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.