ESMA publishes final report on product governance guidelines to safeguard investors

The European Securities and Markets Authority (ESMA) has published today the Final Report on product governance guidelines under the Markets in Financial Instruments Directive II (MiFID II) regarding the target market assessment by manufacturers and distributors of financial products.

The requirements on product governance were introduced under MiFID II to enhance investor protection by regulating all stages of the life-cycle of products or services in order to ensure that firms which manufacture and distribute financial instruments and structured deposits act in the clients’ best interests.

The proposed guidelines address issues specific to manufacturers and distributors as well as issues common to both.

The Final Report follows the Consultation Paper issued on 5 October 2016. Following the responses to the consultation and advice from the Securities Markets Stakeholder Group (SMSG), ESMA has modified the guidelines in some areas such as the topic of portfolio diversification and has provided further practical examples in the annex in order to ease the application of the guidelines.

The ESMA statement and related information is available here.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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