Daily Leverage Certificate (DLC) Singapore

Last updated: September 2026

A Daily Leverage Certificate (DLC) is an exchange-traded security, issued by a bank on SGX, that provides fixed leverage of up to 7 times the single-day performance of an underlying index, stock, or commodity, with the leverage resetting daily rather than remaining fixed over the life of the investment.

Not financial advice. All figures for educational reference only. Data as at September 2026.

Table of Contents

What Is Daily Leverage Certificate?

A Daily Leverage Certificate is designed for investors who want amplified exposure to the daily price movement of an index, stock, or commodity, without needing a margin account or facing a margin call if the position moves against them. SGX became the first exchange in Asia to offer this product category when it listed its inaugural DLCs in July 2017, and the platform has since expanded to include multiple issuing banks and a wider range of underlying assets.

Each DLC references a specific underlying and a specific fixed leverage factor, commonly ranging from 3x up to 7x, and can be either a “long” certificate, which gains when the underlying rises, or a “short” certificate, which gains when the underlying falls. Issuers such as Societe Generale, an early and prolific DLC issuer globally, along with UBS and Mirae Asset Securities, have listed DLCs on SGX tracking underlyings from the Hang Seng Index and Nikkei 225 to gold and silver ETF proxies and, more recently, baskets of individual US mega-cap “Magnificent Seven” stocks.

DLCs sit within SGX’s broader family of leveraged and structured trading instruments, alongside structured warrants and exchange traded notes, but with a distinctly different mechanic: rather than deriving value from an option’s strike price and time decay, a DLC’s value tracks a fixed multiple of the underlying asset’s percentage move for that specific trading day.

How It Works in Singapore

The defining mechanic of a DLC is that its leverage resets at the end of each trading day. If a 5x long DLC’s underlying index rises 2% on a given day, the DLC’s value rises by approximately 5 times 2%, or 10%, for that day. The following day, the 5x leverage is recalculated against the new, higher underlying level and the new DLC price, not against the original starting point.

This daily reset creates a compounding effect that means a DLC’s return over multiple days is not simply 5 times the underlying’s multi-day return. In a strongly trending market, this compounding can actually amplify gains beyond a naive 5x expectation. In a volatile, sideways, or choppy market, however, this same compounding effect tends to erode value over time, even if the underlying asset ends up roughly unchanged over the holding period, an effect commonly described as volatility decay or path dependency, and one of the most important risks for investors to understand before holding a DLC for more than a single trading session.

Because a DLC is a certificate issued by a bank, rather than a margined derivatives position, an investor’s maximum loss is capped at the amount they invested in the certificate; there are no margin calls demanding additional funds, and the position cannot go into negative equity. If the underlying asset moves sharply against the certificate’s direction intraday, issuers may trigger a knock-out or early termination mechanism to protect against the certificate’s value falling below zero, at which point the certificate stops trading and any residual value, if any, is returned to holders.

Worked Example

Suppose an investor buys a 5x long DLC tracking the Hang Seng Index at a reference certificate price of S$1.00, when the index itself sits at 18,000 points.

Day 1: The Hang Seng Index rises 2% to 18,360. The DLC, tracking 5 times that daily move, rises approximately 10%, to about S$1.10.

Day 2: The Hang Seng Index then falls 2% from its new level, back down to roughly 17,993 (close to, but not exactly, its original starting level, due to the mechanics of percentage moves). The DLC, tracking 5 times this new day’s move from its new S$1.10 base, falls approximately 10%, to about S$0.99.

Even though the underlying index ended these two days almost exactly where it started, the DLC ended slightly below its original S$1.00 price, a small but real illustration of the volatility decay that arises from daily leverage resets, an effect that compounds further, and can become significant, the longer a DLC is held through choppy, range-bound markets.

Advantages

• No margin calls or negative equity risk. Maximum loss is capped at the capital invested in the certificate, unlike a traditional margined leveraged position.
• High, fixed leverage without a margin account. Investors can access up to 7x daily leverage through a standard SGX brokerage account, without the account approvals and monitoring typically required for margin trading.
• Exposure to a wide range of underlyings. DLCs on SGX cover major regional indices, commodities, and increasingly individual US mega-cap stock baskets, offering flexibility for tactical, short-term trading views.
• Both long and short variants available. Investors can express a bearish view through short DLCs just as easily as a bullish view through long DLCs, without needing to short-sell the underlying directly.
• Transparent, exchange-traded pricing. Unlike some over-the-counter leveraged products, DLCs trade on SGX with visible, continuous pricing throughout the trading day.

Risks and Limitations

• Volatility decay erodes value in choppy markets. The daily leverage reset means holding a DLC over multiple days in a sideways or volatile market can result in losses even if the underlying ends up roughly unchanged.
• Not suitable for medium to long-term holding. DLCs are explicitly designed and marketed as short-term, typically single-day or very short-horizon trading tools, not buy-and-hold investments.
• Knock-out risk. A sharp adverse intraday move can trigger an early termination mechanism, potentially resulting in a total or near-total loss of the certificate’s value before the trading day even ends.
• Issuer credit risk. As a certificate issued by a bank, a DLC’s value ultimately depends on that issuer meeting its obligations, similar to other structured products.
• Easily misunderstood leverage mechanic. Investors who assume a 5x DLC held for a month will simply return 5 times the underlying’s monthly performance are very likely to be surprised, often unpleasantly, by the actual realised return due to daily compounding.

Daily Leverage Certificate vs Structured Warrant

The Bottom Line

For Singapore investors, a Daily Leverage Certificate is a precision tool for expressing a very short-term, high-conviction directional view, not a leveraged buy-and-hold investment. The daily reset mechanic that defines the product also means its multi-day behaviour can diverge meaningfully, and sometimes painfully, from a naive expectation of simply multiplying the underlying’s return by the leverage factor, making DLCs a product best reserved for active traders who actively monitor and manage the position daily.

Related Terms:

• Warrants Singapore Stocks
• Exchange Traded Notes (ETNs) Singapore
• Contra Trading (SGX) Singapore

Frequently Asked Questions