This product, which usually has a tenor of one to three months, allows you to make profits when foreign exchange markets are trending sideways. It offers
a higher profit rate than the UBS Sharia-Compliant Deposit, which is balanced by the risk of receiving an alternative currency at expiration. UBS Sharia-Compliant
FX BLOCs consist of two separate but simultaneous transactions: a UBS Sharia-Compliant Deposit and a unilateral promise (wa’ad) on the investment currency against an alternative currency.
A structured Islamic investment
UBS Sharia-Compliant FX BLOCs are based on a UBS Sharia-Compliant Deposit but consist of an additional (simultaneous) transaction: A unilateral promise (wa’ad) on the investment currency against an alternative currency. By means of the unilateral promise you grant UBS AG the right to convert the investment amount into an alternative currency amount at a promised FX rate at expiration. If UBS AG exercises this promise the proceeds from the UBS Sharia-Compliant Deposit (commodity murabaha) will be used to meet your
currency exchange obligations (no capital protection).
Higher potential profits
With UBS Sharia-Compliant FX BLOCs you may receive an alternative currency at a discount compared to the spot level on the trade date. As a result, these products provide a higher potential profit rate in sideways
tending foreign exchange markets. Depending on the underlying exchange rate on the expiration date, the initial investment is paid back with the profit rate in the investment currency or in the alternative currency. If payment is made in the alternative currency, the amount paid out corresponds to the initial investment plus the profit rate converted at the Promised FX Rate.
Higher profit rate than with a UBS Sharia-Compliant Deposit alone
Tailor-made solutions also for private investors starting at USD 50,000 (choice of currency, time to maturity and profit rate)
Possibility to generate profits in sideways trending currency markets
Investor profile and suitability
You expect relatively stable exchange rates and are prepared to accept a negative return if the alternative currency depreciates sharply.
You are also prepared to incur higher risks with a view to exploiting attractive earnings opportunities.
You are prepared to hold the investment until maturity, since Sharia-compliant FX BLOCs are usually tailor-made buy-and-hold products for which there is not a secondary market.
Risks
While the potential loss under all scenarios is lower than with a direct investment in one of the two currencies, there is no protection against falling exchange rates.
It is possible that you will be paid back in a currency other than the investment currency.
Sharia-compliant FX BLOCs are usually issued by UBS AG Jersey Branch, which means that investors are exposed to the credit risk of UBS AG.
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