Bank of Nova Scotia Issues Three-Year Auto-Callable Structured Notes Tied to Goldman Sachs and JPMorgan Chase Stocks

Structured Investment Framework and Underlying Reference Assets

The Bank of Nova Scotia issued these contingent income auto-callable securities as senior unsecured debt under its Senior Note Program, Series A. The securities are principal-at-risk instruments that do not guarantee repayment of principal and provide no regular interest payments. Instead, investors receive an opportunity to earn contingent quarterly coupons if predetermined performance conditions are met on scheduled determination dates throughout the three-year term.

The securities reference the common stock of two major U.S. financial institutions: The Goldman Sachs Group, Inc. (Bloomberg ticker GS UN) and JPMorgan Chase & Co. (Bloomberg ticker JPM UN). A critical feature of this structure is that all payments depend on the worst-performing of these two reference stocks. This means that regardless of how well one stock performs, if the other declines significantly, investors will receive reduced or no coupon payments and face substantial principal loss at maturity. This worst-of design concentrates risk on a single reference asset's performance, creating asymmetric downside exposure for security holders.

Contingent Coupon Payment Mechanics and Threshold Conditions

The securities offer a contingent quarterly coupon of $28.30 per $1,000 stated principal amount, equivalent to 11.32% annually, provided that the closing prices of both underlying stocks remain at or above their respective coupon threshold prices on determination dates. The disclosure states that if the closing price of either reference stock falls below 60% of its initial share price on any determination date, no contingent quarterly coupon will be paid. Additionally, the structure includes a memory coupon feature that accumulates unpaid contingent coupons from prior periods, allowing for the potential recovery of missed payments if both stocks subsequently recover above their coupon thresholds on later determination dates.

The Bank of Nova Scotia scheduled 12 determination dates beginning October 26, 2026, and continuing quarterly through the final determination date of July 24, 2029, subject to adjustments for non-trading days and certain market disruption events. Corresponding contingent coupon payment dates follow each determination date, with the final coupon payment occurring at maturity on July 27, 2029. Investors must be willing to accept the risk that if either reference stock closes below the coupon threshold price on every determination date throughout the securities' term, they will receive no contingent coupons whatsoever during the entire holding period.

Automatic Early Redemption and Call Feature Structure

The securities incorporate an automatic early redemption feature that can terminate the investment before maturity. If the closing prices of both reference stocks are at or above their respective call threshold prices on any determination date prior to final maturity, the securities will be automatically redeemed on the next contingent coupon payment date. Upon early redemption, investors receive a payment equal to the stated principal amount of $1,000 per security plus the applicable contingent quarterly coupon and any accumulated unpaid coupons from prior periods under the memory coupon feature.

This early redemption provision benefits the issuer by allowing it to terminate the securities when both reference stocks perform well, capping investor upside. The disclosure emphasizes that once early redemption occurs, no further payments will be made on the securities. Investors cannot prevent early redemption if the performance conditions are met, which means they will not benefit from any further potential appreciation in the reference stocks beyond the early redemption payment date. The timing and probability of early redemption depend entirely on whether both underlying stocks remain above their call thresholds on any single determination date.

Downside Risk Exposure and Principal-at-Risk Structure

The most significant risk in these securities relates to their principal-at-risk design and exposure to downside performance of the worst-performing reference stock. If the final share price of either underlying stock falls below 60% of its initial share price at maturity, The Bank of Nova Scotia will pay investors a cash amount that will be less than 60% of the stated principal amount and could be zero. In this scenario, investors are exposed on a one-to-one basis to the decline of the worst-performing underlying stock and will lose a significant portion or potentially all of their investment.

The disclosure explicitly warns that investors will not participate in any appreciation of the reference stocks and will not realize a return beyond the contingent quarterly coupons received, if any, during the term. Because all payments depend on the worst-performing underlying stock, a decline beyond the coupon threshold price and downside threshold price of either reference stock will result in few or no contingent quarterly coupons and a loss of a significant portion up to the entire investment, even if the other underlying stock appreciates or has not declined as much. The issuer states that these securities are suitable only for investors willing to risk their entire investment based on the worst-performing underlying stock.

Credit Risk and Unsecured Debt Characteristics

Investors in these securities must also consider the credit risk of The Bank of Nova Scotia, the issuer. All payments on the securities are subject to the issuer's creditworthiness and its ability to meet its payment obligations. If The Bank of Nova Scotia were to default on its obligations, investors may not receive any amounts owed to them under the securities and could lose their entire investment. The Bank of Nova Scotia is a Canadian financial institution, and investors should evaluate the bank's financial condition and credit standing as part of their investment analysis.

