MiFID II Update: ESMA consults on complex debt instruments and structured deposits

MiFID II Update: ESMA consults on complex debt instruments and structured deposits

On the 24th March 2015, the European Securities and Markets Authority (ESMA) launched a consultation in connection with draft guidelines on complex debt instruments and structured deposits.

ESMA’s said guidelines are geared towards enhancing investor protection by offering further clarification on which types of financial instruments and structured deposits can be provided without the licensee being required to carry out an appropriateness test in order to assess a client’s knowledge and experience.

Accordingly, the consultation paper sets out the draft guidelines for the assessment of (i) 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 (ii) 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 consultation will run until the 15th June 2015 and it is understood that ESMA will publish final guidelines over the course of Q4 2015.

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