In this 10-hour workshop we will examine and discuss practical implementation and application challenges of MiFID II relating to Product Governance and Best Execution.
The Product Governance Regime has ‘gone live’ with the introduction of the Markets in Financial Instruments Directive Recast (MiFID II) from the 3rd of January 2018. The new regime is designed to ensure that when a firm manufactures or distributes regulated financial services and products, it has arrangements in place to understand the products and ensure they are only sold to investors and clients for which they are likely to be deemed suitable. The new requirements will apply to “services” as well as “products”, for all client types and to all distributors in the sales chain.
The product governance requirements ensure that firms, which manufacture and distribute financial instruments and products, act in the clients’ best interests during all stages of the life-cycle. This workshop examines the organisational arrangements that firms will need to consider as per below:
The Overarching Product Governance Principles
- Clarify key regulatory principles that firms should review in relation to the product governance framework including governance; management oversight; roles & responsibilities; and process.
- State the practical considerations for investor protection including target market; fair value; customer needs; and terms and processes.
- Summarise the requirement to review products regularly to assess whether the product remains consistent with the needs of the target market of the product.
An In-depth Review of the Requirements
- State the new product approval obligation on firms acting as manufacturers, distributors and intermediaries
- Present a model framework which promotes an appropriate approach to addressing conduct risk.
- Summarise the impact for distributors in relation to suitability and appropriateness, information to clients, independent advice, inducements, and remuneration.
- Describe the implication for relationships with third-country manufacturers and distributors , ensuring the level or product information meets the regulatory standard
Investment firms are obliged to offer best execution when executing orders on behalf of a client this principle applies to MiFID II financial products including equity, fixed income, derivatives and commodities. Best Execution aims to strengthen investor protection by making markets more efficient and transparent.
Best execution is the obligation when acting on behalf of a client, to take all sufficient steps to obtain the best possible result for the execution of the client orders, having due regard to the wider market in any relevant instrument. The execution process has to be reflected in an execution policy, which must specify the execution venues, and, where derivatives are concerned, must address and distinguish between Exchange Traded products and Over-The-Counter (OTC) products. Firms and Trading Venues have ongoing requirements to produce reports for their clients and provide ongoing monitoring.
The workshop will examine the requirements and explore the organisational arrangements that firms will need to consider.
The Overarching Best Execution Principles
- Clarify key regulatory principles that firms should review their framework against including governance; management oversight; roles & responsibilities; and process.
- State the practical considerations for investor protection including to take all “sufficient” steps to achieve the best possible results for clients.
- Explore what constitutes “Best Execution” in the context of scope; policy; disclosure and monitoring.
Best Execution Challenges
- State the new requirements for investment firms and trading venues.
- Presenting a model framework which promotes an appropriate approach to addressing conduct risk.
- Demonstrate that firms have complied with their execution policy and being able to demonstrate compliance to national competent authorities.
Best Execution Governance
- Demonstrate practical examples from EU National Competent Authorities enforcement actions and case studies.
- Explore how firms manage outsourcing risk and due diligence with third parties.
- Explain a framework to practically manage regulatory change within your organization to for meeting regulatory expectation.
Who should attend
Management, compliance and administration professionals whose companies are regulated by CySEC, particularly senior management, legal, compliance, internal audit and those employees at the coalface.
Style and timing
This workshop is designed to be participative throughout. The agenda will combine key formal presentations, case studies and syndicate discussion sessions. There will be ample opportunity for delegates to benchmark experiences with industry peers and raise issues of most concern to their organisation, either confidentially or in open session.