{
    "ucits": true,
    "type": "ETF",
    "leverage": false,
    "derivatives": true,
    "swaps": false,
    "inverse": false,
    "replication_method": "physical",
    "complex_factors": "Derivative use for efficient portfolio management and securities lending; no embedded derivatives or structured products",
    "classification": "non-complex",
    "supporting_data": "The HSBC MSCI Korea Capped UCITS ETF is a UCITS-compliant ETF, which generally presumes non-complexity under MiFID II. It primarily invests physically in shares of companies in the MSCI Korea Capped Net Index, with possible use of derivatives limited to efficient portfolio management (EPM) purposes such as managing risk and costs, and securities lending up to 30% of assets, which is within UCITS limits. The ETF may invest up to 10% in total return swaps and contracts for difference, but this is limited and not integral to the investment objective. There is no indication of embedded derivatives or structured products like CLOs. The replication method is physical or close to physical, tracking a transparent equity index. The ETF does not employ significant leverage beyond UCITS limits, nor does it have capital protection or complex payoff structures. The risk profile is high due to market volatility and emerging market exposure, but this does not imply structural complexity. According to MiFID II Article 254 and Delegated Regulation Article 57, such an ETF is non-complex because it meets the criteria: it does not embed derivatives integral to the strategy, uses derivatives only for EPM with minimal risk impact, has a transparent structure and risks understandable by retail investors, and has no significant leverage or opaque features. ESMA guidance confirms that UCITS ETFs with synthetic replication or complex derivatives would be complex, but this ETF does not fall into that category. Therefore, the ETF is classified as non-complex under MiFID II appropriateness rules."
}