34. Is a subordinated structured product compatible with the moratorium?

The subordination of the right to repayment, and more generally of the savings component, adds a layer of complexity that is not compatible with the principles set out in the moratorium, which on the contrary is intended to simplify the structured products on offer. As is the case with reverse convertibles or credit-linked notes, these products also entail a heightened exposure to risk. The combination of subordination and of structuring – a situation not yet encountered at the time the moratorium was drawn up – renders these products too complex to be distributed to a wider public. The structuring of the yield may also have the effect of diverting consumers’ attention from the key element of the product, namely, the subordination of the right to repayment. For these reasons, a subordinated structured product may not be distributed to retail investors by signatories to the moratorium, except by applying the opt-out.