MiFID II: Target market, product complexity and product reviews
Under MiFID II, product manufacturers and distributors are required to define their target investor markets and take steps to ensure that products end up only in the hands of the intended market, with products being defined as either complex or non-complex.
MiFID II requires investment firms which manufacture products to maintain, operate and review a process for the approval of each product and significant changes of existing products before they are marketed or distributed to clients.
Target market assessment
Artemis’ product approval approach specifies the intended target market of end-clients during the design stage and ensures all relevant risks to the identified target market are assessed.
Investment firms have a duty to ensure that their distributors are distributing their products correctly, to the appropriate target market for each fund. This involves a two-way information-sharing between advisers and product providers. The target market for each product is set out in the European MiFID Template (EMT).
Complexity of products
Only ‘non-complex’ products are permitted to be made available to private investors without any advice or suitability checks.
In accordance with Article 25(4)(a) of the MiFID II Directive, all Artemis UK and Luxembourg domiciled UCITS funds are classified as non-complex.
We have applied the tests set out in Article 57 of MiFID II to our non-UCITS funds and these also meet all the necessary criteria to be classed as non-complex.
Product reviews
All products undergo an annual review to ensure that funds: (i) are continuing to meet client needs; (ii) are performing as expected; (iii) are still appropriate for the identified end-clients, and that, overall, the distribution strategy remains compatible with the target market. The periodic reviews are complementary to existing day-to-day oversight and monitoring responsibilities across the business, and are designed to provide a holistic overview of a fund.
Find out more about Artemis’ product governance framework (PDF opens in new window)
The full Artemis governance framework is available upon request; please contact us.