Professionals

5. Must a product mention the name of the issuer?

The name of a structured investment instrument ('note') must mention the name of the issuer. In accordance with the current regulations, units issued by a structured UCI must mention the name of the UCI subfund, followed by the name of the UCI. The name of a structured class 23 product whose return depends on a 'note' or on a unit issued by a structured UCI must mention the name of the issuer of the 'note' or the name of the subfund of the structured UCI.

The fact that the name of the issuer or of the UCI is mentioned in the documentation (prospectus, product sheet) does not in itself constitute fulfilment of the above-mentioned conditions.

Where a financing vehicle is used, the name of the product should contain the following three elements:

  • the name of the issuer
  • the country where the issuer's registered office is established
  • where applicable, the name of the entity to which the investor has a credit risk exposure (in respect of the savings component) of more than 50%.

The name of the product may under no circumstances refer to an entity to which the credit risk exposure is less than 50%.

The marketing materials must indicate the entities, including any guarantor, to which the investor has a credit risk exposure of more than 20% in respect of the savings component.

The above-mentioned 50% and 20% rule is applied at the time of issuance, using ESMA's methodology for UCITS[1]. If, however, the structure of the product specifies that these proportions may change during the product's lifetime, then the marketing materials must mention this and also indicate how the investor will be informed if such a change takes place.

If a financing vehicle with several subfunds is used, the assets of each separate subfund must serve exclusively to guarantee the rights of both the unit-holders of each separate subfund and the creditors whose claims arise from the establishment, operation or winding-up of that particular subfund.

The assets allocated to capital repayment must be contractually required to be non-structured, non-subordinated, non-convertible and non-exchangeable, and must be made up of the following investments only:

a) deposits by a company with an investment grade credit rating that is subject to prudential supervision and is established in a Member State of the European Economic Area, and/or

b) debt instruments issued by a company with an investment grade credit rating that is subject to prudential supervision and is established in a Member State of the European Economic Area, and/or

c) debt instruments issued or guaranteed by a Member State of the European Economic Area with an investment grade credit rating.


[1] CESR's Guidelines on Risk Measurement and the Calculation of Global Exposure and Counterparty Risk for UCITS, CESR 10-788 28/07/2010.