What is the underlying basket in an FCN?

It is the share, index or other reference asset—or group of assets—used to determine the note's outcome. The final terms specify the basket rule.

What is an FCN strike?

The strike is the reference level used in the product's repayment calculation if its loss conditions apply.

What is an FCN barrier?

A barrier is a threshold that can affect the repayment outcome. The term sheet defines its level, observation method and consequence.

Can an FCN redeem early?

Some FCNs have early-redemption or autocall provisions. Whether they apply, and how they work, is set out in the final terms.

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TERM-SHEET REFERENCE

Fixed Coupon Note
terms explained.

An FCN term sheet describes more than a coupon. These core fields explain what is being observed, when it is observed and what can affect repayment.

Read the final documentation: this is a general educational reference, not financial advice, a product recommendation or a suitability assessment.

THE TERM SHEET

Eight fields to
read together.

One field does not determine product risk. The complete payoff and the relationship between these terms are what matter.

1COUPON

What is stated—and when paid?

Record the rate, currency, payment dates and any conditions. A stated coupon does not by itself describe capital risk.

2UNDERLYING BASKET

Which assets drive the outcome?

Confirm each underlying and the basket rule. A worst-of structure can be determined by one weak constituent.

3STRIKE

What is the reference level?

The strike is commonly used to calculate a cash or physical-settlement outcome when loss conditions apply.

4BARRIER

Which threshold matters?

Check the level, whether it is monitored continuously or on stated dates, and exactly what happens if it is reached.

5OBSERVATION

When are levels tested?

Valuation dates, averaging, market-disruption provisions and final observation rules can materially change the mechanics.

6SETTLEMENT

Cash or physical delivery?

Confirm the formula, delivery mechanics and whether an investor may receive assets rather than cash.

7ISSUER

Who makes the payments?

An FCN is an obligation of its issuer. Review the issuer identified in the terms and relevant credit-risk disclosures.

8EARLY REDEMPTION

Can the note end early?

Autocall or issuer-call rules can stop future coupons and return capital before the stated maturity date.

PRACTICAL QUESTIONS

Ask what changes
the outcome.

The useful question is rarely “what coupon does it pay?” Start with the full payoff mechanics and document the terms that could change the client’s outcome.

CHECKHow is the barrier observed?

Continuous and maturity-only barriers can have materially different mechanics.

CHECKWhat happens on a loss event?

Confirm the settlement formula, the strike used and whether cash or physical delivery applies.

For a structured product review, use the final term sheet and all relevant risk disclosures.

NEXT STEP

Turn terms into
a repeatable review.

Use the checklist to record the complete structure, then review the downside mechanics without treating an illustrative scenario as a forecast.

Explore the related resources

Use the seven-point FCN risk checklist or see the difference between an FCN barrier and strike.

FCN Risk Lab provides product-risk analytics only. It does not provide financial advice, determine suitability, establish fair value or recommend a transaction.

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