Bank of Nova Scotia Issues $4.2 Million Autocallable Notes Linked to Three Major Indices Through 2029

Structure and Automatic Call Mechanism of the Linked Notes

The notes issued by The Bank of Nova Scotia represent unsubordinated and unsecured debt securities with returns linked to three equity indices: the Russell 2000 Index, the S&P 500 Index, and the EURO STOXX 50 Index. The disclosure explains that the notes will be automatically called if the closing value of each reference asset on any designated call observation date reaches or exceeds its initial value. When automatic call occurs, note holders receive a cash payment equal to the principal amount plus any contingent coupon otherwise payable on the corresponding contingent coupon payment date.

The autocall feature means investors may have their notes redeemed early if market conditions favor all three indices simultaneously. This structure allows the bank to manage its exposure while providing investors with potential early exit opportunities. However, the disclosure emphasizes that such early redemption is contingent upon all three indices performing at or above their initial values on specified observation dates, a condition that may prove difficult to achieve during volatile market periods.

Contingent Coupon Payments and Performance Barriers

The notes incorporate a contingent coupon mechanism that operates independently of the automatic call feature. The disclosure states that if the notes have not been automatically called and the closing value of each reference asset on any contingent coupon observation date equals or exceeds its contingent coupon barrier value, the notes will pay a contingent coupon on the corresponding contingent coupon payment date. This means coupon payments are not guaranteed and depend entirely on specified performance thresholds being met at predetermined observation dates.

Investors should understand that the contingent coupon is distinct from conventional bond interest payments. The notes do not guarantee interest and note holders may receive no contingent coupons whatsoever over the three-year term. The bank's disclosure indicates that contingent coupon payment depends on simultaneous performance requirements across all three reference assets, creating a scenario where even strong performance in one or two indices may not trigger coupon payments if the third index underperforms.

Maturity Payment Calculation Based on Worst-Performing Index

The most significant structural feature involves the calculation of maturity payments using the least performing reference asset. The disclosure explains that if the notes are not automatically called, the payment at maturity will be based solely on the performance of the reference asset with the lowest percentage change from its initial value to its final value. This "worst of" structure means that even if two of the three indices perform exceptionally well, investors' returns will be determined entirely by whichever index performs most poorly.

The disclosure further specifies that if the notes are not automatically called and the final value of the least performing reference asset equals or exceeds its barrier value, note holders will receive the principal amount of their notes on the maturity date, in addition to any contingent coupon due on such date. Conversely, if the final value of the least performing reference asset falls below its barrier value, investors will suffer a loss equal to the depreciation of that reference asset and may lose up to 100 percent of the principal amount. This asymmetric risk structure places significant emphasis on protecting the weakest-performing index throughout the note term.

Credit Risk and Unsecured Debt Status

The Bank of Nova Scotia's disclosure emphasizes that the notes are unsubordinated and unsecured obligations, meaning any payments on the notes are subject to the credit risk of the bank itself. The bank explicitly states that all payments on the notes will be made in cash and that any payment is subject to the creditworthiness of the bank. This structure differs from collateralized products and places investors in a position where they must evaluate not only the performance of three equity indices but also the bank's ability to meet its obligations when payments become due.

The disclosure notes that the notes will not be listed on any U.S. securities exchange or automated quotation system, which may limit liquidity and secondary market opportunities. Investors seeking to exit their positions before maturity will depend on the bank's affiliate, Scotia Capital (USA) Inc., to make markets in the notes. The bank provides no guarantee that such a secondary market will exist or that prices in any secondary market will reflect the notes' intrinsic value or estimated value.

Initial Estimated Value and Pricing Components

The Bank of Nova Scotia disclosed that the initial estimated value of the notes at the time the terms were set on the trade date was $961.12 per $1,000 principal amount, which is substantially less than the original issue price of 100 percent. The bank explained that this difference arises from multiple cost components embedded in the original issue price, including the bank's internal funding rate, the underwriting commission, and the costs associated with selling and structuring the notes, including the economic terms of related hedging arrangements.

The disclosure reveals that Scotia Capital (USA) Inc., an affiliate of the bank, has agreed to purchase the notes from the bank at the principal amount and to sell them to other registered broker-dealers at a discount of $20.00 (2.00 percent) per principal amount of notes. The bank's proceeds from the $4.209 million offering, after deducting the $84,180 underwriting commission, equal $4,124,820. The bank's disclosure indicates that the difference between the $961.12 estimated value and the 100 percent issue price reflects the economic value the bank retains through hedging arrangements and other structural features.

