Retail Securities Trading Tool (RSTT)

Enhance financial literacy through accessible investment tools

At Capilever we believe that it’s the job of the bank to explain complex financial products and services in the simplest possible way and assist customers manage their financial risk in the best and cheapest possible way. Our investment tool offers a step in the right direction.

Retail Securities Trading Tool (RSTT)

Enhance financial literacy through accessible investment tools

Allow retail customers to invest their assets in individual securities with

✓ Minimized market risk

✓ Maximized capital guarantee

✓ Limited commission costs

✓ Maximal liquidity

Allow retail customers to invest their assets in individual securities with

✓ Minimized market risk

✓ Maximized capital guarantee

✓ Limited commission costs

✓ Maximal liquidity

Apply advanced risk hedging techniques

✓ Understand the taken market risk

✓ Differentiate the portfolio

✓ Eliminate the timing risk

✓ Limit maximum loss

✓ Capitalize profits

✓ Hedge losses

Apply advanced risk hedging techniques

✓ Understand the taken market risk

✓ Differentiate the portfolio

✓ Eliminate the timing risk

✓ Limit maximum loss

✓ Capitalize profits

✓ Hedge losses

WHAT ARE CUSTOMER BENEFITS OF RSTT?

Profit from advanced risk management techniques, without needing to have deep financial knowledge

Benefit from a highly liquid portfolio with capital protection at minimum costs

Automatic follow-up of your portfolio without having to actively follow-up your investment portfolio

Customer is still fully in control contrarily to most robo-advisors – High support self-service model

CUSTOMER BENEFITS

Profit from advanced risk management techniques, without needing to have deep financial knowledge
Benefit from a highly liquid portfolio with capital protection at minimum costs
Automatic follow-up of your portfolio without having to actively follow-up your investment portfolio
Customer is still fully in control contrarily to most robo-advisors – High support self-service model

WHAT ARE BANK BENEFITS OF RSTT?

: Higher transaction volumes, more individual positions and more active management of the portfolios

: Customer retention and acquisition via more extensive investment services

: Giving edge to customers resulting in increased customer satisfaction

: More liquid positions allowing easier usage for pledging via LABL tool

BANK BENEFITS

Higher transaction volumes, more individual positions and more active management of the portfolios
Customer retention and acquisition via more extensive investment services
Giving edge to customers resulting in increased customer satisfaction
More liquid positions allowing easier usage for pledging via LABL tool

Thanks to RSTT, customers with little knowledge of securities can still optimize their portfolio from a risk point-of-view in a simple and user-friendly way

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RSTT USE CASES

John has inherited some money. He has no experience with investments. Worried by high inflation rates, he checks options at his bank which offers accessible investment tools.

John has recently inherited €50.000 in cash. John has some interest in the financial news, but he is definitely not acquainted with trading stock. Furthermore John has a busy life, so he doesn’t want to spend much time on following up on his portfolio. Furthermore John has no direct need for the money, but the money – coming from an inheritance – has emotional value attached to it, so John wouldn’t like to lose too much of this money. At the same time, John is aware of the fact that most low-risk interest-rate linked products (saving accounts, term account and investment grade bonds) actually provide an interest rate lower than the inflation rate, so he wouldn’t want to see that this money is worth actually less when he wants to use it in 10 years.

John, having a busy life, prefers to do as much as possible self-service and online. Luckily his bank has just implemented the RSTT tool of Capilever, which actively assists John in his trading activities, without giving actual advise.

John decides to invest the money in 5 individual shares. His good friend (who is an experienced investor) has advised him to invest in Tesla and Pfizer. John searches for these 2 securities. After selection, the system shows all relevant risk information [Understand the risk you are taking]. From this detail screen, John places a trade for €10.000 (John doesn’t have to calculate himself how much stock units he needs for €10.000, the system calculates this automatically for him). Furthermore, John selects a number of risk hedging techniques, proposed by the system. First of all, John – not knowing if the timing is optimal – decides to spread the acquisition for €10.000 over a period of 10 months, buying every 2 months €2.000 is the desired share [Eliminate the timing risk]. John inputs this once and the system will automatically handle this. Additionally John decides to input caps, i.e. if the share has a profit of more than 20% he wants to capitalize his profit [Capitalize your profits] and when loss is more than 30% he wants to stop his losses [Limit your maximum loss].

