expenses)
- Leverage Shares do not have credit risk because each Series of the SPV has physical ownership of the underlying assets and does not use derivatives, like swaps, to achieve its leverage
- Each ETP is fully collateralized, as its subscription proceeds are invested directly in shares of the underlying equity security, effectively negating potential credit risk
- Leverage Shares ETPs have access to institutional pricing for margin borrowing, and therefore can be a cost-effective means for investors to gain leveraged exposure to individual stocks
Yes, several Leverage Shares Exchange Traded Products (ETPs) (e.g., TSLS, AMZS, APLS) provide short exposure to the underlying security.
Trading Leverage Shares ETPs
BNP Paribas has an agreement with Leverage Shares to provide continuous bid/ask spread on all of our products. Regardless of the trading volume, you will always be able to buy and sell Leverage Shares ETPs.
Experienced investors and market participants may use Leverage Shares Exchange Traded Products (ETPs) for a variety of strategies, including but not limited to:
- Responding to technical indicators on particular individual stocks
- Trading the volatility and the directionality of individual stocks
- Positioning or responding to earnings and news announcements
- Reacting to overnight movements in foreign markets, which may carry momentum into the home market
- Hedging existing exposures in a portfolio
Leverage Shares Exchange Traded Products (ETPs) can be traded through brokerage accounts that have the ability to trade products listed on the London Stock Exchange, Euronext Amsterdam, Borsa Italiana and the Chicago Board of Options Exchange.
- EU trading hours
- Low price
- Multi-currency trading (GBx, USD, EUR)
- ISA/SIPP eligibility
- No W-8BEN forms
Product Characteristics
Leveraged ETPs (such as the Leverage Shares ETPs offering leveraged exposures where the underlying
asset is a stock or a bond) that use margin borrowing to achieve leveraged exposures invest their own
assets plus assets borrowed through a margin account directly in assets underlying the ETPs. This
method incurs borrowing costs related to margin borrowing, but avoids credit risks since it physically
owns the underlying shares or bonds. Swap-based leveraged ETPs do not invest directly in the underlying
stocks or bonds and instead enter into over-the-counter (OTC) swap agreements with a counterparty.
These swaps have associated costs (mainly in the form of fees charged by the swap counterparty) and
are susceptible to the credit risk of the swap counterparty.
Leverage Shares ETPs which invest in stocks and bonds do not invest in over-the counter (OTC)
derivatives like swaps or forwards. Since Leverage Shares plc physically own the underlying assets, the
credit risk associated with over the counter derivatives are not applicable to the Leverage Shares ETPs.
No. The most an investor can lose in a Leverage Shares ETP is the entire value of their initial investment plus any reinvested dividends.
Interactive Brokers is the clearing broker for Leverage Shares Exchange Traded Products (ETPs). For more information on our preferred providers, please see the ‘About’ page.
The index providers are the New York Stock Exchange and Stoxx Ltd., depending on the ETP. You can find out the index provider for each ETP on their respective product pages under “Our ETPs”. More information about the index providers and the indices can be found at https://www.nyse.com/index and https://www.stoxx.com/indices
No. Leverage Shares uniquely replicates the payout of its ETPs physically, so it holds the stocks underlying its leveraged ETPs and receives the dividends on such stocks. However, such dividends are reinvested in more shares of the underlying stock.
Costs and risks
The Margin Rate for our Leveraged ETPs is the respective Benchmark Rate plus one and a half percent (1.5%) and is applied to cash borrowed to meet the specified leverage factor of each ETP. Leverage Shares uses internationally recognized benchmarks on overnight deposits as a basis for determining the Benchmark Rates. For each ETP, the Benchmark Rate is determined by the base currency of the underlying equity security for the respective ETP, according to the following schedule:
| Base Currency of Underlying Equity Security | Benchmark Rate |
|---|---|
| GBP | Sterling Overnight Index Average (SONIA) |
| USD | Fed Funds Effective (Overnight Rate) |
| EUR | Euro Short-Term Rate (€STR) |
- Experienced investors with knowledge of leveraged Exchange Traded Products (ETPs)
- Investors with high risk tolerance
- Investors who can afford to lose some or all of their investment
- Investors who understand the daily compounding of leveraged ETPs and its effects on long-term returns
- Investors who have the time and ability to monitor their investments on a daily or intra-day basis
Leverage Shares Exchange Traded Products (ETPs) provide exposure to stocks that are listed in the US, UK or Italy. However, because the Leverage Shares ETPs are listed in London and may trade in currencies (e.g., GBP, USD, EUR) that are different from the currency of the underlying security, certain Leverage Shares ETPs will expose investors to foreign currency movements. For example, the Leverage Shares ETPs that are listed in GBP but which invest in US companies will reflect the currency movements between the British Pound (GBP) and the USD (US dollar). In this example, if the USD appreciates versus the GBP, this can positively impact the fund’s returns, while a depreciation of the USD versus the GBP is expected to negatively impact the returns. For more information, click here.
