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Target Market Determination (AU DDO)
ID MOD-155
System SD08
Repo bank-app
Build status Not started
Deployed No

Purpose

The Target Market Determination module provides the TMD management capability required to comply with the Australian Design and Distribution Obligations (DDO) under Corporations Act Part 7.8A and ASIC RG 274. For every AU-distributed retail financial product, the module stores the approved TMD, monitors distribution outcomes against the target market description, detects defined trigger events, and escalates for TMD review. Distribution outside the target market is detected automatically and reported as a conduct event.

What it does

TMD record store

Each AU product has a TMD record in app.target_market_determinations: tmd_id, product_id, approved_at, approved_by (compliance_officer role), review_date, status (current/under_review/expired), target_market_description (JSONB — structured criteria for the class of retail clients for whom the product is appropriate), distribution_conditions, review_triggers (configurable list), and version (monotonically incrementing). A compliance_officer approval is required before status is set to current. No AU product can be activated in MOD-127 for distribution without a current TMD. If the TMD expires or is set to under_review, the product is automatically suspended from new distribution until a fresh approval is recorded.

Distribution event monitoring

For each AU product sale or referral, a distribution event is recorded and the acquiring customer's characteristics from MOD-010 are evaluated against the structured target market criteria in the TMD. Criteria may include: customer age range, risk tolerance, financial literacy indicator, investment horizon, and specific product-eligibility flags. Events where the customer falls outside the target market are flagged as out_of_market_distribution and stored with the specific criteria mismatch. A configurable threshold of out-of-market events within a rolling review period triggers a TMD review.

Trigger detection and review workflow

The module monitors each product's configured trigger conditions: complaint rate threshold, product return/early redemption rate, out-of-market distribution count, a distribution channel incident, or a material change to product terms or target customer profile. When a trigger threshold is met, a TMD review case is created in MOD-053, assigned to the Head of Product, and requires compliance_officer re-approval before the case can be closed. During an active TMD review, the product remains distributable but all new distribution events are flagged for enhanced monitoring.

ASIC significant dealings reporting

Significant out-of-target-market dealings — individual transactions above a configured value threshold or systemic patterns — are compiled into a structured report for ASIC submission under the DDO reporting obligation. Submission tracking records the submission date and ASIC acknowledgement reference.

Compliance reason

The Australian DDO (Corporations Act Part 7.8A, effective October 2021) requires every issuer of a retail financial product to: make a TMD, take reasonable steps to ensure distribution is consistent with the TMD, monitor distribution, act on review triggers, and report significant out-of-target-market dealings to ASIC. ASIC has already taken enforcement action against issuers for DDO failures. With 23 products planned and AU distribution intended from launch, the TMD obligation applies to every AU retail product from day one.

Commercial reason

The DDO review trigger mechanism is commercially valuable beyond compliance: a high complaint rate or high early-redemption rate on a product is early evidence of distribution to the wrong customers. Automatic trigger detection allows the institution to correct its distribution strategy before the commercial damage compounds and before ASIC initiates an inquiry.

Module dependencies

Depends on

Module Title Required? Contract Reason
MOD-127 Product configuration panel Required — Product configuration record provides the product attributes and jurisdiction settings referenced in the TMD; product activation gate is enforced via the product configuration layer.
MOD-010 CDD tier assignment engine Required — Customer CDD profile provides the characteristics (age, employment, risk profile, existing holdings) evaluated against the TMD target market description.
MOD-053 Case & complaint management module Required — TMD review trigger cases are created in the case management system and follow the same SLA and escalation workflow.
MOD-048 System decision log Required — All TMD approvals, distribution events, trigger detections, and ASIC report submissions are logged as immutable system decision entries.
MOD-068 Authentication & session management Required — TMD approval workflow requires authenticated compliance officer actions.
MOD-103 Neon database platform bootstrap Required — Neon database and schema provisioned by MOD-103 must exist before this module can read or write Postgres.
MOD-104 AWS shared infrastructure bootstrap Required — AWS shared infrastructure provisioned by MOD-104 is required before this module can be deployed.

Required by

(No modules in this wiki currently declare a dependency on this module.)

Policies satisfied

Policy Title Mode How
CRE-008 Product Design & Distribution Policy GATE No AU retail product can be distributed without an approved, current TMD on file — distribution is blocked at the product configuration layer; no bypass path.
CON-006 Product suitability and governance AUTO Customer characteristics are automatically evaluated against the TMD target market criteria for each product sale; out-of-target-market distribution events are detected and recorded without manual review.
CON-001 Customer Fairness & Conduct Policy LOG Out-of-target-market distribution events and TMD trigger breaches are logged as conduct events and escalated for review.

Capabilities satisfied

(No capabilities mapped)

Part of SD08 — Customer App & Back Office Platform Compiled 2026-05-22 from source/entities/modules/MOD-155.yaml