For the remaining €30.000, John makes a search. John searches for equities, with a moderate risk group (grouping of equities on historical VaR) and receives a list of securities matching the search and sorted by covariance with the existing 2 (pending) positions in his portfolio [Differentiate your portfolio]. John selects a real estate holding company, he read about, which has a very low correlation with his position on Tesla and Pfizer. Again John invests €10.000 over a period, but this time 5 months, investing every month €2.000. Furthermore as John is less certain about this position, he wants to hedge his risk for the coming 2 years [Hedge losses]. Automatically the system blocks the resulting position and writes a coverall call option at a strike price equal to current price + 25%. This will cap his profit, but the resulting premium received will reduce his potential loss.

The remaining €20.000, he leaves open for now, but the ease of inputting his trades, allows John to easily come back, learn and invest the next time he has some free time.

Understanding the risk you are taking

Sylvie is investing her money in equity, funds and bonds. Sylvie is aware that equity is a higher risk product than a bond, but has no idea how to compare different securities of the same security type. The RSTT tool shows this risk information in a graphical, intuitive and easy way. Complex financial measures like maximum drawdown, VaR and duration are shown in such a way that the risk impact of having a position in the security is explained. This way Sylvie can easily compare different securities from a risk perspective and take a deliberate and well-informed decision on which risk she is willing to take. If Sylvie considers a security as too risky, she can immediately look up another similar security (same security type, currency, region and/or sector) that provides a lower risk.

Differentiating your portfolio

Nancy has an existing investment portfolio with a number of positions. Nancy just received a well-deserved bonus from her company and wants to invest this money. Nancy has done some research and identified 3 companies in which she beliefs there is a good investment opportunity. The bonus is however not that big to invest in all 3 securities. Nancy therefore decides to reduce the risk of her investment portfolio, by maximizing the differentiation (i.e. minimizing the price correlation between the positions) in her portfolio. The RSTT tool allows to easily compare the impact on the portfolio variance between a buy order for the 3 securities. Based on this info, Nancy takes a decision.

Eliminating the timing risk

Jack has heard that investing in Apple is an excellent investment opportunity. However when Jack looks at the price graph of the Apple share, he is not really sure whether it’s the right moment (on the price curve) to buy Apple shares. Since it’s a long-term investment, Jack doesn’t need to buy on the minimum of the curve, but he does want to avoid buying at a local maximum on the curve. He decides therefore to spread his acquisition over time. The RSTT tool offers him an automated process, allowing to spread his acquisition over time, without Jack having to manually input an order every X weeks.

Limiting your maximum loss

Thomas wants to buy Tesla shares, but is worried about losing too much money in case his investment doesn’t turn out as expected. The RSTT tool allows Thomas to input directly a maximum loss compared to his position (average) acquisition price. When this maximum loss is exceeded, the position is immediately sold, thus limiting his loss to this maximum.

Capitalizing your profits

Peter wants to buy Apple shares and has read in an article that the share is currently 15% undervaluated. He beliefs that a lot of investors will follow this advice, meaning they will buy now, but likely also sell when this target price is reached. Peter therefore wants to capitalize his profit when 15% gain is reached, but also doesn’t want to follow-up the price continuously. The RSTT tool allows Peter to input directly a profit percentage, at which Peter wants to automatically capitalize his profits.

Hedging losses

Catherine wants to invest in Amazon, but she’s on her guard against too significant losses. Catherine therefore uses the option provided by the RSTT tool to hedge for losses. The tool explains in layman’s terms what the impact is of this hedging, for example that profits are capped or reduced, while at the same time losses are also reduced. Via some graphical simulations, Catherine sees for a few example scenarios how her P&L will look like when Amazon’s price increases/decreases.

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