All product costs are detailed in the relevant exchange-traded product (ETP) FactSheet and KIDs, which are available on each individual ETP page. Generally, for our Leveraged and Inverse ETPs, the following fees are applicable:
Leveraged Long Exposures
1. Arranger Fee: 0.75% (annualized), on the ETP Value held by securityholder, charged daily;
2. Margin Rate: Designated benchmark rate + 1.5% (annualized), on borrowed cash, charged daily.
Short/Inverse Exposures
1. Arranger Fee: 0.75% (annualized), on the ETP Value held by securityholder, charged daily;
2. Stock Borrow Rate: The current Borrow Rate (annualized) is published on LeverageShares.com on a daily basis.
*Interest Paid to Investors on Cash Balances: Designated benchmark rate – 1% (annualized), on cash holdings, paid/added to ETP Value daily.
- Higher Risk/Reward: Leveraged Exchange Traded Products (ETPs) provide magnified exposure to an underlying asset or benchmark and therefore can both gain or lose money much faster than investing in the underlying investment without leverage
- Daily Compounding Risk: To meet its objective of doubling the daily returns of an asset’s or benchmark’s performance, the leveraged ETP must rebalance, or re-leverage, its position every day. Over a longer holding period, the daily rebalancing may result in returns that do not equal the specified multiple of the benchmark due to the effects of compounding
- Investors can lose up to, but not more than, the full value of their investment, particularly in a volatile market environment
- The full risk warnings should be read before purchasing a leveraged ETP (they can be found here)
ETPs that are denominated in currencies different from that of the underlying stock are priced using interbank exchange rates. These are the ultracompetitive rates used by banks to transfer money between themselves.
The Margin Rate for each Leverage Shares ETP is the respective Benchmark Rate plus one percent (1%). Leverage Shares uses internationally recognized benchmarks on overnight deposits as a basis for determining the Benchmark Rates. For each ETP, the Benchmark Rate is determined by the base currency of the underlying equity security for the respective ETP, according to the following schedule:
Base Currency of
Underlying Equity SecurityBenchmark Rate
GBP GBP LIBOR (Overnight Rate)
USD Fed Funds Effective (Overnight Rate)
EUR EONIA (Euro Overnight Index Average)
- Experienced investors with knowledge of leveraged Exchange Traded Products (ETPs)
- Investors with high risk tolerance
- Investors who can afford to lose some or all of their investment
- Investors who understand the daily compounding of leveraged ETPs and its effects on long-term returns
- Investors who have the time and ability to monitor their investments on a daily or intra-day basis
Leverage Shares Exchange Traded Products (ETPs) provide exposure to stocks that are listed in the US, UK or Italy. However, because the Leverage Shares ETPs are listed in London and may trade in currencies (e.g., GBP, USD, EUR) that are different from the currency of the underlying security, certain Leverage Shares ETPs will expose investors to foreign currency movements. For example, the Leverage Shares ETPs that are listed in GBP but which invest in US companies will reflect the currency movements between the British Pound (GBP) and the USD (US dollar). In this example, if the USD appreciates versus the GBP, this can positively impact the fund’s returns, while a depreciation of the USD versus the GBP is expected to negatively impact the returns.
