On January 4, MFA and AIMA submitted a joint letter to ESMA in response to its consultation paper on draft guidelines on MiFID II product governance requirements.
ESMA’s draft guidelines seek to ensure the common, uniform and consistent application of product governance framework established in Articles 16(3) and 24(2) of MiFID II, although the guidance mainly addresses the ‘target market assessment’. The Associations believe that the draft guidance is predominately focused on the retail market, and urged ESMA to confirm this view.
To the extent that ESMA intended for the guidance to extend beyond retail clients, the Associations requested that ESMA clarify that it expects firms to apply the rules proportionately, thereby ensuring that firms will use regulatory resources appropriately to those who will benefit from the investor protection measures.
Finally, the Associations requested that ESMA confirm that the guidance does not apply to firms with respect to discretionary portfolio management, such as in a client’s separate account.