Thu. Sep 19th, 2019

Planet Compliance

Innovation & Regulation in Finance

ESMA Guidelines on complex debt instruments and structured deposits in MiFID II

2 min read

The European Securities and Markets Authority has published today the Final Report on guidelines on complex debt instruments and structured deposits.
These guidelines are intended to enhance investor protection by identifying complex financial instruments and structured deposits for which the provision of so-called execution-only services is not possible (ie the firm has to ask information on client’s knowledge and competence in order to carry out an appropriateness test).
According to Article 25(10) of MiFID II the guidelines are developed for the assessment of:
1. bonds, other forms of securitised debt and money market instruments incorporating a structure which makes it difficult for the client to understand the risk involved; and
2. structured deposits incorporating a structure which makes it difficult for the client to understand the risk of return or the cost of exiting the product before term.

The guidelines also cover debt instruments embedding a derivative.
ESMA Final Report

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