Bank of Nova Scotia Issues Trigger Autocallable Notes Linked to EURO STOXX 50 Index Due 2031

Automatic Call Mechanism and Quarterly Observation Schedule

The notes feature an automatic call mechanism designed to terminate the investment early if market conditions favor the issuer. According to the disclosure, the Bank of Nova Scotia will automatically call the notes if the closing level of the EURO STOXX 50 Index reaches or exceeds the call threshold level—defined as 100% of the initial level established on the trade date—on any quarterly observation date. The filing states that observation dates begin after the first 12 months of the note term and continue quarterly through the final valuation date on July 24, 2031.

Upon an automatic call, the issuer will pay investors on the applicable call settlement date a cash payment per note equal to the principal amount plus an accumulated call return. The filing indicates that the call return increases the longer the notes remain outstanding, with the rate ranging from 9.50% to 10.20% per annum depending on the observation date triggering the call. Once called, no further payments will be owed to investors under the notes, effectively terminating the investment at that point.

Contingent Principal Repayment with Downside Exposure

If the notes are not subject to an automatic call prior to maturity, investors face a contingent repayment structure tied to the final performance of the underlying index. The disclosure states that if the closing level of the EURO STOXX 50 Index on the final valuation date equals or exceeds the downside threshold of 75% of the initial level, the Bank of Nova Scotia will pay investors the full principal amount at maturity on July 29, 2031. However, if the final level falls below this 75% threshold, the payment will be reduced proportionally based on the index decline.

The filing emphasizes that investors could lose their entire principal investment in extreme scenarios where the underlying index experiences significant decline. The document specifically states that "in extreme situations, you could lose your entire investment in the Notes" and warns that "you will not receive a positive return if the Notes are not automatically called and you may lose a significant portion or all of your investment." This contingent repayment structure applies only if investors hold the notes to maturity and creates a scenario where the notes possess the same downside market risk as the underlying index itself.

Offering Terms and Pricing Structure

The notes are being offered at a base price of $10.00 per note with a minimum initial investment of 100 notes, representing a $1,000 commitment. The filing indicates that integral multiples of $10 above the minimum may be purchased. The issue price to public is listed as $10.00 per note, with an underwriting discount of $0.25 per note. The Bank of Nova Scotia expects to receive $9.75 per note before accounting for hedging-related profits.

The disclosure notes that Scotia Capital (USA) Inc., an affiliate of the Bank of Nova Scotia, will purchase the notes at principal amount and distribute them through UBS Financial Services Inc. The estimated value of the notes at pricing is expected to fall between $9.31 and $9.61 per note, representing a discount to the $10.00 issue price. The filing cautions that "the actual value of your Notes at any time will reflect many factors and cannot be predicted with accuracy" and directs investors to risk disclosures regarding estimated value and liquidity for additional context.

Trade and Settlement Timeline

The announcement establishes a specific timeline for the offering process. The trade date is expected to be July 24, 2026, with settlement scheduled for July 29, 2026. The filing notes that delivery is expected on the third business day following the trade date, settling on a T+3 basis rather than the standard T+1 settlement for secondary market trades. This extended settlement period creates operational considerations for investors who may wish to trade the notes in the secondary market before full delivery occurs.

The final valuation date is set for July 24, 2031, with the maturity date following five days later on July 29, 2031, establishing a five-year note term. The filing discloses that the observation dates for the automatic call feature will occur quarterly starting 12 months after settlement, meaning the first potential call date would be approximately July 29, 2027. This structure creates a potential five-year holding period if the index fails to reach the call threshold during any quarterly observation window.

Credit Risk and Issuer Obligations

The Bank of Nova Scotia's creditworthiness forms a critical component of investor risk in this offering. The disclosure explicitly states that "any payment on the Notes, including any repayment of principal, is subject to the creditworthiness of BNS" and cautions that "if BNS were to default on its payment obligations you may not receive any amounts owed to you under the Notes and you could lose your entire investment." This credit risk exists independently of market risk related to the underlying index performance.

The filing clarifies that the notes are senior unsecured debt securities, meaning they have no collateral backing and rank equally with other unsecured debt obligations of the issuer. The document specifies that these instruments are not insured by the Canada Deposit Insurance Corporation, the U.S. Federal Deposit Insurance Corporation, or any other government agency in Canada, the United States, or other jurisdictions. Additionally, the notes are identified as non-bail-inable debt securities under the CDIC Act, meaning they would not benefit from the CDIC's treatment of certain eligible deposits in a resolution scenario.

Risk Profile and Suitability Considerations

The disclosure emphasizes the elevated risk profile of these structured notes compared to conventional debt instruments. The Bank of Nova Scotia explicitly warns that investors should not purchase the notes without understanding and accepting the significant risks involved. The document states that "the Notes are significantly riskier than conventional debt instruments" and notes that "you should carefully consider the risks" before investing. The filing cautions that events relating to various identified risks "could adversely affect the market value of, and the return on, your Notes."

