{
    "type": "ETC",
    "ucits": false,
    "leverage": true,
    "derivatives": true,
    "swaps": false,
    "inverse": false,
    "replication_method": "synthetic",
    "complex_factors": "Leverage, Derivatives, Synthetic replication, Commodity exposure, Daily reset compounding, Structured product features",
    "classification": "complex",
    "supporting_data": "The product is a WisdomTree Coffee 3x Daily Leveraged ETC, which is a collateralised debt security designed to provide leveraged exposure (3x) to the Bloomberg Coffee Sub Excess Return Index. It uses derivatives to achieve this leverage and synthetic exposure to commodity futures, with daily reset of leverage causing compounding effects that make returns over longer periods deviate from simple multiples of the index. The product is not a UCITS fund but an ETC governed by Jersey law. It explicitly involves leverage beyond UCITS limits and uses derivatives integral to its investment objective, including futures contracts subject to roll costs and contango effects, which add complexity. The product's structure, risks (including counterparty and collateral risk), and payoff profile are difficult for retail investors with basic knowledge to understand. The KID risk indicator is at the highest level (7/7), reflecting very high risk. The product does not offer capital protection and may result in total loss of investment. These features align with MiFID II criteria for complex instruments, including the use of derivatives beyond efficient portfolio management, synthetic replication, leverage, and complex payoff structures. Therefore, it must be classified as complex under MiFID II rules and requires an appropriateness assessment before sale to retail investors."
}