What you need to do to make data Mifid II compliant

This data then needs to be communicated throughout the chain right down to the adviser community, thus ensuring each point of distribution/redistribution has a clear view on how the product should be sold, and to whom it can be sold. 

Each distributor in the chain, including the end adviser, is in turn obliged to operate their own product governance process and to set out and document their own specific views on the applicable target market and distribution strategy for each of the products in their arsenal.

The distributors are, in fact, expected to have an even more granular and refined approach to the process, the reason being that they are closer to the end investor and thus expected to demonstrate their knowledge of the client through a more targeted and specific market assessment.

It is important to note that adherence to the standards will not always be consistent and there may be many versions in play. Ronan Brennan

This requirement is dampened for products on the simpler side of the complexity spectrum, and obviously heightened for the more complex products.

The target market and distribution strategy data is not particularly sensitive and many firms would have no qualms about publishing it on a publicly accessible web site, and to this end it is likely much of it will be deemed ‘market data’ and freely exchanged with market data vendors (MDVs) and data aggregators alike.

The challenge will be simply how this data will be made available to tens, if not hundreds, of intermediaries in the chain. Giving the data to an MDV will not solve the broader problem; many intermediaries cannot reasonably be expected to sign up to any specific MDV, or indeed, a range of different vendors.

What firms really need is a single point of distribution/collection where each intermediary can receive/pick up the data. 

The industry has come together in working groups to facilitate standards to ease the exchange of this data along with cost and charges information, right the way from product manufacturer down to distributor, and on the whole, there appears to be broad consensus on this communication of target market data.

However, it is important to note that adherence to the standards will not always be consistent and there may be many versions in play as various different interest groups establish their own interpretations of these standards. 

Unfortunately, this is actually the easy part. Product governance within MiFID II also requires distributors to send target market sales exception data back upstream to the original manufacturer. This could include data on sales outside the target market, as well as data related to sales into the negative target market.