{
    "ucits": true,
    "type": "ETF",
    "leverage": false,
    "derivatives": true,
    "swaps": true,
    "inverse": false,
    "replication_method": "synthetic",
    "complex_factors": "Use of total return swaps, structured products exposure, securities lending, concentrated index",
    "classification": "complex",
    "supporting_data": "The HSBC Asia Pacific ex Japan Sustainable Equity UCITS ETF invests up to 15% of its assets in total return swaps and contracts for difference, with derivative use not expected to exceed 5%. It also may invest in derivatives for efficient portfolio management and investment purposes, and engage in securities lending up to 30% of assets (not expected to exceed 25%). The ETF tracks the FTSE Asia Pacific ex Japan ESG Low Carbon Select Index, which is a concentrated index with a high level of concentration risk. The replication method involves synthetic elements due to the use of total return swaps, introducing counterparty and collateral risks. According to MiFID II Article 254 and Delegated Regulation EU 2017/565 Article 57, ETFs using synthetic replication and derivatives integral to the investment strategy are classified as complex because these features introduce risks and structures difficult for retail investors with basic knowledge to understand. The presence of derivatives beyond efficient portfolio management, securities lending, and a concentrated index further contribute to complexity. The ETF is UCITS compliant but due to its synthetic replication and derivative use, it does not meet the criteria for non-complex instruments under Article 57. Therefore, it is classified as complex under MiFID II appropriateness rules."
}