In accordance with the Markets in Financial Instruments Directive (MiFID II), the European Securities and Markets Authority (ESMA) has published its final report on guidelines on complex debt instruments and structured deposits.

ESMA is required by MiFID to develop guides by 3 January 2016 for the assessment of

1. 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
2. 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.

These guidelines are intended to enhance investor protection by identifying complex financial instruments and structured deposits for which the provision of so-called execution-only services is not possible (ie the firm has to ask information on client’s knowledge and competence in order to carry out an appropriateness test).

This follows a public consultation period, which ended in June 2015. The guidelines will now be translated into EU languages and published on ESMA's website. There will follow a two-month period in which national competent authorities must notify ESMA whether they comply or intend to comply with the guidelines.