# Target Market Assessment: [Product name]

> Product governance record that an investment firm keeps when it
> manufactures or distributes a financial instrument: product
> description, the identified target market in the five categories
> used in EU practice (client type, knowledge and experience, financial
> situation with focus on ability to bear losses, risk tolerance and
> compatibility of the risk and reward profile, objectives and needs
> including sustainability-related objectives), the negative target
> market, distribution strategy, scenario analysis, charges review,
> conflicts, approval, distributor feedback and periodic review. Based
> on MiFID II (Directive 2014/65/EU) Articles 16(3), 16a and 24(2), as
> amended by Directive (EU) 2021/338, Commission Delegated Directive
> (EU) 2017/593 Articles 9 and 10, as amended by Delegated Directive (EU)
> 2021/1269 (sustainability factors, applied from 2022-11-22), and the
> ESMA Guidelines on MiFID II product governance requirements
> (ESMA35-43-3448, applied from 2023-10-03). Replace every `[bracketed]`
> value and every row marked *Example*. This is a document format, not
> financial, investment or legal advice. Obtain the directive, the
> delegated act, national transposing rules and the guidelines for the
> normative text.

<!--
Guidance: How to use this template
- Decide first whether you act as manufacturer, distributor or both
  (section 1). A manufacturer runs the product approval process of
  Delegated Directive 2017/593 Article 9; a distributor follows Article
  10 and must set its own target market even if the manufacturer did
  not. A firm that is both completes one assessment (Article 10(2)).
- Check the exemption in MiFID II Article 16a (inserted by Directive
  (EU) 2021/338): bonds with no embedded derivative other than a
  make-whole clause, and instruments distributed only to eligible
  counterparties, are exempt from the second to fifth subparagraphs of
  Article 16(3) and from Article 24(2) (product approval, target market
  and distribution strategy); other organisational duties still apply.
  Record the reason if you rely on it.
- Write the target market at a granular level: one positive and one
  negative entry per category, with the reasoning. Generic answers such
  as "retail, all" fail the granularity test.
- The output feeds distributors (manufacturer side) and the
  suitability and appropriateness process (distributor side). Link to
  the Client Risk Profile (`finance/client-risk-profile`) categories so
  that advisers can match clients to products.
- Related documents: MiFID Suitability Report
  (`compliance/mifid-suitability-report`), Conflicts of Interest Register
  (`compliance/conflicts-of-interest-register`), Marketing Review
  Checklist (`compliance/marketing-review-checklist`), Best Execution
  Policy (`compliance/best-execution-policy`), Risk Register
  (`compliance/risk-register`).
-->

## Document control

<!-- Guidance: Identify the product, the firm's role and the approval body. Each material change to the product, its target market or its distribution strategy is a new version approved through the same process. -->

| Field | Value |
|---|---|
| Document ID | [TMA-YYYY-NNN] |
| Version | [1.0] |
| Status | [Draft / Approved by product committee / In distribution / Under review / Withdrawn] |
| Owner | [@product-owner] |
| Approvers/reviewers | [@product-committee], [@compliance], [@risk], [@distribution-head] |
| Last updated | YYYY-MM-DD |
| Classification | [Internal; distributor summary shareable] |
| Product identifier | [ISIN / internal code] |
| Firm role | [Manufacturer / Co-manufacturer / Distributor / Manufacturer and distributor] |
| Other manufacturers or distributors | [Names, agreement reference] |
| Exemption under MiFID II Art. 16a | [Not applicable / Applies: reason] |
| Next scheduled review | YYYY-MM-DD |

*Example*: TMA-2026-007 for the Kestrel Bay Euro Equity Participation
Note 2031 (fictional), co-manufactured by Kestrel Bay Capital Europe
(fictional MiFID investment firm, product design) and Fernhollow Bank
(fictional EU credit institution, issuer). One target market is set for
both co-manufacturers.

