The European Securities and Markets Authority launched today a consultation on draft guidelines on complex debt instruments and structured deposits.
These 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 (i.e. to carry out an appropriateness test).
The consultation paper (CP) sets out the draft guidelines for the assessment of
(i) 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
(ii) 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.
This CP also covers the concept of embedded derivative for debt instruments.
The consultation will be open until 15 June 2015. ESMA expects to publish final guidelines in Q4 2015.
2015/610 Consultation paper