Bank of Nova Scotia Issues Callable Contingent Coupon Notes Linked to Three Major Equity Indices

Note Structure and Reference Assets

The Bank of Nova Scotia's offering comprises Callable Contingent Coupon Notes that derive their payment terms from the performance of three major U.S. equity indices: the Nasdaq-100 Index, the Russell 2000 Index, and the S&P 500 Index. The disclosure states that payments on the notes are contingent on the performance of these reference assets, with the least-performing index determining the ultimate payment at maturity. This multi-asset structure means investors are exposed to the downside of whichever index performs worst over the note's term, a feature that distinguishes these instruments from single-index linked notes.

The filing confirms that the notes do not provide investors with direct ownership or economic interest in any constituent stocks of the reference indices. Investors do not acquire voting rights, dividend entitlements, or any other rights associated with direct stock ownership. Instead, they hold contractual claims on the Bank of Nova Scotia linked solely to price performance metrics of the three indices. This structural distinction is material for investors evaluating the risk profile and potential returns of the instrument.

Contingent Coupon Mechanics and Call Provisions

The notes feature a conditional coupon payment structure whereby investors receive periodic contingent coupon payments only if specified barrier conditions are met on observation dates. The filing discloses that if the closing value of each reference asset on any contingent coupon observation date equals or exceeds its contingent coupon barrier value, investors will receive a contingent coupon payment on the corresponding payment date. However, the disclosure notes that the notes do not guarantee interest and investors may not receive any contingent coupon payments, indicating substantial uncertainty regarding periodic income.

The Bank of Nova Scotia retains the right to call the notes in their entirety (but not partially) as of any potential call settlement date at the Bank's discretion, regardless of reference asset performance. If the Bank exercises this issuer call, investors receive cash equal to the principal amount plus any contingent coupon otherwise payable on the corresponding contingent coupon payment date. This call feature gives the Bank optionality that could limit upside participation if markets rise significantly, as the issuer may call the notes when doing so is economically advantageous to the Bank rather than to investors.

Principal-at-Risk Payoff at Maturity

The most significant feature of these notes is their principal-at-risk structure at maturity. The filing states that if the Bank does not elect to call the notes prior to maturity, the payment at maturity is based solely on the performance of the reference asset with the lowest percentage change from its initial value to its final value—the "Least Performing Reference Asset." This construction creates substantial downside exposure, as investors are effectively exposed to the worst-performing index rather than an average or a more favorable metric.

If the final value of the least-performing reference asset is equal to or greater than its barrier value at maturity, investors receive the full principal amount of their notes on the maturity date, in addition to any final contingent coupon due. However, if the final value of the least-performing reference asset falls below its barrier value, the disclosure explicitly warns that investors will suffer a loss equal to the depreciation of that least-performing asset and may lose up to 100% of the principal amount. This total loss scenario underscores the leverage and risk concentration embedded in these instruments.

Estimated Value and Secondary Market Considerations

The Bank of Nova Scotia disclosed that the initial estimated value of the notes at the time terms are set on the trade date is expected to be between $947.66 and $977.66 per $1,000 principal amount, which is less than the original issue price of $1,000 (or 100%) at which investors purchase the notes. This gap between estimated value and issue price reflects the bank's internal funding costs, underwriting and structuring expenses, and hedging-related costs embedded in the offering. The filing explains that the original issue price incorporates the Bank's internal funding rate, which is typically lower than the rate the Bank would pay when issuing conventional fixed-rate debt securities.

The disclosure provides guidance on potential secondary market pricing, stating that assuming all relevant factors remain constant after the trade date, the price at which Scotia Capital (USA) Inc. may buy or sell the notes in the secondary market could initially exceed the Bank's estimated value for a period expected to be approximately three months after the original issue date. This temporary pricing advantage may reflect the bank's discretionary decision to reimburse investors a portion of estimated hedging and structuring costs during the initial period following issuance. After this initial window, secondary market values will likely reflect the embedded costs and performance dynamics of the underlying reference assets.

Distribution and Affiliate Sales Arrangements

The filing discloses that Scotia Capital (USA) Inc., an affiliate of the Bank of Nova Scotia, will purchase the notes from the Bank at the principal amount and will sell the notes to other registered broker-dealers at the principal amount. This arrangement means the issuer and its affiliate control both the creation and initial distribution channels for these instruments. The disclosure further states that the Bank may periodically pay third-party dealers a structuring fee of up to $4.50 per note with respect to some or all of the notes, providing additional compensation for intermediaries in the distribution process.

