Structured Thoughts: News for the financial services community, Volume 6, Issue 9

ESMA Final Report on Complex Debt Instruments and Structured Deposits -

On 26 November 2015, the European Securities and Markets Authority (“ESMA”) published its Final Report on its “Guidelines on complex debt instruments and structured deposits”. The Final Report follows ESMA’s Consultation Paper on the same issue published in March 2015 on which we previously reported.

Background and Initial Consultation -

The Consultation Paper is focused on the “execution-only exemption” contained within the Markets in Financial Instruments Directive (“MiFID”) and the amendments to such exemption made pursuant to a recast MiFID Directive now expected to come into force from January 2018 (“MiFID II”). This exemption relates to the level of diligence that firms are required to carry out on their clients before providing financial services to such clients. Where an execution-only service relates to non-complex financial instruments specified in Article 19(6) of the existing MiFID and certain other conditions apply, the investment firm can provide the service to the client without having to carry out either suitability or an appropriateness assessment in relation to such client. The Article 19(6) list of instruments includes bonds and similar debt instruments admitted to trading on a regulated market or equivalent third country market but specifically excludes any such bond or other instrument that embeds a derivative.

Please see full publication below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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