Complex Financial Instruments

As Complex Financial Instruments are generally defined as any financial investment product containing a structure that includes a right or some form of leverage.

The following are categorized as complex financial instruments:

• Purchasing Stocks or Bonds on credit (margin trading)
• Derivative financial instruments
• Options contracts, futures contracts, swaps contracts, forward-rate agreements, and other derivative contracts related to commodities, currencies, interest rates, or yields, issuance rights, or other derivative instruments, financial indices, or other financial measures eligible for settlement with physical delivery or cash.
• Bonds-Debt securities whose performance depends on the performance of a specific group of asset elements, e.g., Asset Backed Securities, CDOs, securitized mortgage loans, etc.
• Bonds classified as incorporating a derivative like Convertible and exchangeable bonds, Bonds linked to indices (indexed bonds) and investment certificates on the performance of underlying assets, Convertible bonds subject to redemption, Bonds with call or put options (callable or puttable bonds), Debentures linked to credit risk (credit linked notes)
• Bonds of reduced collateral
• Perpetual bonds
• Bonds, other forms of securitised debt and money market instruments incorporating a structure which makes it difficult for the client to understand the risks involved; and
• Debt instruments embedding a derivative
• Debt instruments denominated in a currency different from the one of the jurisdiction (or a currency that is pegged to the currency of the jurisdiction) where the investment services are provided;
• Debt instruments that would be regarded as “packaged products” by virtue of the Regulation on key information documents for packaged retail and insurance-based investment products since they should be classified as “complex” instruments in accordance with criteria applicable to any other financial instruments;
• Structured deposits in which the return is linked to a currency which is not the one of the jurisdiction where the structured deposit is offered;
• Structured deposits, which incorporate structures that make it difficult for the client to understand the cost of early exit from the product;
• Structured deposits incorporating a structure which makes it difficult for the client to understand the cost of exiting the product before term and the risk of return.
• A structure that makes it difficult for the client to understand the cost of early exit from the product exists when the exit cost is not a fixed monetary amount like in case of early exit, a commission of up to 300 euros is charged, the exit cost is calculated based on a variable factor, such as an interest rate, the exit cost is not a fixed monetary amount for each month remaining until the end of the agreed duration, e.g., in case of early exit, a commission of up to 50 euros per month is charged or the exit cost is not a percentage of the initial invested amount, e.g., structured deposits with an exit cost equal to at least the amount of accrued performance until the early exit date and
• Inflation - linked notes;
• Derivative instruments for the transfer of credit risk;
• Financial Contracts for Differences.