### Approvals

| Body or role | Name | Decision | Date |
|---|---|---|---|
| Product approval committee | [Chair] | [Approved / Approved with conditions / Rejected] | YYYY-MM-DD |
| Compliance function | [Name] | [Opinion] | YYYY-MM-DD |
| Risk function | [Name] | [Opinion] | YYYY-MM-DD |
| Management body (report noted) | [Name] | [Noted] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@product-owner] | First draft for committee |
| 1.0 | YYYY-MM-DD | [@product-owner] | Approved for launch |
| [x.y] | YYYY-MM-DD | [@author] | [Periodic review outcome or change] |

## Contents

1. [Scope and firm role](#1-scope-and-firm-role)
2. [Product description](#2-product-description)
3. [Target market in five categories](#3-target-market-in-five-categories)
4. [Negative target market](#4-negative-target-market)
5. [Distribution strategy](#5-distribution-strategy)
6. [Scenario analysis](#6-scenario-analysis)
7. [Charges and value review](#7-charges-and-value-review)
8. [Conflicts of interest and market integrity](#8-conflicts-of-interest-and-market-integrity)
9. [Information to distributors](#9-information-to-distributors)
10. [Distributor feedback and sales monitoring](#10-distributor-feedback-and-sales-monitoring)
11. [Periodic review and trigger events](#11-periodic-review-and-trigger-events)
12. [Governance and traceability](#12-governance-and-traceability)
13. [Glossary and references](#13-glossary-and-references)
14. [Standard and licence note](#standard-and-licence-note)

## 1. Scope and firm role

<!-- Guidance: State what the assessment covers and which product governance obligations apply. Pitfall: a distributor copying the manufacturer's target market without checking it against its own client base, which Article 10(2) requires. -->

Explain whether the firm creates, develops, issues or designs the
instrument (manufacturer, Delegated Directive 2017/593 Article 9(1)) or
decides to offer or recommend it (distributor, Article 10(1)). Where
several firms work together, record the written agreement that sets
out their responsibilities (Article 9(8)) and which firm holds the
direct client relationship (Article 10(10)).

| Item | Detail |
|---|---|
| Role and legal basis | [Manufacturer: Art. 9 / Distributor: Art. 10 / Both] |
| Co-manufacturing agreement | [Reference, date, allocation of tasks] |
| Products in scope | [ISIN list or product family] |
| Services through which it is distributed | [Portfolio management / Advice / Non-advised / Execution-only] |
| Manufacturer not subject to MiFID II | [Name; information obtained from public documents and direct requests] |
| Proportionality applied | [Simple product: reduced depth, reason] |

*Example*: Kestrel Bay Capital Europe designed the payoff, the target
market and the distribution plan; Fernhollow Bank issues the notes,
hedges the payoff and runs the secondary market. The co-manufacturing
agreement CMA-2026-03 assigns target market and review tasks to Kestrel
Bay Capital Europe and pricing, hedging and issuer disclosures to
Fernhollow Bank. Both firms also distribute the note to their own
clients and act as distributors under Article 10 for that activity.

## 2. Product description

<!-- Guidance: Describe the product so that a distributor's adviser could explain it to a client: payoff, term, capital at risk, issuer and liquidity. Reference the key information document. Pitfall: describing marketing features ("participation in markets with protection") without stating the conditions under which capital is lost. -->

| Feature | Detail |
|---|---|
| Legal form and issuer | [Note / fund unit / share], issuer [name, rating] |
| Underlying | [Index, basket, reference rate] |
| Currency and denomination | [EUR], [1,000] |
| Issue and maturity dates | YYYY-MM-DD to YYYY-MM-DD |
| Payoff at maturity | [Formula] |
| Capital protection | [Level], [conditions], [subject to issuer credit] |
| Liquidity | [Secondary market terms, bid-offer spread] |
| Complexity | [Complex / Non-complex], basis [MiFID II Art. 25(4)] |
| Key information document | [PRIIPs KID reference, summary risk indicator] |
| Sustainability factors | [Considered: how / Not considered] |

