On the 24th March, 2015, ESMA issued a consultation paper on draft guidelines it developed for the assessment of 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.
The guidelines are intended to enhance investor protection and are important for the correct classification of MiFID debt instruments (bonds, securitised debt and money market instruments) and structured deposits as either 'complex' or 'non-complex'.
The consultation will run until the 15 June 2015 following which date ESMA will consider all comments received. It is anticipated that the final guidelines will be published during the fourth quarter of 2015.
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