Article 25(4) of MiFID II provides for an "execution only" exemption from the requirement on investment firms to obtain the client information necessary to assess the appropriateness of the service or product for the client. One of the conditions for the application of the exemption is that the services relate to products which are “non-complex” for the purpose of the same paragraph.
Article 25(10) requires ESMA to develop guidelines for assessing the complexity 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.
Section II of the report briefly illustrates the guidelines following the responses to the consultation. Section III contains the Annexes: Annex I provides the Summary of questions raised in the consultation paper, Annex II describes the legislative mandate, Annex III reports the cost-benefit analysis, Annex IV explains the detailed feedback on the responses received to the consultation paper, Annex V contains the final text of the guidelines and includes a summary of a non-exhaustive list of examples of complex products for the purpose of the guidelines.