Representing financial market professionals based in France



ICSA interim meeting, 10 February 2021

The International Council of Securities Associations (ICSA) met in mid-February with Paul Andrews, Secretary General of the International Organization of Securities Commissions (IOSCO), to discuss IOSCO’s work programme for 2021 and 2022 (link). The meeting was held virtually because of the health crisis.

Priority work areas were discussed, including cryptocurrencies, artificial intelligence and market fragmentation. The meeting also afforded an opportunity to stress the systemic risks connected with services provided by non-bank financial institutions, as well as the ways in which widespread remote-working might affect supervision, fraud detection and operational resilience. Sustainable finance is another major issue for IOSCO, which plans to focus on improving the consistency and comparability of sustainability reporting. With Paul Andrews set to stand down as head of IOSCO at the end of February, participants thanked him for his excellent work and receptive attitude


Prudential regime for investment firms

Entry into application

As our feature article shows (p 2), implementing Europe’s new regime for investment firms, which comprises the Investment Firms Regulation (IFR) and the Investment Firms Directive (IFD), is a major project for AMAFI. The association is meeting regularly with the Treasury and the prudential regulator, ACPR, to discuss transposition of the IFD into French law and the practical arrangements required to switch investment firm classes to the new regime. While some operational solutions are now emerging, with just months to go until the 26 June 2021 deadline, concerns remain. Given that some answers can only come at European level, the new regime’s entry into application should be delayed by a few months.


In connection with the new regime, the European Banking Authority (EBA) is consulting on guidelines for sound remuneration policies for Class 2 investment firms.

Since the proposed guidelines are closely modelled on those put forward in connection with the fifth Capital Requirements Directive, on which EBA also consulted recently, AMAFI partly based its response (AMAFI / 21-19) on the feedback it submitted in January (AMAFI / 21-07). Among the top priorities are Brexit-related implications for competitiveness and the capacity of EU participants to attract talent. In terms of the proposals for gender-neutral pay policies, AMAFI argued that EBA had overstepped its mandate in areas linked to gender neutrality, such as access to training and internal mobility. Pointing to IFD’s sector-specific focus, the association said that the guidelines were not an appropriate vehicle for dealing with these questions.


Anti-money laundering

Annex to ACPR guidelines

The ACPR has finalised and published the Annex on market transactions to its guidelines on KYC aspects. This is a significant development for market activities and AMAFI members. The aim of the measures is to capture the specific features of these activities in order to implement tailored due diligence measures, which are inherently different from those applicable to banking and retail services, and so improve the effectiveness of participants’ anti-money laundering/counter-terrorist financing (AML/CTF) systems.

The document, which takes into account the most recent comments made by the association, meets AMAFI’s key goals because it states, in a written ACPR policy, that:

  • In the case of financial intermediation, no business relationship exists between an executing broker and the end customers of a referring intermediary, where the intermediary sends customer orders to the executing broker as part of an order reception-transmission service;
  • In the case of financial instrument distribution, no business relationship exists between the manufacturer and the distributor’s end customer;
  • In the event that dual Market Abuse and AML reports are made to France’s securities regulator, AMF, and the French financial intelligence unit, Tracfin, respectively, these reports may have the same content, but the money laundering risk profile of the affected customer need not be downgraded in every case.

Request for clarification

AMAFI sent to the appropriate French authorities (DGT, INPI, DGFIP and ACPR) a list of issues requiring clarification following transposition of the Fifth AML/CTF Directive and publication of the new cross-sector executive order on AML/CTF internal control.


MIF 2 - Protection des investisseurs

Retrouvez les propositions de l’AMAFI pour la révision de MIF 2 sur les aspects Protection des investisseurs dans la note AMAFI / 21-35



ESMA issues a negative opinion on the AMF’s AMP on Liquidity Contracts

Writing in a press release, AMAFI expressed disappointment at the negative opinion recently published by the European Securities and Markets Authority (ESMA) on amendments notified by the French securities regulator (AMF) to the Accepted Market Practice (AMP) on liquidity contracts. In describing the AMP as “potentially threatening the market confidence in the Union financial markets”, ESMA inexplicably overlooks not only the extensively documented analyses on which the AMF based its AMP but also the AMF’s long-standing attention to preventing and punishing market abuse.

