The impacts of Mifid II Product governance on financial intermediaries. A possible fintech solution to face new requirements

Mifid II introduces the requirements on product governance to enhance investor protection by regulating of all stages of the life-cycle of financial products or services and to ensure that firms, which realize and distribute financial instruments or structured deposits, act in the clients’ best interest. To reach this scope, Mifid II set out several Product Governance requirements, that impose to financial intermediaries to implement a product approval process for each new financial instrument they are going to create or for significant changes to existent products. By implementing the product approval process, MifiD II redesign the relationship between intermediaries and clients internalizing this relationship into the intermediaries’ corporate governance processes , because the client’s interest has a central role during all life-cycle of financial instrument from the creation to distribution of financial product. Clients’ features play a fundamental role since the early stage, in fact financial products have to be designed to satisfy the target market’s needs and objective identified for each products. The implementation of a product approval process has a great impact on corporate governance financial intermediaries, because it involves a redefinition of function’s roles and assignment of new tasks. The aim of this paper is to underline the main impacts of Mifid II Product Governance requirements on corporate governance of financial institutions and the necessary efforts to make intermediaries compliant to the new regulatory framework. At the same time, this essay wants to provide an insight about a future research on a fintech solution, to let intermediaries face POG requirements. Furthermore, the authors, with this food for thought about Blockchain, want to underline the importance for financial service industry, of paying attention to Fintech technologies and their several possible applications to win the challenges of new regulatory frameworks, such as Mifid II, and to survive in the new era of Digital Finance.