Under what can only be described as a headache, MiFID II has a lot of elements to it. Product Intervention & Product Governance was one of the bigger changes and one that kind of got swept under the rug. To take a break from the GDPR, we thought we would have a little catch up about MiFID II.
PROD contains rules and guidance relating to the FCA’s power to make temporary product intervention rules and the obligations of manufacturer and distributors, when manufacturing or distributing financial instruments.
Manufacturers are firms which create, issue and/or design investments. They must make sure that:
Distributors are firms which offer, recommend or sell investment or provides investment services to clients. They must ensure that:
The target market is the group of individuals for which the particular financial instrument, structured deport or investment services is aimed at. There are six categories that firms should use when identifying the target market:
Product governance that is carried out correctly should result in products that:
This is a very brief summary of one section of the hefty beast that is MiFID II. If you want more information in regards to PRODs then you can pop over to our Knowledge Base, which will give you more detail and guidance. Alternatively, you can head over to Annex 4 of the ESMA Guidelines on Product Governance which includes illustrative example and case studies in relation to the application of the guidance.