*Example* payoff of the note, per EUR 1,000 nominal, with $I_0$ the
index level at the strike date and $I_T$ the level at the final
valuation date:

$$
R = 1{,}000 \times \max\left(0.90,\ 1 + 0.70 \times \frac{I_T - I_0}{I_0}\right)
$$

Other *Example* features: EUR denomination of 1,000, issue
2026-12-15, maturity 2031-12-15 (five years), underlying a European
large-cap equity price index [index name], 90% capital floor at
maturity only, unsecured senior preferred debt of Fernhollow Bank and
subject to bail-in under the EU bank resolution framework, daily
secondary bid by the issuer under normal market conditions with a
target spread of 1%, PRIIPs summary risk indicator 3 on the 1 to 7
scale, sustainability factors not considered. The note embeds a
derivative and is therefore treated as complex.

## 3. Target market in five categories

<!-- Guidance: Set the positive target market category by category, at a granular level, with the reasoning. ESMA35-43-3448 uses five categories; the client profile used by distributors should map to them. Pitfall: setting knowledge and experience without linking it to the distribution channel (advised clients can be less experienced than non-advised ones). -->

For each category describe the clients for whose needs, characteristics
and objectives the product is compatible (Delegated Directive
2017/593 Article 9(9), as amended), and the reasoning from the product
features in section 2.

| Category | Positive target market | Reasoning |
|---|---|---|
| TM-1 Client type | [Retail / Professional / Eligible counterparty] | [Why] |
| TM-2 Knowledge and experience | [Basic / Informed / Advanced, by channel] | [Why] |
| TM-3 Financial situation and ability to bear losses | [Loss the client can bear] | [Why] |
| TM-4 Risk tolerance and risk/reward compatibility | [Risk indicator range, risk band] | [Why] |
| TM-5 Objectives and needs | [Purpose, horizon, sustainability-related objectives] | [Why] |

*Example* for the note:

| Category | Positive target market (*Example*) | Reasoning (*Example*) |
|---|---|---|
| TM-1 Client type | Retail and professional clients | Denomination and disclosures designed for retail; no restriction for professionals |
| TM-2 Knowledge and experience | Informed investors (knowledge of capital-floor notes or at least one similar product held); basic investors only when advised or in portfolio management | Payoff has a floor, a participation rate and issuer risk that need explanation |
| TM-3 Ability to bear losses | Can bear a loss of up to 10% of the amount invested at maturity, and understands that an issuer default or bail-in could cause a loss of up to 100% | Floor at 90% applies only at maturity and only if the issuer pays |
| TM-4 Risk tolerance | Risk tolerance consistent with a summary risk indicator of at least 3 (medium band); medium risk band in the distributor's scale | Market risk limited by the floor, credit risk not limited |
| TM-5 Objectives and needs | Seeks growth linked to European equities with a partial floor over a 5-year horizon and intends to hold to maturity; no sustainability-related objectives addressed | Participation of 70% and the floor match a cautious growth need; early exit price is not protected |

Map the categories to the client profile used by distributors, so that
an adviser can test a client against the target market. For example,
TM-3 maps to the capacity for loss in the Client Risk Profile
(`finance/client-risk-profile`) section 5.2 and TM-5 to sections 3 and
6.

## 4. Negative target market

<!-- Guidance: Identify the groups of clients for whom the product is not compatible (Article 9(9)). ESMA35-43-3448 states that a negative target market for sustainability factors is not required where the product considers them, and explains how to present sustainability aspects. Pitfall: an empty negative target market, or one that only repeats the opposite of the positive list without thought about real client groups. -->

Name the client groups to whom the product must not be distributed,
and explain why. Distributors may sell to clients outside the positive
target market in justified cases, such as diversification or hedging
in a portfolio context under a suitability assessment, but sales into
the negative target market should be rare, justified and reported.