All product costs are detailed in the relevant exchange-traded product (ETP) FactSheet and KIDs, which are available on each individual ETP page. Generally, the following fees are applicable:
Long Exposures
1. Arranger Fee: Charged daily, annual rate of 0.75% of the ETP Value held by securityholder;
2. Daily Margin Interest: Designated benchmark rate + 1.5%.
Short Exposures
1. Arranger Fee: Charged daily, annual rate of 0.75% of the ETP Value;
2. Securities Borrowing Fee and Interest on Cash: The current Securities Lending Fee is published on leverageshares.com on a daily basis).
- Higher Risk/Reward: Leveraged Exchange Traded Products (ETPs) provide magnified exposure to an underlying asset or benchmark and therefore can both gain or lose money much faster than investing in the underlying investment without leverage
- Daily Compounding Risk: To meet its objective of doubling the daily returns of an asset’s or benchmark’s performance, the leveraged ETP must rebalance, or re-leverage, its position every day. Over a longer holding period, the daily rebalancing may result in returns that do not equal the specified multiple of the benchmark due to the effects of compounding
- Investors can lose up to, but not more than, the full value of their investment, particularly in a volatile market environment
- The full risk warnings should be read before purchasing a leveraged ETP (they can be found here)
ETPs that are denominated in currencies different from that of the underlying stock are priced using interbank exchange rates. These are the ultracompetitive rates used by banks to transfer money between themselves.
Legal
No: Payments on Leverage Shares ETPs which receives US source dividends on are not subject to U.S. federal withholding tax under section 871 (m) of the Internal Revenue Code of 1986. Accordingly, brokers do not need to take any action with respect to section 871 (m).
Leverage Shares ETPs are in fact eligible* as Undertakings for Collective Investment in Transferable Securities (UCITS), meaning they can be invested in by other UCITS-compliant funds. However, Leverage Shares ETPs themselves are not UCITS-compliant.
*Disclaimer: UCITS eligibility subject to the specific UCIT schemes’ investment and borrowing powers as outlined in its Prospectus and legal instruments constituting the UCITS scheme.
Leverage Shares is entitled to benefits under the U.S.-Ireland income tax treaty with respect to any U.S. source dividends it receives. Accordingly, Leverage Shares is subject to 15% withholding tax on U.S. source dividends.
No. UK stamp duty is not payable on overseas domiciled Exchange-Traded Products (ETPs) like Leverage Shares ETPs, which are domiciled in Ireland.
Scenarios
Brokers onboard products to their platform based on customer demand. Kindly contact their help desk and request that they are added. Alternatively, please inform us about the issue so that our sales team can liaise with the broker directly.
Yes, Leverage Shares ETPs can continue to trade on regulated exchanges at very low prices, even a few pennies. Leverage Shares may execute a reverse split in order to bring the trading price back to higher levels (approximately $5).
The price change on the underlying due to a stock/reverse stock split has no influence on the price of the ETP. For example, in the case of a split, the ETP would receive the additional shares resulting from the split, so it would hold more shares at a lower price, leaving the price of the ETP identical.
The ETP(s) tracking the instrument would either:
- Begin tracking another product, possibly a European GDR listing or the locally listed stock in Asia;
- If there is no other liquid instrument that Leverage Shares can use, be redeemed – returning the value of invested amounts back to investors, net of fees and costs.
- In the unlikely scenario that an ETP is delisted or redeemed by Leverage Shares, the shares and instruments underlying such ETP (the “Collateral”) would be sold or unwound, and the resulting amounts returned to investors, net of applicable fees and costs.
- Leverage Shares ETPs are fully collateralised – this Collateral is held in favour of an independent trustee acting on behalf and for the benefit of investors.
- For more information, click here
The consolidation will result in an investor holding less ETPs with a proportionately higher ETP Security Value. An investor’s economic interest in a Series of ETP Securities will remain unchanged. For more information, click here.
A spin-off is considered an “Adjustment Event” requiring a modification to the index or investment strategy applicable to the Series of ETP Securities. In this case, the PM would sell the automatically acquired spin-off shares at the market close of the first business day post spin-off (or whenever the shares are available to trade by the PM, whichever comes first) and concurrently reinvest the proceeds into the underlying shares or basket matching the relevant index or investment strategy.
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