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ESMA_QA_1015

ESMA_QA_1015

Status: ✅ Answer Published

Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1015

Regulatory Context

Regulation : PROSPECTUS

Level 1 Regulation: Prospectus Regulation 2017/1129

Level 2 Regulation: No information available

Level 3 Regulation: No information available

Topic: Content of prospectus

Subject Matter: Derivatives, indices, underlyings and related disclosure - Type of underlying

Question

Submission Date: 12 July 2019

In Commission Delegated Regulation 2019/980 Annex 14 item 4.8, Annex 15 item 4.8, Annex 16 item 4.9, Annex 17 item 2.2.2 and Annex 27 item 3.1.7 a statement setting out the type of underlying is required. According to the respective annexes, a statement setting out the type of the underlying is labelled as Category A information and must, therefore, be included in the base prospectus. When making the Category A statement setting out the type of the underlying in the base prospectus, how precise should the information be?

ESMA Answer

Answer Date: 12-07-2019

[ESMA31-62-1258 Prospectuses Q&A 12.2] All information known at the time of drawing up the base prospectus must be disclosed in the base prospectus itself. Therefore, if the precise underlying is known by the issuer, then full and complete information must be included in the base prospectus. If the issuer has not decided on the details of the underlying at the time of the approval of the base prospectus, then a more general statement setting out the type of the underlying should be included. The minimum disclosure in the base prospectus would be whether the underlying is:

  • an equity security;
  • a non-equity security;
  • an interest rate;
  • an index;
  • a commodity; or
  • a reference entity or reference obligation. If the type of underlying does not fall within the categories listed above, the type of underlying should be defined. If the underlying is a basket of underlyings, the type(s) of underlying(s) should be defined in the same manner as described above. The final terms then have to state the details of the underlying(s) pursuant to Category C information requirements and may provide information in accordance to Annex 28. In case of proprietary indices and credit-linked securities further disclosure requirements must be complied with in accordance with the Commission Delegated Regulation 2019/980.

This document was automatically extracted from the ESMA EMIR Q&A database.

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