Secondary Market Pricing and Temporary Reimbursement Period

The bank disclosed that the value of the notes at any time will reflect many factors and cannot be predicted with accuracy. However, assuming that all relevant factors remain constant after the trade date, the price at which Scotia Capital may initially buy or sell the notes in the secondary market, if any, may temporarily exceed the bank's estimated value on the trade date. The bank explained that this temporary premium may occur for a period expected to be approximately three months after the original issue date because the bank may discretionarily elect to effectively reimburse investors a portion of the estimated cost of hedging its obligations and other costs that it will no longer expect to incur over the notes' term.

The disclosure states that the bank made such a discretionary election and determined the temporary reimbursement period on the basis of multiple factors, which may include the tenor of the notes and any agreements with Scotia Capital and other dealers participating in the offering. The bank emphasized that the amount of estimated costs reimbursed to investors may not be allocated ratably throughout the reimbursement period and that the bank may discontinue such reimbursement at any time or revise the reimbursement period's duration based on changes in market conditions and other unpredictable factors.

No Direct Ownership or Rights in Underlying Indices

The Bank of Nova Scotia's disclosure makes explicit that the notes are derivative products based on the price return of the least performing reference asset and do not constitute a hypothetical direct investment in any of the reference assets or any constituent stocks of the reference assets. By acquiring the notes, investors do not obtain a direct economic or other interest in, claim or entitlement to, or any legal or beneficial ownership of any reference asset constituent stock or any rights as a holder of such stocks.

This distinction is material because investors gain no voting rights, rights to receive dividends, or other distributions associated with the underlying equity indices. The notes provide only the contractual cash payments specified in the disclosure, dependent on the performance conditions outlined. Investors cannot benefit from corporate actions, dividend distributions, or other events affecting the constituent companies within the three indices beyond the derivative exposure embedded in the note structure.

No Insurance Coverage or Government Protection

The Bank of Nova Scotia's disclosure explicitly states that the notes are not insured by the Canada Deposit Insurance Corporation pursuant to the Canada Deposit Insurance Corporation Act, nor are they insured by the U.S. Federal Deposit Insurance Corporation or any other government agency of Canada, the United States, or any other jurisdiction. This distinction is critical for investors accustomed to deposit protection offered by traditional bank products.

Unlike deposits held at banks, which may qualify for CDIC or FDIC insurance up to specified limits, these structured notes provide no such government-backed protection. Investors' only recourse is the contractual obligations of The Bank of Nova Scotia and the bank's ability to meet those obligations. The lack of insurance coverage increases the relevance of the bank's creditworthiness and financial condition to the overall risk profile of the investment.

Investment Risk Factors and Liquidity Considerations

The Bank of Nova Scotia's disclosure identifies investment in the notes as involving certain risks and directs investors to additional risk disclosures found in the accompanying product supplement and prospectus materials. The bank emphasizes that risks relating to estimated value and liquidity are substantial, particularly regarding the difference between the initial estimated value and the original issue price that investors must pay.

The disclosure acknowledges that neither the bank's nor Scotia Capital's estimated value of the notes at any time is determined by reference to credit spreads or the borrowing rate the bank would pay for its conventional fixed-rate debt securities. Instead, the bank's use of its internal funding rate reduces the economic terms of the notes to investors. Secondary market liquidity for the notes may be limited or nonexistent, and Scotia Capital is under no obligation to make a market in the notes after their initial distribution. Investors should carefully evaluate their ability to hold the notes until maturity or their comfort with potential illiquidity.

Trade, Settlement, and Identification Details

The Bank of Nova Scotia disclosed specific transaction dates and identifiers for the notes. The trade date was July 17, 2026, and the notes settled on July 22, 2026, with a maturity date of July 20, 2029, providing a term of approximately three years if not automatically called prior to maturity. The minimum investment required is $1,000 per note, with additional notes available in integral multiples of $1,000. The CUSIP identifier is 063941AU2 and the ISIN is US063941AU20, allowing investors to identify the notes in trading and account systems.

The offering was made pursuant to Registration No. 333-282565 and filed as a Form 424(b)(2) pricing supplement. All payments on the notes will be made in cash, with no physical certificates or alternative settlement mechanisms available. The disclosure confirms that Scotia Capital (USA) Inc., an affiliate of The Bank of Nova Scotia, served as the underwriter for the offering and has agreed to distribute the notes to registered broker-dealers at the specified discount.