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Status: You are viewing the version of the handbook as on 2019-01-03.

PROD 3.1 General

[Note: ESMA has also issued guidelines under article 16(1) of the ESMA Regulation covering: “MiFID II product governance requirements”, dated 5th February 2018.

See https://www.esma.europa.eu/sites/default/files/library/esma35-43-620_guidelines_on_mifid_ii_product_governance_requirements_0.pdf. ]

Interpretation: financial instruments and structured products

PROD 3.1.1R

1For the purposes of PROD 3, references to financial instruments include structured deposits.

Proportionate application of rules

PROD 3.1.2R
  1. (1)

    A firm must, when manufacturing financial instruments or deciding on the range of financial instruments and investment services it intends to distribute to clients, comply, in a way that is appropriate and proportionate, with the requirements set out in this chapter.

  2. (2)

    In complying with these requirements, a firm must take into account:

    1. (a)

      the nature of the financial instrument or investment service; and

    2. (b)

      the target market for the financial instrument.

[Note: articles 9(1) and 10(1) of the MiFID Delegated Directive]

PROD 3.1.3G

A proportionate application of the requirements in this chapter may mean that complying with the rules could be relatively simple for simple financial instruments distributed on an execution-only transaction basis where such financial instruments would be compatible with the needs and characteristics of the mass retail market.