Bank of Nova Scotia Issues $1.524 Million Autocallable Notes Linked to Coinbase Stock

Structural Design of the Coinbase-Linked Notes

The Bank of Nova Scotia has structured these notes as unsubordinated and unsecured debt securities linked to the price performance of Coinbase Global Inc. common stock. The notes operate on a three-year term if not called early, with an approximate maturity of July 5, 2029. Investors receive exposure to Coinbase equity returns through a derivative product mechanism rather than direct ownership of the underlying stock. The notes do not provide voting rights, dividend entitlements, or any beneficial ownership claim on Coinbase securities, clarifying that investors are purely taking on structured credit and equity market exposure through the Bank of Nova Scotia's obligations.

The note design incorporates multiple valuation dates and barrier levels that determine payment outcomes. The Initial Value, established on the trade date of July 15, 2026, serves as the benchmark against which all performance measurements are calculated. This structural framework allows the Bank to offer potentially enhanced yields through contingent coupon mechanisms while simultaneously limiting downside protection. Investors purchasing the notes assume full responsibility for understanding these complex payment conditions and their implications for overall returns.

Autocall Mechanism and Early Redemption Features

A defining characteristic of these notes is the automatic call provision, which triggers if the Closing Value of Coinbase stock on any designated Call Observation Date reaches or exceeds the Initial Value. Once this threshold is breached, the notes are automatically redeemed at par, returning 100% of the principal amount to investors and terminating the note contract. This feature creates an asymmetric risk-reward profile where investors benefit from sideways to modestly positive Coinbase performance through early exit at par, but forgo participation in substantial upside movements beyond the initial stock price level.

The automatic call feature introduces timing uncertainty into the investment, as the notes could be recalled at any observation date without investor consent or ability to negotiate exit terms. From an investor perspective, this means that if Coinbase stock appreciates significantly beyond the Initial Value, investors holding the notes receive only their principal back rather than capturing the full appreciation. The automatic call mechanism effectively caps investor upside while simultaneously shortening the investment horizon when market conditions prove favorable for the underlying equity.

Contingent Coupon Payment Structure and Conditions

The notes provide contingent coupon payments on specified observation dates, but only if Coinbase stock closes at or above a predetermined Contingent Coupon Barrier Value on those dates. The disclosure states that "the Notes do not guarantee interest and you may not receive any Contingent Coupons on the Notes," emphasizing the conditional nature of these income payments. Should the barrier condition not be satisfied, investors receive no coupon payment for that period, creating a scenario where total return depends entirely on whether the stock price sustains required performance thresholds.

This contingent structure introduces significant income risk into the investment profile. Unlike conventional bonds offering guaranteed interest payments, investors in these notes face scenarios where expected coupon payments may be entirely withheld if Coinbase stock price declines even modestly. The specific coupon percentages and observation dates are detailed within the product supplement accompanying this disclosure, but the pricing supplement itself does not provide numerical coupon rates. Investors must review the complete product documentation to understand the precise income mechanics and payment probability scenarios.

Maturity Payment Mechanics and Principal Risk Exposure

At maturity, payment to investors depends entirely on whether the Final Value—defined as the Closing Value of Coinbase stock on the Final Valuation Date—equals or exceeds the Barrier Value. If the Final Value meets or surpasses the Barrier Value, investors receive their full $1,000 principal amount per note on the maturity date, plus any contingent coupon due on that date. However, if the Final Value falls below the Barrier Value, the disclosure explicitly warns that "you will suffer a loss on the Notes equal to the depreciation of the Reference Asset and you may lose up to 100% of the Principal Amount."

This structure exposes investors to complete principal loss if Coinbase stock declines sufficiently below its barrier level by the final valuation date. The disclosure does not specify the exact Barrier Value percentage relative to the Initial Value, but the potential for total loss is unambiguous. This characteristic distinguishes the notes from conventional fixed-income investments and positions them as equity-linked products with substantial downside risk. Investors considering these notes should fully understand that principal loss scenarios are mathematically possible and could materialize if cryptocurrency markets experience significant correction during the note's three-year term.

Pricing and Valuation Considerations for Investors

The Bank of Nova Scotia established an initial estimated value of $967.00 per $1,000 principal amount, which the disclosure identifies as being less than the $1,000 original issue price. This $33 per $1,000 discount represents the embedded cost structure associated with structuring the product, including underwriting commissions, hedging expenses, and the Bank's internal funding costs. Scotia Capital (USA) Inc., the Bank's affiliate, received a 2.00% underwriting commission totaling $30,480 on the total $1.524 million offering, reducing net proceeds to the Bank to $1,493,520.

The disclosure explains that the initial estimated value incorporates the Bank's internal pricing models referencing the Bank's internal funding rate on the trade date and assumptions about market parameters. The Bank's use of its internal funding rate—described as "typically lower than the rate the Bank would pay when it issues conventional fixed rate debt securities"—effectively reduces the economic value delivered to investors. Additionally, the Bank indicated it may elect to reimburse investors a portion of estimated hedging and structural costs over an approximately three-month period following the original issue date, potentially allowing secondary market prices to temporarily exceed the trade date estimated value, though such reimbursement is discretionary and subject to discontinuation.