| ID | Negative target market (*Example*) | Reason (*Example*) |
|---|---|---|
| NTM-001 | Clients who cannot accept any loss of capital | Floor is 90%, and issuer risk remains |
| NTM-002 | Clients who need access to their money within five years | Secondary price may be below the floor before maturity |
| NTM-003 | Clients seeking regular income | No coupons are paid |
| NTM-004 | Basic investors buying without advice | Complex product; not suitable for non-advised sales to clients without relevant knowledge |
| NTM-005 | Clients whose risk tolerance stops at indicator 1 or 2 | Product indicator is 3 |
| [NTM-NNN] | [Group] | [Reason] |

## 5. Distribution strategy

<!-- Guidance: Show that the intended channels fit the target market (MiFID II Article 24(2)). Complex instruments cannot be sold execution-only (Article 25(4)). Pitfall: permitting execution-only or online non-advised sales of a complex product because the platform can technically offer it. -->

| Channel | Permitted? | Conditions | Rationale |
|---|---|---|---|
| Portfolio management | [Yes / No] | [Mandate limits] | [Why] |
| Investment advice | [Yes / No] | [Suitability assessment] | [Why] |
| Non-advised with appropriateness test | [Yes / No] | [Appropriateness outcome required] | [Why] |
| Execution-only | [Yes / No] | [Non-complex only] | [Why] |
| Marketing communications | [Channels] | [Review by `compliance/marketing-review-checklist`] | [Why] |

*Example*: portfolio management, yes, for Balanced or higher mandates
with a 5% position limit per structured note; investment advice, yes,
for clients matching TM-1 to TM-5; non-advised with appropriateness,
yes, for informed investors only; execution-only, no (complex product);
online advertising aimed at the general public, no. Kestrel Bay
Capital Europe's own Cautious model (Model C) does not use the note,
because the model excludes structured products by design. Mandates
for clients with no knowledge or experience of structured products,
such as the sustainable variant of Model B used in the MiFID
Suitability Report (`compliance/mifid-suitability-report`), also
exclude the note, because those clients fall outside TM-2.

```mermaid
flowchart TD
  A["Product idea"] --> B["Design and co-manufacturing agreement"]
  B --> C["Target market draft, sections 3 and 4"]
  C --> D["Scenario analysis and charges review"]
  D --> E{"Product committee"}
  E -- Rejected --> F["Redesign or stop"]
  E -- Approved --> G["Information pack to distributors"]
  G --> H["Distribution through permitted channels"]
  H --> I["Sales data and feedback"]
  I --> J["Periodic review"]
  J --> C
```

## 6. Scenario analysis

<!-- Guidance: Assess the risk of poor outcomes for end clients and when they occur, including deterioration of markets, financial difficulty of the manufacturer or a third party, failure to become commercially viable and demand higher than expected (Delegated Directive 2017/593 Article 9(10)). Pitfall: showing only favourable market scenarios from the marketing material. -->

Show outcomes in money and as an annualised return so that clients and
distributors can compare them with alternatives. State the assumptions
and that scenarios are illustrations, not forecasts. The annualised
return over $T$ years is:

$$
r_{\text{ann}} = \left(\frac{R}{1{,}000}\right)^{1/T} - 1
$$

| Scenario ID | Situation (*Example*) | Index change at maturity | Payoff per EUR 1,000 | Annualised over 5 years |
|---|---|---|---|---|
| SCN-001 | Severe market fall | -30% | 900 (floor applies; 1 + 0.70 x -0.30 = 0.79) | -2.09% |
| SCN-002 | Moderate fall | -5% | 965 | -0.71% |
| SCN-003 | Flat market | 0% | 1,000 | 0.00% |
| SCN-004 | Market rise | +25% | 1,175 | +3.28% |
| SCN-005 | Issuer default or bail-in | Any | Up to 0 (loss up to 100%) | Not meaningful |
| SCN-006 | Early exit in year 2 after a fall | -15% at exit | Issuer bid, illustrated at 930 | Not applicable |

