{
    "ucits": true,
    "type": "ETF",
    "leverage": false,
    "derivatives": true,
    "swaps": false,
    "inverse": false,
    "replication_method": "physical",
    "complex_factors": "Derivatives for efficient portfolio management, securities lending",
    "classification": "non-complex",
    "supporting_data": "The HSBC MSCI Canada UCITS ETF is a UCITS-compliant ETF, which under MiFID II is generally presumed non-complex due to strict regulatory requirements ensuring diversification, liquidity, and transparency. The ETF uses derivatives only for efficient portfolio management (EPM) purposes, such as managing risk and costs, and investment purposes, but these derivative exposures are limited (total return swaps and contracts for difference not expected to exceed 5% of assets). This limited use of derivatives for EPM aligns with the MiFID II framework where such use does not automatically trigger complexity if the impact on risk-return profile is minimal and well disclosed. The ETF employs physical replication or direct investment in index constituents where possible, with derivatives used only when direct investment is not practical, supporting non-complex classification. Securities lending is used up to 30% of assets but is managed within UCITS rules with collateral requirements, which does not automatically make the ETF complex. There is no significant leverage beyond UCITS limits, no embedded derivatives, and the underlying MSCI Canada Index is transparent and straightforward. The risk profile is high due to market volatility but this does not imply structural complexity. Therefore, based on MiFID II Article 254, Delegated Regulation EU 2017/565 Article 57, and ESMA guidelines, this UCITS ETF is classified as non-complex. This is consistent with ESMA and industry views that UCITS ETFs with limited derivative use for EPM and physical replication are non-complex, while synthetic or structured UCITS ETFs with significant derivative use or complex structures would be complex. The ETF's structure and risks are understandable by retail investors with basic knowledge, and no features such as significant leverage or embedded derivatives are present to trigger complexity."
}