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How is profit from working on a Capital Account calculated?

Let’s consider some examples of how profit is calculated for Capital Accounts1.

Suppose a client bought a structured product for 10,000 USD with a 90% capital protection level (CPL).

The clients activates a Capital Account and receives a free 7,200 USD credit limit, taking the following formula into account: CPL / 100 x cost of product x 0.8. At maturity, the following is possible:

The Client makes a profit on the structured product.

Suppose the return on the structured product is 20%. Then:

Example №1
Let’s say that at maturity the client made 1,100 USD on their Capital Account. At maturity they’ll receive 1,100 + 12,000 = 13,100 USD.

Example №2
Let’s say that at maturity the client lost 1,100 USD on their Capital Account. At maturity an adjustment will occur: the negative amount which the client incurred as a loss on the Capital Account will be deducted from the outcome of their investment on the structured product. The client will receive 12,000 - 1,100 = 10,900 USD on their transitory account.

No return on structured product. Then:

Example №1>
Let’s say at maturity the client has made 1,100 USD using their Capital Account, but their structured product hasn’t made a profit. Consequently, at maturity the client receives 90% from their capital protection level: 9,000 + 1,100 = 10,100 USD.

Example №2
Let’s say that at maturity the client has lost 1,100 through trading using his Capital Account. In this instance, at maturity an adjustment will occur: the negative amount which the client incurred as a loss on the Capital Account will be deducted from the outcome of their investment on the structured product. The client will receive 9,000 – 1,100 = 7,900 USD on their transitory account.

Please note:

  1.  None of the above examples take commission for the forming of a structured product into account. Such commission is deducted at maturity of the structured product.

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