Article 9(10) adverse conditions (*Example* assessment):

| Condition | Assessment |
|---|---|
| (a) Market environment deteriorates | Covered by SCN-001, SCN-002 and SCN-006; the floor protects only at maturity |
| (b) Manufacturer or third party in financial difficulty | SCN-005; issuer rating and resolution status monitored as a trigger in section 11 |
| (c) Product fails to become commercially viable | Minimum issue size EUR 5,000,000; issue cancelled and subscriptions returned if not reached |
| (d) Demand much higher than expected | Maximum issue size EUR 50,000,000 to stay within the issuer's hedging capacity; allocation pro rata |

## 7. Charges and value review

<!-- Guidance: Check that costs and charges are compatible with the target market, do not undermine return expectations and are transparent (Article 9(12)). Compare with a simple alternative the target client could buy. Pitfall: reviewing the fee level without asking what the client receives for it. -->

| Cost component | % of nominal over the term (*Example*) | EUR per 10,000 invested |
|---|---|---|
| Structuring and hedging margin of the issuer | 2.40% | 240 |
| Distribution fee paid to distributors | 0.60% | 60 |
| Ongoing costs | 0.00% | 0 |
| **Total costs over five years** | **3.00%** | **300** |

The distribution fee is a third-party payment. Kestrel Bay Capital
Europe does not keep it in portfolio management (MiFID II Article
24(8)); in non-independent advice it is disclosed and must meet the
inducement conditions of Article 24(9). Record the treatment in the
Conflicts of Interest Register (`compliance/conflicts-of-interest-register`).

*Example* value check: a five-year term deposit at an illustrative
2.0% a year would return EUR 1,104.08 per EUR 1,000 (1,000 x
1.02^5), with deposit protection up to the statutory limit. The note
beats the deposit only if the index rises by more than about 14.9% over
five years, because 1 + 0.70 x 0.149 = 1.104. The committee accepted
the value case for clients who seek equity participation with a
partial floor, and required the comparison to be shown in adviser
training material.

| Article 9(12) test | Result (*Example*) |
|---|---|
| (a) Costs compatible with needs and characteristics of the target market | Yes: total 3.0% over five years for a hold-to-maturity growth need |
| (b) Charges do not undermine return expectations | Yes, with the break-even disclosed |
| (c) Charging structure transparent for the target market | Yes: all costs embedded and stated in the KID and ex-ante cost disclosure |

## 8. Conflicts of interest and market integrity

<!-- Guidance: Analyse conflicts each time a product is made (Article 9(2) and (3)) and consider whether the product threatens orderly markets or financial stability (Article 9(4)). Pitfall: missing that a product may allow the manufacturer to offload its own risk to clients. -->

| Check | Result |
|---|---|
| Does the product let the manufacturer reduce or dispose of its own risk to the detriment of clients? | [Yes / No: reason] |
| Do clients take an exposure opposite to the firm's current or intended position? | [Yes / No: reason] |
| Remuneration of staff linked to sales of the product? | [Yes / No: controls] |
| Threat to orderly functioning or stability of markets? | [Yes / No: reason] |
| Staff expertise to understand the product (Art. 9(5)) | [Training records] |

*Example*: Fernhollow Bank hedges the index exposure with external
counterparties and holds no opposite position; no sales targets apply
to advisers; issue size is small relative to index liquidity. Conflict
COI-021 (group issuer, group distributor) is recorded with controls:
independent pricing check by Kestrel Bay Capital Europe's valuation
function and disclosure to clients.

## 9. Information to distributors

<!-- Guidance: Give distributors what they need to understand and sell the product properly: channels, approval process outcome and the target market (Article 9(13)), and sustainability factors presented transparently (as amended). Pitfall: sending only the KID, without the negative target market and distribution restrictions. -->

| Item sent to distributors | Format | Date |
|---|---|---|
| Positive and negative target market | [Industry data template / PDF summary] | YYYY-MM-DD |
| Distribution strategy and channel restrictions | [Summary] | YYYY-MM-DD |
| Key information document and prospectus | [Links] | YYYY-MM-DD |
| Cost and charges data | [Ex-ante data feed] | YYYY-MM-DD |
| Sustainability factors | [Not considered / Detail] | YYYY-MM-DD |
| Training material for advisers | [Reference] | YYYY-MM-DD |

Many firms exchange target market data through an industry template
such as the European MiFID Template maintained by FinDatEx; record the
version used and the mapping of its fields to sections 3 and 4.