The securities are issued as senior unsecured debt obligations of The Bank of Nova Scotia and do not provide any secured claims against specific assets. Investors will not have any security interest in, or access to, any underlying reference asset or collateral. The unsecured nature of these securities means that in the event of issuer default or insolvency, investors would rank as general unsecured creditors without preferential claim to any assets. This combination of principal risk tied to reference stock performance plus issuer credit risk creates a two-layer risk structure that investors must carefully evaluate before committing capital to these instruments.

Offering Terms, Pricing Schedule, and Settlement Arrangements

The Bank of Nova Scotia established a stated principal amount of $1,000 per security with an issue price of $1,000 per security, subject to commissions and pricing adjustments described in the preliminary pricing supplement. The minimum investment required is $1,000, representing one security. The pricing date was July 24, 2026, with an original issue date of July 29, 2026, occurring three business days after the pricing date. The maturity date is July 27, 2029, subject to potential postponement for certain market disruption events as described in the accompanying product supplement.

Investors should note that these securities initially settle on a T+3 basis (three business days after trade execution), which differs from the standard T+1 settlement requirement for most secondary market securities under Securities Exchange Act Rule 15c6-1. The disclosure states that purchasers who wish to trade the securities in the secondary market prior to one business day before delivery will be required to specify alternative settlement arrangements to prevent settlement failures. This settlement timing difference creates operational considerations for investors planning to hold the securities or trade them in secondary markets during the early period after issuance.

Key Determination Dates and Coupon Payment Calendar

The Bank of Nova Scotia established a quarterly determination date schedule spanning the three-year term of the securities. Determination dates are scheduled for October 26, 2026, January 25, 2027, April 26, 2027, July 26, 2027, October 25, 2027, January 24, 2028, April 24, 2028, July 24, 2028, October 24, 2028, January 24, 2029, April 24, 2029, and July 24, 2029, subject to postponement for non-trading days and market disruption events. The final determination date is July 24, 2029, which is three days before maturity on July 27, 2029.

Corresponding contingent coupon payment dates follow each determination date, scheduled for October 29, 2026, January 28, 2027, April 29, 2027, July 29, 2027, October 28, 2027, January 27, 2028, April 27, 2028, July 27, 2028, October 27, 2028, January 29, 2029, April 27, 2029, and the maturity date of July 27, 2029. This 12-coupon schedule means that investors will have 12 opportunities to receive contingent coupon payments, provided both underlying stocks remain above their respective coupon threshold prices on the corresponding determination dates. The regular quarterly timing provides predictable testing points throughout the investment term, allowing investors to monitor whether performance conditions are being met on a consistent schedule.

Investment Suitability and Risk Disclosure Summary

The Bank of Nova Scotia explicitly states in its disclosure that these securities are designed for investors who are willing to risk their entire investment based on the worst-performing underlying stocks and who seek an opportunity to earn interest at a potentially above-market rate in exchange for the risk of receiving no interest over the entire term. The 11.32% annual coupon rate is presented as compensation for accepting principal risk and the possibility of zero coupon payments. Investors must understand that the contingent nature of the coupons means no payments are guaranteed, and the securities offer no return of principal protection.

The disclosure emphasizes multiple risk factors that investors must carefully consider before purchasing these securities. These include the risk of receiving no contingent quarterly coupons if either reference stock falls below the coupon threshold price on any determination date, the risk of principal loss if either reference stock falls below 60% of its initial price at maturity, the risk of total investment loss if either reference stock declines substantially, the concentration of risk on the worst-performing stock, the lack of participation in any appreciation of the reference stocks, and the credit risk of The Bank of Nova Scotia as the issuer. Investors should thoroughly review all offering documents, including the prospectus, prospectus supplement, and product supplement dated November 8, 2024, along with the preliminary pricing supplement, before making an investment decision.

Regulatory Filing and Documentation Status

The preliminary pricing supplement for these securities was filed pursuant to Securities and Exchange Commission Rule 424(b)(2) on July 22, 2026, and is referenced as being subject to completion. The disclosure states that the information contained in the preliminary pricing supplement is not complete and may be changed, and that The Bank of Nova Scotia may not sell the securities until the final pricing supplement, accompanying product supplement, prospectus supplement, and prospectus are delivered in final form. The offering documents are not an offer to sell the securities, and The Bank of Nova Scotia is not soliciting offers to buy the securities in any state where the offer or sale is not permitted.

The securities are part of a registration statement numbered 333-282565, with supporting prospectus, prospectus supplement, and product supplement documents dated November 8, 2024. Investors should expect to receive final offering documents prior to settlement, and all details contained in the preliminary pricing supplement are subject to change based on market conditions and final pricing determinations. The preliminary nature of this announcement means that specific terms, including the aggregate principal amount of securities offered, may be finalized differently than presented in this preliminary version.