The conditions under which this opinion was formulated are concerning. For one thing, the documents published by the AMF stress that no market abuse linked to a liquidity contract has been observed, while everyone is familiar with the calibre of the tools used by the AMF to perform market surveillance in this regard. For another, the lack of compliance with the points for convergence issued in April 2018 by ESMA clearly played a major role in this position, despite the fact that no study of the type carried out by the AMF was produced either at that time or since.

At a time when the growing financing challenges facing the European Union are giving the markets an ever-more central role, as the Capital Markets Union initiative emphasises, ESMA has once again taken a dogmatic stance, eschewing the pragmatic approach based on reasoned analyses that should guide it in discharging its tasks. This approach is especially regrettable because it fuels and justifies the uncertainty over extending the powers of an authority that has yet to demonstrate its expertise and ability to respond pragmatically to the challenges facing issuers, investors and market participants in Europe (see Editorial and stories below).

It goes without saying that AMAFI urges the AMF to disregard ESMA’s opinion and maintain its position.


CMU – European Supervisory Authorities

As part of the Capital Markets Union (CMU) reboot, the European Commission launched a consultation on supervisory convergence and the single rulebook with a view to learning the initial lessons from the review of the European Supervisory Authorities (ESAs) conducted in 2019.

AMAFI organised its input (AMAFI / 21-32) to this discussion around issues specific to ESMA, which has a particularly pivotal role to play in CMU. With this in mind, AMAFI identified several priorities:

  • Adjust ESMA’s remit to integrate the goal of ensuring that European market participants have the competitiveness to respond to the financing challenges facing the EU;
  • Improve the effectiveness of tools to promote supervisory convergence, including Q&As, which should always be put out to consultation, and the ability to issue no action letters with powers equivalent to those issued by US supervisors;
  • Establish governance arrangements to make sure that the issues connected with decisions taken by the Board of Supervisors are fully measured, including by setting up an Executive Board composed of independent members to mitigate national bias and by improving the contribution from Standing Committees, which can channel the industry’s operational expertise to enhance the work done by ESMA;
  • Set up recruitment pathways between industry, national supervisors and the European authority to help build understanding of the often fiendishly technical issues that need to be addressed;
  • Extend ESMA’s direct supervisory powers over certain entities whose business is clearly pan-European in scope. However, such an extension can only be considered if it is tied to improvements in how ESMA functions, particularly in terms of governance.

In addition to providing feedback to the consultation, which looks to be a fairly formal exercise judging by the format used and other elements, AMAFI will shortly publish a document summarising its suggestions on a matter whose importance must not be underestimated.


SPACs - Europlace working group on the attractiveness of the Paris financial centre

AMAFI is part of the Paris Europlace working group on the attractiveness of the Paris financial centre, whose aim is to talk about the main regulatory, legal and tax obstacles that interfere with the centre’s appeal. Special purpose acquisition companies (SPACs) and initial public offerings (IPOs) are among the key concerns for the group, which may propose recommendations where appropriate.

SPACs are listed companies created to carry out one or more acquisitions, whose target may not be known when the SPAC is listed. The funds raised are kept in order to finance the subsequent acquisition of a company that, once acquired, will be listed without an IPO. In the post-Brexit environment, and given the appetite for and rise in SPACs (illustrated by two recent listings in France), which can help to improve a financial centre’s appeal, these issues are taking on real significance and deserve close attention. While a first reading suggests that French law may be used to duplicate the standard features of SPACs as developed in the USA, the AMF recently highlighted several points that represent a starting point for work in this regard.