30 November 2015

ESMA publishes final report on guidelines on complex debt instruments and structured deposits in MiFID II

The European Securities and Markets Authority has published the Final Report on guidelines on complex debt instruments and structured deposits. 

According to Article 25(10) of MiFID II the guidelines are developed for 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.

On 24 March 2015 ESMA launched a consultation on the relevant draft guidelines1 in order to explain its rationale and gather input from stakeholders on the issues covered by Article 25(10) of MiFID II. The Consultation Paper also set out draft guidelines on the concept of embedded derivative which is equally important for the correct classification of debt instruments (bonds, securitised debt and money market instruments) as either “complex” or “non-complex”. The consultation period closed on 15 June 2015.

 ESMA received 32 responses. The answers received are available on ESMA’s website unless respondents requested otherwise. ESMA also sought the advice of the Securities and Markets Stakeholder Group’s (SMSG). This paper summarises and analyses the responses to the CP and explains how the responses have been taken into account. ESMA recommends reading this report together with the CP published on 24 March 2015 to have a complete view of the rationale for the guidelines.

Full report

© ESMA