Complex investments and professional investor access

A complex investment is an investment that may be more difficult to understand than a standard listed share, mainstream fund, conventional bond or simple ETF. Complexity can arise from the way the investment is structured, the type of assets it holds, how returns are calculated, the use of leverage or derivatives, liquidity restrictions, or features that may materially alter the risk or return profile.

Examples of investments that may be treated as complex include:

• leveraged or inverse exchange traded products;
• exchange traded notes, certificates or commodities with complex features;
• structured products or structured notes;
• warrants, options and other derivative-based instruments;
• convertible, perpetual, subordinated or contingent-convertible bonds;
• investment trusts or funds using complex strategies, specialist assets or material gearing;
• products with limited liquidity, unusual pricing mechanisms or material counterparty risk;
• investments where the manufacturer states that the product is not simple or may be difficult to understand.

Not every investment in these categories will be accepted by Invinitive. Each investment remains subject to Invinitive's permitted-investment rules, asset governance process, custody availability and any product-wrapper restrictions.

Complex investments can behave differently from more straightforward investments. In some cases, losses may be magnified, the price may move in a way that is not obvious from the underlying market, the product may be difficult to sell, or the investment may contain conditions or triggers that change the risk profile.

For this reason, Invinitive may require a client to complete an appropriateness assessment before trading a complex investment. The assessment is designed to check whether the client has sufficient knowledge and experience to understand the nature and risks of the investment.

An appropriateness assessment is not investment advice. It does not confirm that the investment is suitable for the client. It simply forms part of Invinitive's execution-only controls before allowing access to certain investments.

Depending on the investment, additional risks may include:

• leverage risk, where gains and losses can be amplified;
• compounding risk, particularly for daily-reset leveraged or inverse products;
• liquidity risk, where the investment may be difficult or expensive to sell;
• counterparty risk, where returns depend on the financial strength of an issuer or counterparty;
• concentration risk, where the investment is exposed to a narrow asset, issuer, sector or strategy;
• derivative risk, where pricing may be affected by factors such as volatility, time decay, interest rates or option-like features;
• currency risk, where returns may be affected by exchange-rate movements;
• disclosure risk, where less information may be available than for more mainstream investments.

Some investments may only be available to clients who have been categorised as professional investors. This may include certain overseas-listed ETFs, institutional share classes, products without retail disclosure documentation, or investments that are not intended for retail distribution.

Professional investor status is not automatic. Invinitive will only treat a client as a professional investor where the relevant regulatory criteria have been assessed and the client has been informed of the protections they may lose by being categorised in this way.

Clients who wish to be considered for enhanced market access can complete Invinitive's Professional Investor / Enhanced Market Access Assessment.

Before an investment is made available, Invinitive may consider factors including:

• whether the investment is permitted within the relevant product wrapper;
• whether the investment is capable of being held through Invinitive's custody arrangements;
• whether it is listed or traded on a recognised or supported market;
• whether it is a standard asset for SIPP purposes;
• whether the investment is complex or non-complex;
• whether retail or professional-client restrictions apply;
• whether appropriate disclosure documents are available;
• whether any additional warnings, controls or assessments are required.