The European Securities and Markets Authority (ESMA), the EU’s Financial Markets Regulator and Supervisor, has published its Final Report on Guidelines on MiFID II product governance guidelines.

The main amendments introduced to the guidelines concern:

the specification of any sustainability-related objectives a product is compatible with;
the practice of identifying a target market per cluster of products instead of per individual product (“clustering approach”);
the determination of a compatible distribution strategy where a distributor considers that a more complex product can be distributed under non-advised sales;
the periodic review of products, including the application of the proportionality principle.
The product governance requirements introduced by MiFID II have proven to be one key element of the MiFID II investor protection framework, aiming at ensuring that financial instruments and structured deposits (“products”) are manufactured and/or distributed when this is in the best interest of clients.

By pursuing the objective of ensuring a consistent and harmonised application of the product governance requirements, the guidelines will make sure that the objectives of MiFID II can be efficiently achieved.

ESMA conducted a public consultation on these Guidelines to gather the views of relevant stakeholders. The report published today contains a feedback statement summarising the responses received and highlighting the amendments and clarifications introduced in the final guidelines to consider the feedback received during this consultation.