ESMA_QA_2137
Status: ✅ Answer Published
Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/2137
Regulatory Context
Regulation : MIF2
Level 1 Regulation: Markets in Financial Instruments Directive II (MiFID II) Directive 2014/65/EU- Investor Protection and Intermediaries
Level 2 Regulation: Regulation 2017/565 - MiFID II Delegated Regulation
Level 3 Regulation: ESMA/2015/1783 - Guidelines - Complex debt instruments and structured deposits (MiFID)
Topic: Appropriateness
Subject Matter: Non-complex structured deposits
Question
Submission Date: 19 March 2024
If a structured deposit has only one variable affecting the return received on maturity (the agreed term), and has an exit fee that is either a fixed sum, a fixed sum for each month remaining until maturity (the agreed term) or a percentage of the original sum invested, would it still be considered a non-complex financial instrument, in accordance with point (v) of Article 25(4)(a) of MiFID II, if the client is entitled to receive the positive market value of the underlying option, if any, if the client exits prematurely, e.g. in the event of unforeseen liquidity requirement? If the structured deposit is exited prematurely, and not on the agreed upon maturity date, the market value of the underlying option will depend on more than one variable, i.e. the underlying index, the volatility of the index, time to maturity.
ESMA Answer
Answer Date: 26-04-2024
Dear Sir, Thank you for contacting ESMA. ESMA is committed to replying to questions from market participants and to develop them to Q&As. However, due to the significant number of questions received, ESMA is not in the position to address all issues raised by market participants and has to prioritise them. The selection of questions to be developed into Q&As through this web-based tool is done taking into account a number of criteria related to the level of public attention and relevance of the topic from an overall EU perspective, also taking into account the type of stakeholder represented. Having carefully considered your question and considering the above criteria and current number of questions that have been addressed to us recently, ESMA will unfortunately not be in a position to develop a Q/A in relation to this question. Despite not being able to provide a Q&A on this occasion ESMA welcomes questions from you also in the future and invites you to take part of numerous Q&As and other guidance the ESMA has developed to seek guidance among that material. ESMA took note of the issue and will take it into account if and when the guidelines are reviewed. Lastly, ESMA would like to provide the following guidance: please note that, if in doubt when assessing whether the exemption for non-complex financial instruments under Article 25(4) of MiFID II is applicable, investment firms should have in mind that the appropriateness assessment is meant to protect investors and that the exemption should thus be interpreted with caution. Regards, ESMA
This document was automatically extracted from the ESMA EMIR Q&A database.