The filing notes that Scotia Capital (USA) Inc. may use the final pricing supplement to engage in market-making transactions in the notes after their initial sale and that unless informed otherwise in the confirmation of sale, the pricing supplement is being used in a market-making transaction. This dual role—as both initial purchaser and potential secondary market maker—creates a conflict of interest structure that investors should evaluate carefully. The Bank and its affiliates have economic incentives that may not always align with secondary market investors' interests.

Credit Risk and Debt Security Status

The notes are unsubordinated and unsecured debt securities of the Bank of Nova Scotia, meaning payments are subject entirely to the credit risk of the issuer. The filing emphasizes that all payments on the notes are subject to the creditworthiness of the Bank, distinguishing these instruments from secured debt or higher-priority obligations. Should the Bank experience financial distress or default, investors holding these notes would compete with other unsecured creditors for recovery, with no collateral backing their claims.

The disclosure explicitly states that the notes are not insured by the Canada Deposit Insurance Corporation pursuant to the CDIC Act, nor are they insured by the U.S. Federal Deposit Insurance Corporation or any other government agency in Canada, the United States, or any other jurisdiction. This absence of deposit insurance protection is material for investors accustomed to traditional bank deposits or who may incorrectly assume government backing. The uninsured status combines with the principal-at-risk payoff structure to create a dual-layer risk profile: reference asset performance risk and issuer credit risk.

Offering Terms and Investment Parameters

The notes are offered with a minimum investment of $1,000 and integral multiples of $1,000 in excess thereof, establishing a relatively accessible entry point for retail and institutional investors. The disclosure confirms that the notes are expected to price on July 24, 2026, and are expected to settle on July 29, 2026, with an approximate term of five years if not called prior to maturity. The CUSIP identifier is 063941DQ8 and the ISIN is US063941DQ80, allowing investors to track and verify the security through standard market databases.

All payments on the notes will be made in cash, eliminating any uncertainty regarding settlement method or potential complications involving physical delivery or alternative settlement mechanisms. The filing clarifies that the notes will not be listed on any U.S. securities exchange or automated quotation system, meaning investors who wish to exit their positions before maturity will need to negotiate sales through available over-the-counter channels or with Scotia Capital (USA) Inc. in its market-making capacity. This potential illiquidity should factor into investment decision-making, particularly for investors with shorter time horizons.

Regulatory Status and Disclosure Framework

The pricing supplement was filed pursuant to SEC Rule 424(b)(3) under Registration No. 333-282565, indicating the notes are offered as part of a registered offering registered with the Securities and Exchange Commission. The filing carries a "Subject to Completion" notice, signifying that the preliminary pricing supplement was dated July 20, 2026, with Amendment No. 1 dated July 21, 2026, superseding the initial preliminary version. This amendment structure suggests material terms or conditions were modified between the preliminary and amended versions, though the filing does not explicitly detail the specific amendments made.

The SEC's regulatory framework for these notes establishes that neither the SEC nor any state securities commission has approved or disapproved the notes or passed upon the accuracy or adequacy of the pricing supplement, product supplement, underlier supplement, prospectus supplement, or prospectus. The filing emphasizes that any representation to the contrary would constitute a criminal offense, underscoring the regulatory parameters within which these instruments must be marketed and sold. Investors should review the complete prospectus and product supplement documentation to understand all material terms, conditions, and risk factors associated with these notes.

Risk Profile and Investor Considerations

Investment in these notes involves multiple intersecting risk layers that investors should carefully evaluate. The filing directs investors to review detailed risk disclosures beginning on page P-10 of the pricing supplement, page PS-6 of the accompanying product supplement, page S-2 of the accompanying prospectus supplement, and page 8 of the accompanying prospectus. These references indicate that the full risk analysis spans multiple documents and requires investors to synthesize information across supplemental materials beyond the pricing supplement itself.

The fundamental risks include reference asset performance risk (concentrated in the least-performing index), issuer credit risk (subject to Bank of Nova Scotia creditworthiness), liquidity risk (no listing on U.S. exchanges), estimated value risk (initial pricing below secondary market value potential), and contingency risk (coupon payments not guaranteed). The disclosure emphasizes that the actual value of the notes at any time will reflect many factors and cannot be predicted with accuracy, reinforcing the inherent uncertainty surrounding these structured products. Investors should ensure they fully understand the mechanics of the least-performing asset calculation and the barrier level thresholds before committing capital.