Bank of Nova Scotia Issues $8.9 Million Contingent Income Auto-Callable Securities Linked to Amazon, Alphabet, and Microsoft Stock Performance

Structured Product Architecture and Underlying Reference Assets

The Bank of Nova Scotia issued these Contingent Income Auto-Callable Securities as part of its Senior Note Program, Series A. The securities represent senior unsecured debt obligations of the Canadian financial institution with an aggregate principal amount of $8.933 million. Investors can purchase the securities at a stated principal amount of $1,000.00 per security with a minimum investment requirement of $1,000.00, meaning each investor must purchase at least one security to participate in the offering.

The three underlying reference assets for this structured product are the common stock of Amazon.com Inc., the Class A common stock of Alphabet Inc., and the common stock of Microsoft Corporation. All payments on the securities, including contingent quarterly coupons and any principal repayment at maturity, are determined by the performance of the worst-performing stock among these three technology giants. This "worst of" structure means that even if two of the three stocks appreciate significantly, a substantial decline in any single underlying stock will trigger coupon suspension and potential principal loss for investors.

Contingent Coupon Mechanics and Memory Feature

The securities offer the opportunity to earn contingent quarterly coupons of $31.025 per security, representing an annualized return of 12.41% on the stated principal amount, but only under specific conditions. On each of the eight scheduled determination dates—October 19, 2026, January 19, 2027, April 19, 2027, July 19, 2027, October 18, 2027, January 18, 2028, April 17, 2028, and July 17, 2028—the Bank of Nova Scotia will assess whether the closing prices of all three underlying stocks remain at or above their respective coupon threshold prices, set at 50% of their initial share prices.

A notable feature of these securities is the memory coupon mechanism. If a contingent quarterly coupon is not paid on any determination date because the closing price of any underlying stock falls below its coupon threshold price, that missed coupon does not disappear permanently. Instead, the unpaid contingent coupon accrues and becomes payable on a subsequent contingent coupon payment date if all three underlying stocks return to or exceed their coupon threshold prices. This memory feature means investors could receive multiple quarters' worth of accumulated coupons on a single payment date if market conditions improve after a period of underperformance. However, if the closing price of any underlying stock remains below its coupon threshold price on every determination date, investors will receive no contingent coupons during the entire two-year term of the securities.

Early Redemption and Automatic Call Provisions

The securities feature an automatic early redemption provision that can terminate the investment prior to the scheduled maturity date of July 20, 2028. If on any determination date (other than the final determination date of July 17, 2028), the closing prices of all three underlying stocks are greater than or equal to their respective call threshold prices, the Bank of Nova Scotia will automatically redeem the securities on the first contingent coupon payment date following that determination date. The early redemption payment will equal the stated principal amount of $1,000 plus the contingent quarterly coupon otherwise payable with respect to that determination date, plus any previously unpaid contingent quarterly coupons accumulated through the memory coupon feature.

Investors should understand that once early redemption occurs, no further payments will be made on the securities, and the investment terminates. The call threshold prices are not explicitly stated in the pricing supplement but are referenced as being tied to the underlying stock performance thresholds. If the closing price of any of the three underlying stocks falls below its call threshold price on a determination date, the securities will not be automatically redeemed, and investors will continue to hold them with ongoing exposure to market movements.

Principal-at-Risk Structure and Downside Protection Limitations

These securities do not guarantee the repayment of principal and do not provide for regular interest payments in the traditional sense. Instead, they are principal-at-risk investments where investors may recover less than their original $1,000 investment per security at maturity. The downside threshold price for each underlying stock is set at 50% of its initial share price. If, on the final determination date of July 17, 2028, the closing price of any of the three underlying stocks falls below this downside threshold price, the Bank of Nova Scotia will pay investors a cash amount per security that will be less than 50% of the stated principal amount and could potentially be zero.

In this adverse scenario, investors bear a 1-to-1 basis loss relative to the decline of the worst-performing underlying stock. For example, if Amazon stock declines 60% from its initial price while Alphabet and Microsoft stocks remain stable, the securities would trigger the downside threshold breach, and investors would lose approximately 60% of their principal investment. The disclosure emphasizes that investors must be willing to accept the risk of losing a significant portion or potentially all of their investment in these securities. The Bank of Nova Scotia also notes that these are not secured obligations, meaning investors have no security interest in any underlying reference assets and will have no access to collateral in case of default.

Pricing Terms and Settlement Mechanics

The Bank of Nova Scotia priced the Contingent Income Auto-Callable Securities on July 17, 2026, at an issue price of $1,000.00 per security, with an original issue date of July 22, 2026—three business days after the pricing date. This T+3 settlement structure differs from the standard one-business-day settlement (T+1) required by Rule 15c6-1 of the Securities Exchange Act of 1934 for secondary market trades. The company did not disclose specific commission amounts or other issue-related costs that may be embedded in the offering price.

Purchasers who wish to trade the securities in the secondary market before July 21, 2026 (one business day before the scheduled delivery date) will face settlement complications due to the three-business-day settlement period of the initial offering. To prevent failed settlements, such early traders will be required to specify alternative settlement arrangements with their counterparties. This settlement structure may limit liquidity for investors seeking to exit positions immediately after pricing.

