The Enhanced Product Governance under MiFID II
Following the ‘One year anniversary from MiFIDII-its implications’ article, we continue our series of commentaries aimed at simplifying the process of understanding the new regulation. Among others, the new regulation introduces, for all investment firms, requirements for enhanced product governance. The motive is, again, to achieve ‘investor protection’.
The product governance obligations include procedures for the European investment firms to; understand and analyze the specifics of the investment products pre-manufacturing and pre-distribution, while the firms need to identify the compatible target market when they;
1. analyze the type of client for whom the product is intended (retail and/or professional),
2. assess all relevant risks for investor protection, and
3. ensure the recommended product offering is in the interest of the client.
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