MIFID2 implementation in France: the pace quickens

Whilst texts implementing, or proposing to implement, changes to French law have been published, the AMF has (until now) not published any draft versions of its post-MIFID2 General regulations.

Please find set out below a summary of the content of The Autorité des Marches Financiers (AMF) consultation published on 10 May 2017 (the Consultation). Should you wish to submit any comments, these must be received by 10 June 2017. The Consultation follows on from the AMF’s September 2016 in relation to research and inducements.

The Consultation focuses on the implementation of the Commission Delegated Directive 2017/593 (the CDD), as a result it concentrates on:

  • the custody of financial instruments
  • product governance issues, and
  • inducements.

Please note that essentially the Consultation is a copy out of the CDD. However, the following points may be of interest:

  1. As French Alternative Investment Fund Managers (AIFMs) and French Undertakings for Collective Investment in Transferable Securities (UCITS) Management companies (together SGP) will no longer be investment companies, the AMF has crafted its draft amended General regulations to ensure that:
    1. the rules relating to the custody of financial instruments do not apply to SGP (as they are prohibited from holding client assets)
    2. the product governance rules will only apply to the extent that a SGP is a "distributor", and
    3. the MIFID2 inducements rules will only apply to a SGP to the extent that it carries out an investment service - there is no gold plating of the inducement rules to collective portfolio management. The AMF will gold plate the rules relating to the custody of financial instruments to custodians who are not investment service providers.
  2. The AMF will likely gold plate the product governance rules to ensure that all "distributors" - even if not investment service providers (eg French IFAs, SGPs) respect the MIFID2 rules for "distributors".
  3. Minor clarifications have been issued in relation to the appropriate measures a producer should take if an event could have a significant effect on the risk or expected return of a product.
  4. The draft AMF rules clarify situations in which the client’s consent to the amount of the research payment account and periodicity of allocations to that account can be inferred (ie it is the same as the prior year)

Given that the AMF is not the regulator responsible for the regulation of all investment companies (this would be the Autorité de contrôle prudentiel et de résolution “ACPR”) it does not have the ability to draft all of the regulations required to implement the CDD. As a result, we await an arrêté from the ACPR in order to implement the CDD’s requirements on a number of points (such as use of client assets, structured deposits and qualified money market funds).

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.