{
    "ucits": true,
    "type": "ETF",
    "leverage": false,
    "derivatives": true,
    "swaps": true,
    "inverse": false,
    "replication_method": "synthetic",
    "complex_factors": "Synthetic replication, use of total return swaps, counterparty risk, securities lending, exposure to derivatives and structured products",
    "classification": "complex",
    "supporting_data": "The HSBC MSCI Taiwan Capped UCITS ETF is a UCITS-compliant ETF that aims to track the MSCI Taiwan Capped Index. It uses synthetic replication methods, including total return swaps and contracts for difference, to gain exposure when direct investment in all index constituents is not practical. The Fund may invest up to 10% of its assets in total return swaps and contracts for difference, and up to 30% in securities lending transactions, which introduces counterparty and collateral risks. The use of derivatives is integral to the investment objective, not merely for efficient portfolio management, and the synthetic replication introduces opacity since the ETF does not hold all underlying securities directly. These features make the structure and risks difficult for a retail investor with basic knowledge to understand. According to MiFID II Article 254 and Delegated Regulation EU 2017/565 Article 57, and ESMA guidelines, such use of embedded derivatives and synthetic replication typically classifies the ETF as complex. The ETF does not use significant leverage beyond UCITS limits, but the presence of swaps and synthetic replication, combined with securities lending and the complexity of the underlying index exposure, outweighs this. The ETF's risk profile is high (category 6), reflecting market volatility and complexity. Therefore, despite being a UCITS ETF, the synthetic replication and derivative use cause it to fail the non-complex criteria under Article 57, requiring an appropriateness assessment for retail investors and the inclusion of a comprehension alert in the PRIIPs KID if applicable."
}