SuperDerivatives last week released an upgrade to its coverage of the target redemption family of structures on SDX, its independent front-office platform.
In addition to already supporting regular target redemption forwards (tarfs), tarfs with knock out/in barriers, digital and pivot tarfs, SDX now allows the target within these structures to be defined on a per unit basis, i.e. in big figures.
SDX is the only platform currently able to provide this level of support in terms of both breadth of coverage, support of per unit payout/variable notionals and pricing table creation, SuperDerivatives claims.
The change is particularly significant since most participants and term sheets view the target profit in terms of a number of units/big figures of profit per unit of base notional and not in terms of absolute total cash profits. Also, trades often include notionals that vary over the life of the trade and in this case the only way to correctly price and accumulate profit over time is to do so independently of notional size, SuperDerivatives says.
There is an increasing need for price instruments that can only be replicated by combining multiple target redemption notes. In this instance, it is critical to be able to set the target in units of term, it adds.