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ARTICLE · 13 APRIL 2015

Difficulty in Understanding? ESMA Consultation Paper On Complex Debt Instruments And Structured Deposits

Morrison Foerster
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On 24 March 2015, the European Securities and Markets Authority (ESMA) published a Consultation Paper setting out draft guidelines on complex debt instruments and structured deposits.

European UnionFinance and Banking
Jeremy Jennings-Mares
Jeremy Jennings-Mares
Peter Green
Peter Green
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On 24 March 2015, the European Securities and Markets Authority (ESMA) published a Consultation Paper setting out draft guidelines on complex debt instruments and structured deposits.1

Background

The Consultation Paper is focussed on a relatively narrow (but important) aspect of the MiFID II2 legislation, namely the "execution-only exemption". This is already part of the existing MiFID regime and relates to the level of diligence that firms are required to carry out on their clients before providing financial services to such clients. For investment advisory and portfolio management services, a full "suitability" assessment is required under which the firm must obtain sufficient information regarding the client's knowledge and experience, financial situation and investment objectives. For other financial services, including execution-only services, a less stringent "appropriateness" assessment is permitted, which is limited to considering the client's relevant

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