ESMA has published its final report on guidelines on complex debt instruments and structured deposits under MiFID 2. The guidelines identify complex financial instruments and structured deposits for which the provision of execution-only services is not possible. They cover the assessment of:

  • 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
  • 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.

Following consultation on its guidelines, ESMA has made a number of changes, many of which remove from the “complex” category instruments with particular characteristics. The guidelines give a non-exhaustive list of examples of relevant instruments and characteristics.  (Source: ESMA Reports on Complex Debt Instruments)