{
    "type": "ETP",
    "ucits": false,
    "leverage": true,
    "derivatives": true,
    "swaps": true,
    "inverse": false,
    "replication_method": "synthetic",
    "complex_factors": [
        "Leverage (3x daily leveraged exposure)",
        "Use of swaps (total return swap with Natixis)",
        "Synthetic replication",
        "Complex payoff due to daily reset and compounding effects",
        "Counterparty risk (swap provider)",
        "Collateral risk (collateral held by custodian)",
        "High risk rating (7/7)",
        "Lack of capital protection",
        "Opaque structure for retail investors"
    ],
    "classification": "complex",
    "supporting_data": "The GraniteShares 3x Long MicroStrategy Daily ETP is a collateralised exchange traded product that seeks to replicate 3 times the daily performance of MicroStrategy Inc via a total return swap with Natixis. This synthetic replication method, combined with the use of leverage (3x daily), introduces significant complexity. The product's payoff is affected by daily reset and compounding effects, making returns over periods longer than one day difficult to predict and understand for retail investors. The swap exposes investors to counterparty risk and collateral risk, despite collateral being held in a segregated account. The product is classified with the highest risk rating (7/7), indicating very high potential losses. It is explicitly stated as 'not simple and may be difficult to understand' and is intended for investors with specific knowledge and experience. These features align with MiFID II criteria for complex instruments, particularly Article 57 of the Delegated Regulation and ESMA guidelines, which exclude leveraged synthetic products with embedded derivatives and counterparty risk from the non-complex category. Therefore, this ETP must be classified as complex under MiFID II."
}