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24 March 2015

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


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The guidelines are intended to enhance investor protection by offering further clarification on which types of financial instruments and structured deposits can be provided, that all the relevant legal conditions are fulfilled, without the firm assessing a client’s knowledge and experience.


The consultation will be open until 15 June 2015.

The consultation paper (CP) sets out the draft guidelines 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
  • 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 CP also covers the concept of embedded derivative for debt instruments. ESMA expects to publish final guidelines in Q4 2015.

ESMA considers it necessary to address both “embedded derivatives” and complex “structures” because these are alternative criteria that need to be differentiated and divergent practices persist despite the previous CESR Q&A. ESMA considers that these draft guidelines are the appropriate tool for addressing all the relevant issues, ensure greater legal certainty as well as provide a consolidated, more user-friendly approach to the classification of debt instruments for MiFID II purposes. Whether or not a debt instrument or structured deposit is considered complex, the relevant investment firm must ensure that all information addressed to its clients or potential clients is fair, clear and not misleading in accordance with Article 4(3) of MiFID II, and provide them with appropriate information about the debt instrument or structured deposit in a comprehensible form, in such a manner that they are reasonably able to understand the risks in accordance with Article 24(4).

Full press release

Full Consultation paper

To respond



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