ESMA set to review MiFID II product governance guidelines

The European Securities and Markets Authority (ESMA) is currently consulting on reviewed guidelines on MiFID II product governance guidelines.

ESMA is proposing to update the 2017 product governance guidelines following a number of recent regulatory and supervisory developments.

The main proposals in the draft guidelines relate to the specification of any sustainability-related objectives a product is compatible with, the practice of identifying a target market per cluster of projects instead of per individual product, the determination of a compatible distribution strategy where a distributor considers that a more complex product can be distributed under non-advised sales and the periodic review of products, including the application of the proportionality principle.

ESMA said, “The product governance requirements introduced by MiFID II have proved to be one of the most important elements of the MiFID II investor protection framework, aiming at ensuring that firms act in their clients’ best interests during all stages of the investment product’s life cycle and preventing mis-selling.

“As part of the product governance requirements, a target market of end clients must be identified and periodically reviewed for each product, as well as a distribution strategy that must be consistent with the identified target market.”

The consultation of the reviewed guidelines will close on 7 October 2022. The authority will consider the feedback it receives to the consultation in Q4 2022 and expects to publish a final report in Q1 2023.

Copyright © 2022 RegTech Analyst

Enjoyed the story? 

Subscribe to our weekly RegTech newsletter and get the latest industry news & research

Copyright © 2018 RegTech Analyst

Investors

The following investor(s) were tagged in this article.