## 10. Distributor feedback and sales monitoring

<!-- Guidance: Distributors provide sales information and review outcomes to manufacturers (Article 10(9)). Define the data, frequency and thresholds that trigger action. Pitfall: collecting sales data without checking how much went outside the positive target market. -->

| Metric ID | Metric | Source | Frequency | Threshold for review (*Example*) |
|---|---|---|---|---|
| FB-001 | Sales by channel | Distributor reports | Quarterly | Any execution-only sale |
| FB-002 | Sales outside positive target market, with reasons | Distributor reports | Quarterly | More than 5% of sales by value |
| FB-003 | Sales into negative target market | Distributor reports | Quarterly | Any sale without documented justification |
| FB-004 | Complaints about the product | Complaints log | Monthly | Two or more on the same theme |
| FB-005 | Early redemptions | Issuer secondary market data | Quarterly | More than 10% of issue redeemed early |
| [FB-NNN] | [Metric] | [Source] | [Frequency] | [Threshold] |

*Example* Q1 2027 report: sales EUR 18,400,000, of which 96.2% through
advice and 3.8% through portfolio management; EUR 410,000 (2.2%) sold
outside the positive target market for diversification within advised
portfolios, each with a suitability justification; no sales into the
negative target market; no complaints. Check: 96.2% + 3.8% = 100%;
410,000 / 18,400,000 = 2.2%.

## 11. Periodic review and trigger events

<!-- Guidance: Review the product regularly and before any re-issue, and identify crucial events that change its risk or return (Article 9(14) and (15); Article 10(5) for distributors). Record the actions available. Pitfall: an annual review that only confirms nothing changed while the issuer was downgraded. -->

| Trigger ID | Event (*Example*) | Action (*Example*) |
|---|---|---|
| TRG-001 | Issuer rating falls by two notches or below investment grade | Suspend new sales; inform distributors; reassess TM-3 |
| TRG-002 | Index falls more than 30% from the strike level | Inform distributors that the floor is likely to apply; update secondary market information |
| TRG-003 | Sales outside the target market above threshold FB-002 | Contact distributor; review channel permissions |
| TRG-004 | Complaints threshold FB-004 reached | Root cause review; update adviser training |
| TRG-005 | Change in law affecting the product (for example, Retail Investment Strategy rules once in force) | Legal review and re-approval |

Possible actions under Article 9(15) include informing clients or
distributors, changing the approval process, stopping further issuance,
changing the product terms, reconsidering the sales channels,
contacting or terminating distributors and informing the competent
authority.

| Review | Date | Outcome | Next review |
|---|---|---|---|
| Launch approval *(Example)* | 2026-11-20 | Approved with 5% portfolio management position limit | 2027-11-20 |
| [Annual review] | YYYY-MM-DD | [Outcome] | YYYY-MM-DD |

## 12. Governance and traceability

<!-- Guidance: Show that the management body has effective control (Article 9(6), Article 10(8)) and that compliance monitors the process (Article 9(7), Article 10(6)). Use the matrix to evidence each requirement. Pitfall: product approval by a sales committee without compliance and risk functions. -->

The compliance function reports to the management body on the products
manufactured or distributed, including the distribution strategy, and
these reports are available to the competent authority on request.

