{
    "type": "ETF",
    "ucits": true,
    "leverage": false,
    "derivatives": false,
    "swaps": true,
    "inverse": false,
    "replication_method": "physical",
    "complex_factors": [
        "Total Return Swaps",
        "Contracts for Difference"
    ],
    "classification": "complex",
    "supporting_data": "The HSBC MSCI Japan UCITS ETF is classified as complex primarily due to its use of total return swaps and contracts for difference, which introduce counterparty risk and derivative exposure. While the fund primarily uses physical replication, the KIID explicitly states that up to 10% of assets may be invested in total return swaps and contracts for difference, which are complex instruments. Additionally, the fund may use derivatives for efficient portfolio management, though this is not the primary driver of complexity. The presence of swap agreements and the potential for counterparty risk, even at a limited exposure level, triggers the complexity classification under MiFID II. The fund's risk level of 6 out of 7 also supports this classification, indicating higher volatility and risk. While the fund is UCITS-compliant and physically replicated, the specific use of swaps and derivative instruments for non-hedging purposes makes it complex.",
    "confidence": 90
}