Credit Risk and Issuer Obligations

The notes represent unsubordinated and unsecured obligations of The Bank of Nova Scotia, meaning that all payments—including principal and any contingent coupons—depend entirely on the Bank's creditworthiness and ability to meet its obligations when due. The disclosure states plainly that "any payments on the Notes are subject to the credit risk of the Bank" and "any payment on your Notes is subject to the creditworthiness of the Bank." Investors are not purchasing equity or commodity exposure only; they are simultaneously assuming credit risk associated with a Canadian financial institution.

Notably, the notes are not insured by the Canada Deposit Insurance Corporation (CDIC) pursuant to the CDIC Act, nor are they protected by Federal Deposit Insurance Corporation (FDIC) coverage or any other government insurance program in Canada, the United States, or any other jurisdiction. This means that if The Bank of Nova Scotia were to experience financial distress or default, investors would have no government-backed safety net and would rank alongside other unsecured creditors in any bankruptcy or restructuring scenario. The combination of credit risk and structured product complexity creates a layered risk profile distinct from conventional bank deposits or publicly traded equity.

Secondary Market Liquidity and Trading Constraints

The notes will not be listed on any U.S. securities exchange or automated quotation system, meaning investors cannot access standardized market trading venues. Scotia Capital (USA) Inc. may elect to engage in market-making activities in the notes after their initial sale, but the disclosure explicitly states that such market-making is not obligatory. Any secondary market transaction would depend on Scotia Capital's discretionary willingness to provide bid-ask quotes and execute trades. This structural absence of guaranteed liquidity distinguishes the notes from exchange-traded securities and introduces significant practical constraints on investors' ability to exit positions prior to maturity.

The disclosure advises that "the price at which SCUSA would buy or sell your Notes (if SCUSA makes a market, which it is not obligated to do) will be based on SCUSA's estimated value of your Notes" and that SCUSA may discontinue market-making activities at any time without notice. Investors should recognize that they may be unable to liquidate their holdings except at potentially unfavorable prices negotiated directly with the Bank's affiliate or other willing counterparties. This illiquidity risk is particularly significant for structured products with declining valuations, as market-making appetite typically diminishes as products move in-the-money or underwater.

Regulatory Status and Investment Suitability Considerations

The Bank of Nova Scotia filed this pricing supplement pursuant to Rule 424(b)(2) under the Securities Act of 1933, with registration number 333-282565. The disclosure includes standard SEC disclaimers stating that "neither the United States Securities and Exchange Commission (the 'SEC') nor any state securities commission has approved or disapproved of the Notes or passed upon the accuracy or the adequacy of this pricing supplement, the accompanying product supplement, prospectus supplement or prospectus." This notation clarifies that SEC review does not constitute an endorsement of the product's terms, valuation, or appropriateness for particular investor categories.

Investors should recognize that these notes represent complex derivative securities requiring careful analysis of multiple interconnected components: equity price performance, barrier levels, contingent coupons, credit exposure, and liquidity constraints. The disclosure directs investors to review "Additional Risks" beginning on page P-10 of the pricing supplement, "Additional Risk Factors Specific to the Notes" in the accompanying product supplement, and "Risk Factors" in the accompanying prospectus supplement and main prospectus. The elaborate risk disclosure structure reflects the intricate nature of autocallable structured products and the multiple ways in which investment returns can diverge from investor expectations.

Cryptocurrency Exposure Through Structured Product Framework

By linking returns to Coinbase Global Inc. stock, the notes provide indirect exposure to cryptocurrency market trends and the digital asset exchange industry. However, investors should understand that they are not purchasing Coinbase equity directly or gaining any ownership rights in the company. Instead, they are purchasing a derivative product whose value depends on Coinbase stock price movements, filtered through the Bank of Nova Scotia's credit risk and the complex payment mechanics embedded in the note structure. This distinction matters significantly for investors seeking cryptocurrency exposure, as the notes add layers of structural and credit complexity to what might otherwise be obtained through direct equity purchase.

Coinbase's business model and profitability are heavily dependent on cryptocurrency trading volumes, regulatory developments affecting digital asset markets, and broader adoption trends within the digital assets ecosystem. The notes' returns are therefore exposed to volatility in cryptocurrency valuations, regulatory uncertainty, and company-specific operational risks. The Bank of Nova Scotia's decision to offer such products reflects market demand for structured exposure to cryptocurrency assets from investors who may prefer leveraging the Bank's distribution infrastructure and credit standing rather than accessing cryptocurrency markets directly through alternative venues.

Settlement and CUSIP Identification Details

The notes traded on July 15, 2026, and settled on July 20, 2026, with a standard five-business-day settlement period. The notes carry CUSIP number 063941AS7 and ISIN US063941AS73, enabling identification and settlement through standard securities clearing systems. The term to maturity is approximately three years assuming no early automatic call, positioning the maturity date at July 5, 2029. Minimum investment amounts are set at $1,000 per note with integral multiples of $1,000 in excess thereof, establishing a relatively accessible entry point compared to some institutional structured products while maintaining the complexity associated with autocallable derivative securities.

The specific settlement mechanics and ongoing administration of the notes are governed by the complete legal documentation referenced in the disclosure, including the product supplement, prospectus supplement, and base prospectus filed with the SEC. All payments on the notes will be made in cash, meaning investors will not receive physical securities or alternative settlement mechanisms. The disclosure of CUSIP and ISIN identifiers facilitates secondary market trading infrastructure and enables investors to track their holdings through standard financial databases and custodial systems, though as noted above, secondary market liquidity may be limited.