Societe Generale has launched two Sterling LIBOR trackers on LSE: (1) the ST11, which is linked directly to future interest rates for December 2011; and (2) the ST12 which is linked to the future interest rates for December 2012.
According to the company the payout for both the December 2011 and the December 2012 expiry products equals the prevailing percentage level of three month Sterling LIBOR on the expiry date of the tracker multiplied by £100, provided that the product has not expired early.
Prior to expiry, the tracker can be traded during normal business hours on the LSE, with pricing in line with market-based interest rate expectations.
If at any point during the lifetime of the product, the price of the tracker’s underlying asset, i.e. three month Sterling LIBOR futures for the relevant expiry date (December 2011 for ST11 and December 2012 for ST12), falls to zero, the tracker will automatically expire early and will be worthless. In this scenario, all of the investor’s capital would be lost, said the company.
These trackers are issued by Societe Generale Acceptance, a member of the Societe Generale Group.
Intra-day liquidity is provided, with live bid and offer prices quoted on the London Stock Exchange.