| Req ID | Requirement (reference) | Section | Evidence |
|---|---|---|---|
| PG-REQ-001 | Product approval process for each product and significant adaptation (MiFID II Art. 16(3)) | 1, 12 | Committee minutes |
| PG-REQ-002 | Granular target market and incompatible groups (Del. Dir. 2017/593 Art. 9(9)) | 3, 4 | This record |
| PG-REQ-003 | Scenario analysis (Art. 9(10)) | 6 | Scenario workbook |
| PG-REQ-004 | Risk/reward and design driven by client benefit (Art. 9(11)) | 3, 6 | This record |
| PG-REQ-005 | Charging structure review (Art. 9(12)) | 7 | Cost workbook |
| PG-REQ-006 | Conflicts and market integrity (Art. 9(2) to (4)) | 8 | Register entry |
| PG-REQ-007 | Information to distributors (Art. 9(13)) | 9 | Distribution log |
| PG-REQ-008 | Regular review and crucial events (Art. 9(14), (15)) | 11 | Review minutes |
| PG-REQ-009 | Distributor target market and sales feedback (Art. 10(2), 10(9)) | 3, 10 | Feedback reports |
| PG-REQ-010 | Distribution strategy consistent with target market (MiFID II Art. 24(2)) | 5 | Channel matrix |
| PG-REQ-011 | Management body control and compliance oversight (Art. 9(6), (7); Art. 10(6), (8)) | 12 | Compliance report |

Jurisdiction notes, as of 2026-10 (check local law):

| Jurisdiction | Reference | Note |
|---|---|---|
| EU | MiFID II Art. 16(3), 16a, 24(2); Del. Dir. (EU) 2017/593 Art. 9, 10; ESMA35-43-3448 | Transposed into national law; check national rules |
| EU (pending) | Retail Investment Strategy package | Expected to add value-for-money and peer benchmark requirements; not in force |
| UK | FCA Handbook PROD 3; PRIN 2A Consumer Duty (products and services outcome, price and value outcome) | Reference only; obtain the Handbook text |
| [Other] | [Reference] | [Note] |

## 13. Glossary and references

<!-- Guidance: Define the terms used in the assessment and list the sources. Pitfall: using internal product codes or risk scale names without explaining them to distributors. -->

| Term | Meaning |
|---|---|
| Manufacturer | Firm that creates, develops, issues or designs a financial instrument |
| Distributor | Firm that offers, recommends or sells a financial instrument to clients |
| Positive target market | Clients whose needs, characteristics and objectives the product is compatible with |
| Negative target market | Clients for whom the product is not compatible |
| Summary risk indicator | The 1 to 7 risk scale shown in a PRIIPs key information document |
| Bail-in | Write-down or conversion of a bank's liabilities by a resolution authority |
| Capital floor | Minimum repayment at maturity, subject to the issuer paying |
| Sustainability factors | Environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters, as defined in Regulation (EU) 2019/2088 Article 2(24) |

References (obtain the official texts):

- Directive 2014/65/EU (MiFID II), Articles 16(3), 16a, 24(2), 24(8),
  24(9) and 25(4), as amended by Directive (EU) 2021/338.
- Commission Delegated Directive (EU) 2017/593, Articles 9 and 10, as
  amended by Delegated Directive (EU) 2021/1269.
- ESMA Guidelines on MiFID II product governance requirements,
  ESMA35-43-3448.
- Regulation (EU) No 1286/2014 (PRIIPs) and Commission Delegated
  Regulation (EU) 2017/653, for the key information document and the
  summary risk indicator.
- FinDatEx European MiFID Template, cited by name only.
- FCA Handbook PROD and PRIN 2A, cited by reference only.

## Standard and licence note

Based on Directive 2014/65/EU (MiFID II), Directive (EU) 2021/338,
Commission Delegated Directive (EU) 2017/593 and Delegated Directive
(EU) 2021/1269 as published on EUR-Lex (reuse authorised with
acknowledgement under Commission Decision 2011/833/EU), and on the
category structure of the ESMA Guidelines on MiFID II product
governance requirements, ESMA35-43-3448 (source: ESMA,
esma.europa.eu; this template is not endorsed by ESMA, and the
guidelines are free on the ESMA website). FCA Handbook modules and the
FinDatEx template are cited by name only. All text is original; no
legislative or guideline text is reproduced. The product, Kestrel Bay
Capital Europe, Fernhollow Bank and all figures are fictional. Check
the current consolidated texts, national transposition and any adopted
Retail Investment Strategy changes before use. This is a document
format, not financial, investment or legal advice. Template licence:
MIT.