A structured retail product (SRP) is a financial product that is issued (by certain institutions, e.g., banks, insurance firms, etc.) to the public as an investment vehicle that consists of more than one component. For example, the product may have two components: a primary and a contingent investment such as an underlying asset (the primary investment: certificates, bonds, notes, etc., or generally the wrapper) and a derivative instrument.
Structured retail products take multiple types including:
- Fixed-income-linked structured retail products.
- Commodity-linked retail products.
- FX-linked structured retail products.
- Equity-linked structured retail products.
For example, a fixed-income version may consist of a zero-coupon or interest-bearing note combined with a derivative whose value (performance) is usually realized at the maturity of the product. An example is an equity-linked note (ELN) that makes a periodical “fixed” interest payment as well as a repayment, at maturity, of the face value of the debt instrument liked to (multiplied by) the return of a commodity (e.g., gold) that has experienced good to excellent performance over a span of previous years).
