{
    "ucits": true,
    "type": "ETF",
    "leverage": false,
    "derivatives": true,
    "swaps": false,
    "inverse": false,
    "replication_method": "synthetic",
    "complex_factors": "Use of derivatives on CDS indices, synthetic replication, complex credit derivatives exposure",
    "classification": "complex",
    "supporting_data": "The Tabula Global IG Credit Curve Steepener UCITS ETF invests primarily through derivatives on CDS indices (iTraxx Europe and CDX IG), employing long and short CDS positions with monthly rebalancing and rolling of series. This synthetic replication strategy involves counterparty risk and complexity in understanding the payoff and risk profile, which is difficult for retail investors with basic knowledge to grasp. The ETF uses derivatives not only for efficient portfolio management but as an integral part of its investment objective, exposing investors to credit curve steepener strategies and credit default swap risks. The ETF's risk profile includes leverage usage and counterparty risk, and the product documentation explicitly states that it is 'not simple and may be difficult to understand.' According to MiFID II Article 25(4)(a)(iv) and Article 57 of the Delegated Regulation, UCITS ETFs are presumed non-complex unless they embed derivatives or structured products that introduce complexity. Here, the synthetic replication via CDS derivatives and the complex index construction cause the ETF to fail the non-complex criteria, requiring an appropriateness assessment. Therefore, despite being a UCITS ETF, the product is classified as complex under MiFID II due to its synthetic replication method, derivative use integral to strategy, and complexity of underlying instruments such as CDS indices and credit derivatives. This aligns with ESMA guidance that synthetic ETFs and structured UCITS should be considered complex and subject to appropriateness tests. The ETF does not use physical replication, has significant derivative exposure, and involves risks (counterparty, liquidity, leverage) that are not straightforward for retail investors to understand, confirming its complex classification."
}