The higher call return rates offered by the notes are specifically identified as being "generally associated with a greater risk of loss and a greater risk that the Notes will not be subject to an automatic call." This inverse relationship means that the attractive return potential comes paired with increased probability that the index will fail to reach the call threshold, leaving investors exposed to full downside market risk. The disclosure directs investors to comprehensive risk sections in the accompanying product supplement, prospectus supplement, and prospectus for detailed enumeration of specific risk factors.

Regulatory Approval and Disclosure Framework

The filing is submitted as a preliminary pricing supplement under Rule 424(b)(2) and references a registration statement filed with the Securities and Exchange Commission under number 333-282565. The document is dated July 21, 2026, and incorporates by reference a prospectus dated November 8, 2024, along with a prospectus supplement, underlier supplement, and product supplement all dated the same date. The preliminary nature of this filing indicates that final terms and pricing remain subject to completion and delivery of definitive offering documents.

The Bank of Nova Scotia includes a standard SEC disclaimer stating that "Neither the Securities and Exchange Commission (the 'SEC') nor any other regulatory body has approved or disapproved of these Notes or passed upon the adequacy or accuracy of this document." The filing further notes that the notes will not be listed or displayed on any securities exchange or electronic communications network, limiting liquidity and secondary market trading availability. Investors are directed to the complete offering documents for comprehensive disclosure of terms, conditions, and risk factors applicable to this structured product.

Underlying Asset Performance and Index Mechanics

The notes are linked to the EURO STOXX 50 Index, identified by Bloomberg ticker SX5E, which serves as the performance benchmark for automatic call triggers and contingent repayment calculations. The filing establishes the initial level as the closing level of this index on the trade date of July 24, 2026, which will serve as the baseline for all subsequent performance measurements. The call threshold level is set at 100% of this initial level, meaning the index must reach or exceed its trade-date closing level on any quarterly observation date to trigger an automatic call.

The downside threshold is fixed at 75% of the initial level, establishing a floor below which investors experience full market exposure to index declines. This structure creates distinct outcomes: if the index reaches or exceeds 100% of the initial level on any quarterly call date, investors receive the call price and the investment terminates; if the index ends between 75% and 100% of the initial level at maturity, investors receive full principal; if the index closes below 75% of the initial level at maturity, investors' principal is reduced proportionally to the index decline. The disclosure does not provide historical performance data or forward-looking guidance regarding the likelihood of various outcomes.

Secondary Market Considerations and Liquidity Constraints

The Bank of Nova Scotia disclosure addresses practical considerations for investors contemplating secondary market trading of the notes. The filing explains that while trades in the secondary market are generally required to settle in one business day (T+1) under SEC Rule 15c6-1, the initial delivery of these notes on a T+3 basis creates a technical constraint. Investors wishing to trade the notes in the secondary market before one business day before delivery must specify alternative settlement arrangements to prevent settlement failure, as the counterparty to the sale would receive delivery three days after trade rather than the standard one business day.

The disclosure states that "The Notes will not be listed or displayed on any securities exchange or any electronic communications network," indicating that secondary market liquidity depends entirely on over-the-counter trading arrangements rather than exchange-based price discovery and execution. The estimated value of the notes at pricing—between $9.31 and $9.61 per note, a discount to the $10.00 issue price—reflects the illiquidity premium and issuer hedging profits embedded in the offering. This structure means investors purchasing at the $10.00 issue price will experience immediate unrealized losses if they attempt to sell in the secondary market before the notes reach the estimated value range or trade higher based on market movements.

Hedging Activities and Affiliate Involvement

The filing identifies Scotia Capital (USA) Inc., an affiliate of the Bank of Nova Scotia, as playing a central role in the distribution structure. According to the disclosure, Scotia Capital will purchase the notes at principal amount and distribute them to UBS Financial Services Inc. at the stated discount, with UBS presumably handling retail distribution to investors. The filing explicitly excludes "any profits to BNS, SCUSA or any of our other affiliates from hedging" from the stated underwriting discount and proceeds figures, indicating that the Bank of Nova Scotia and its affiliates expect to derive additional profits from hedging activities related to the notes.

The disclosure directs investors to risk factor sections addressing "Risks Relating to Hedging Activities and Conflicts of Interest" for additional information regarding these hedging arrangements. The nature and scope of hedging activities, their potential impact on note valuations, and the specific mechanisms by which the issuer and its affiliates profit from hedging are detailed in the accompanying product supplement and prospectus supplement. This structure creates inherent conflicts of interest, as the issuer benefits financially from market movements that may adversely affect investor returns.