Abstract:
The aim of this thesis is to understand if there is a correspondence between complexity and riskiness in certificates, and to examine whether these financial products, so-called complex products, are suitable for retail investors or not.
In the first part, the main characteristics of certificates are shown and the markets in which they are traded. Subsequently, there is a detailed analysis of the structure of the main types of certificates that are currently proposed by the main financial intermediaries in this field.
The thesis then analyses the opinions issued in 2014 and in 2015 by ESMA and then by Consob in order to regulate the sale of complex products, in which certificates are included.
In conclusion, the thesis investigates the fact that the legislator associates product complexity to riskiness. Complexity is a relative term that depends on the characteristics of the product and its risk-return profile. In fact, there may be financial products in the market with a high level of complexity, but with a low risk level, or vice versa.
Misunderstandings in the comprehension of these terms may limit the sale of complex products to a wider audience. This thesis hopes to clarify the levels of complexity and riskiness of certificates, and to show that if there is transparency on the part of financial intermediaries, these products can be sold to retail customers according to their risk aversion and their knowledge of financial markets.
