The second version of the ‘ Markets in Financial Instruments Directive (MiFID)’ further intensifies the regulations for financial service providers in terms of investor protection. Main areas of focus include product design and governance, advisory process (e.g. client classification and disclosure of information), inducements, costs and charges, provision of services in the European Economic Area (EEA), trading, and records management.
In case of the product design and governance, the respective regulation not only affects the distributor, but also the manufacturer of financial instruments: the new target market concept requires the manufacturer to define the suitable end client and a respective distribution strategy based on adequate target market criteria for financial instruments. In this way, the manufacturer now shares the responsibility for investor protection. The target market concept presents a challenge over the complete value chain, i.e. from the manufacturer via the distributor(s) to the end client: An industry standard for respective target market criteria cannot be expected in near future – nevertheless the manufacturer and distributor are both required to exchange information about the suitability of the defined target market and distribution strategy of the financial instruments on a regular basis.
Financial service providers to the EEA are obliged to comply with these new regulations from day one. But it is assumed that the affected countries will translate these EU regulations into national law only few months earlier. Therefore, financial service providers should strive to implement flexible solutions in a staggered approach to ensure timely compliance with the new MiFID II requirements.
- Leading the implementation of the MiFID II requirements for booking center CH for a major Swiss bank
- Leading the implementation of the “costs & charges” requirements
- Business analysis of the target market concept and its impact on a distributor’ s processes and systems
- Functional lead of the implementa-tion of the target market concept for a distributor