Notes on Financial Software Engineering for MiFID II-Compliance

Following a critical discourse analysis of the MiFID II financial regulation, here are some notes for the industry tackling the issue of Financial Software Engineering for Investment Suitability and Reporting Quality.

This is my own reading of the regulation and how it impacts the work of financial software developers. I discuss a number of the things one should keep in mind when developing a MiFIDII-compliant software for assessing an investor’s risk personality and investment suitability.

  • Article 24.2 talks about target market and has an impact on Investor’s Personality/Financial Product Matching Rules.
  • Article 24.3 talks about clear information and has an impact on Reporting Standards.
  • Article 24.4 talks about timely information including costs and charges and has an impact on Reporting Granularity.
  • Article 24.4iii talks about periodic assessment of suitability and has an impact on Reporting Frequency.
  • Article 24.7 talks about diversity in the selection of financial products and has an impact on Investor’s Personality/Financial Product Matching Rules and Financial Assets in Database.
  • Article 24.11 talks about transaction of products in packages and/or separately and has an impact on Investment Strategy and Reporting Granularity.
  • Article 25 talks about suitability of assessment and reporting and has an impact on Reporting Standards.
  • Article 25.1 talks about quality of information and has an impact on Reporting Standards.
  • Article 25.2 talks about investors’ knowledge and has an impact on Test Design and Reporting.
  • Article 25.6 talks about the suitability of an investment and periodic reporting and has an impact on Investor’s Personality/Financial Product Matching Rules and Reporting Frequency.

please get in touch here, to know more on Financial Personality Profiling, Investment Suitability and Reporting Quality

[see another Post on Investment Suitability – > here]

 

For constant updates, https://www.esma.europa.eu/policy-rules/mifid-ii-and-mifir

 

 

 

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