Determination and Payment Dates Throughout the Two-Year Term

The structured product includes eight scheduled determination dates spanning the approximately two-year investment period from July 2026 through July 2028. These determination dates are October 19, 2026, January 19, 2027, April 19, 2027, July 19, 2027, October 18, 2027, January 18, 2028, April 17, 2028, and July 17, 2028, with the last date serving as the final determination date. The corresponding contingent coupon payment dates are scheduled for October 22, 2026, January 22, 2027, April 22, 2027, July 22, 2027, October 21, 2027, January 21, 2028, April 20, 2028, and the maturity date itself.

The Bank of Nova Scotia retains the right to postpone determination dates in cases of non-trading days and certain market disruption events, as described in the accompanying product supplement and general terms of the notes. Similarly, contingent coupon payment dates may be postponed for non-business days. The final maturity date of July 20, 2028, may also be subject to postponement in cases of specific market disruption events. Investors should be aware that these postponements could extend the timeline for receiving contingent coupon payments or learning whether early redemption has been triggered.

Credit Risk and Issuer Considerations

All payments on the securities, including principal repayment at maturity and all contingent coupon payments, are subject to the full credit risk of The Bank of Nova Scotia. The Bank of Nova Scotia is a major Canadian financial institution, but like all issuing entities, it faces the risk of default on its obligations. In the event that The Bank of Nova Scotia were to experience financial distress or default on its payment obligations under these securities, investors may not receive any amounts owed to them, and they could lose their entire investment in the securities.

The securities are issued as senior unsecured debt, meaning they are not backed by any collateral or security interest in specific assets. Investors hold no claim on or access to any underlying reference assets (Amazon, Alphabet, or Microsoft stock) and cannot liquidate these assets to recover their investment. The disclosure emphasizes that in addition to the market risk associated with the performance of the three underlying technology stocks, investors also bear the credit risk of The Bank of Nova Scotia as an issuer. This dual-layer risk structure—market risk tied to stock performance and credit risk tied to issuer solvency—is a defining characteristic of these structured securities.

No Equity Participation and Return Limitations

Investors in these Contingent Income Auto-Callable Securities will not participate in any appreciation of the underlying stocks beyond the fixed contingent coupon payments if they are earned. Even if Amazon, Alphabet, or Microsoft stock prices appreciate significantly during the two-year term, investors will realize no returns beyond the contingent quarterly coupons of $31.025 per security that may be paid on determination dates when all three stocks remain above their coupon threshold prices. The securities are designed to provide fixed-income-like returns through the contingent coupon structure, not equity-like upside participation.

The Bank of Nova Scotia explicitly states in the offering disclosure that these securities are intended for investors who seek the opportunity to earn interest at a potentially above-market rate in exchange for accepting the risk of receiving no interest payments over the entire term and the risk of losing a significant portion or all of their principal investment. The maximum return an investor can achieve is the sum of all contingent quarterly coupons paid during the holding period (if all determination dates result in all three stocks remaining above coupon threshold prices) plus the return of principal at maturity or early redemption. For investors who experience even a single determination date where any underlying stock falls below its coupon threshold price, the maximum potential return is reduced by the lost contingent coupon, unless and until that coupon is recovered through the memory coupon feature on a subsequent payment date.

Regulatory Framework and Registration Details

The Bank of Nova Scotia issued these Contingent Income Auto-Callable Securities pursuant to an effective registration statement (No. 333-282565) filed with the Securities and Exchange Commission. The offering is being made in accordance with the prospectus dated November 8, 2024, the prospectus supplement dated November 8, 2024, and the product supplement dated November 8, 2024. The pricing supplement issued on July 17, 2026, was filed pursuant to Rule 424(b)(2) of the Securities Act of 1933, which allows for the pricing of securities under previously filed registration statements without requiring a new registration amendment or delay in offering the securities.

This structured product represents a form of retail investment product that is subject to applicable securities laws and regulations governing the offer and sale of securities in the United States. Investors should review the complete prospectus materials, including the prospectus, prospectus supplement, product supplement, and pricing supplement, to understand all terms, risks, and conditions governing the securities. The Bank of Nova Scotia's disclosure materials note that these securities are designed for sophisticated investors who understand the risks associated with principal-at-risk structured products and the specific mechanics of contingent coupon auto-callable notes.

Investment Suitability and Risk Profile Summary

The Bank of Nova Scotia characterizes these Contingent Income Auto-Callable Securities as appropriate for investors who are willing to risk their entire investment based on the worst-performing of the three underlying stocks and who are seeking an opportunity to earn interest at a potentially above-market rate in exchange for accepting the risk of receiving no interest over the entire two-year term. The suitability profile assumes investors have the financial capacity to lose their full principal investment and understand the mechanics of the "worst of" structure that ties all payments to the single worst-performing stock among the three technology giants.

The worst-of structure introduces concentration risk: a decline in any single underlying stock can trigger coupon suspension or principal loss regardless of the performance of the other two stocks. For example, if Alphabet stock experiences a significant decline while Amazon and Microsoft stocks appreciate, the securities would still suffer coupon suspensions and potential principal loss. Investors considering these securities should carefully evaluate their risk tolerance, investment timeline, and the potential volatility of Amazon, Alphabet, and Microsoft stocks over the two-year period. The offering is not appropriate for investors seeking capital preservation, consistent income, or equity upside participation, as the securities provide none of these benefits.