Liquidity contracts – Accepted market practice

As planned, following a two-year observation period, the French securities regulator, AMF, conducted an overall review of the accepted market practice (AMP) for liquidity contracts created by AMF Decision 2018-01. Accordingly, on 31 March 2021, it submitted a new draft AMP to ESMA, which responded with a negative opinion (Info AMAFI 150).

On 23 June 2021, the AMF decided to disregard ESMA’s opinion and published Decision 2021-01 on renewing the implementation of liquidity contracts in equity securities under the accepted market practice. The French financial community, including AMAFI (see press release), welcomed the decision, which is supported by detailed analyses, as mentioned in the explanatory memo published by the Authority pursuant to MAR Article 13(5).

Acting through its Liquidity Contract Group, AMAFI is updating its standard liquidity contract and accompanying memo. It is also drafting a charter to clarify the commitments of market members acting under liquidity contracts to help them implement the obligations resulting from the AMF’s decision. These documents will be discussed with the AMF in the near future, with the intention of publishing them in October.