On 3 August 2023, the European Securities and Markets Authority (ESMA) published on its website, in all EU official languages, the guidelines on the MiFID II product governance requirements.

The guidelines are based on Article 16(1) of the ESMA Regulation. The objectives of the guidelines are to establish consistent, efficient, and effective supervisory practices within the European System of Financial Supervision and to ensure a common, uniform, and consistent application of the MiFID II requirements on product governance. In complying with the guidelines, ESMA anticipates a corresponding strengthening of investor protection.

The guidelines apply in relation to the manufacturing or distribution of financial instruments and structured deposits. In particular, the guidelines apply in relation to the following requirements:

  • Article 9(3) of MiFID II.
  • Article 16(3) and 16(6) of MiFID II.
  • Article 24(1) and 24(2) of MiFID II.
  • Articles 9 and 10 of Commission Delegated Directive (EU) 2017/5932 (MiFID II Delegated Directive).

The guidelines apply as from two months from their publication on ESMA’s website in all EU official languages.

The guidelines should be applied in a way that is appropriate and proportionate, considering the nature of the product, the investment service, and the target market of the product.

In general, firms acting as manufacturers and/or distributors should substantiate, and document choices made in the context of their product governance arrangements, including regarding the target market identification and related distribution strategies.