COE is the Brazilian version of Structured Notes
COE is a security similar to the Structured Notes, very popular in the United States and Europe. In a single application, COE provides diversity and access to new markets. It is easier for you to monitor performance, since COE is already configured as a single instrument, which also means single taxation. Costs would likely be higher if you would direct your assets to various assets separately.
Banks issue the COEs, but they are registered at B3, which is authorized and prepared to make the deposit and also the settlement of the COE. If your bank is accredited at Certifica, that’s even better for you, since you can rely on the added security of this seal.
COE has its maturity, minimum contribution amount, index and gains and losses scenario (figure) defined by banks for different investor profiles.
Suitability. Does it work for you ?
When issuing a COE, banks follow the rules of suitability (i.e. analyzing the risk appetite of each client). So if you are interested in a particular COE, it will be verified if it suits your profile and your understanding.
This transparency is important from a product regulation standpoint. According to this regulation, COE may be issued in two different manners:
- Protected Face Value, with guarantee of the principal invested
or
- Face Value at Risk, when there is possibility of loss to the extent of the capital invested
Therefore, more conservative investors, who once were concerned to access some specific market, now have the possibility to achieve a differentiated compensation by establishing a loss limit on investment. Bolder investors have the opportunity to invest in operations with some degree of risk, but with clearer strategies and scenarios that would be difficult to build alone.