France Interdealer Exemption Development

The French government released Decree No 2019-655 formalising the Interdealer Exemption outlined in the AMF-ACPR letter (dated 12 February 2019), with effect from 29 June 2019.

The French government released Decree No 2019-655 formalising the Interdealer Exemption outlined in the AMF-ACPR letter (dated 12 February 2019), with effect from 29 June 2019. The conditions of the exemption remain broadly the same as outlined in the 2019 letter (see both French and English versions here) but the text of the Decree goes slightly further, including a longer list of French counterparties with which own account dealing is permitted under the exemption and allowing for third country firms becoming market members of French regulated markets, MTFs or OTFs. Furthermore, the version of the exemption outlined in the Decree is not limited to derivatives contracts, but covers any transactions on financial instruments or greenhouse gas emission allowance.

The extended list of French counterparties covered by the exemption now includes the following public entities: the French State, the Trésor public, the Banque de France, La Poste, both the Institut d'émission des départements d'outre-mer and the Institut d'émission d'outre-mer, the Caisse des dépôts et consignations (CDC), the Caisse de la dette publique and the Caisse d'amortissement de la dette sociale.

The Decree has been implemented in article D.532-40 of the French financial and monetary Code as follows:

“A company from a third party country within the meaning of 1° of article L. 532-47 of this Code [ie equivalent to an investment service provider] is not subject to the requirement to establish a branch in France, provided that it enters into, on own account and without providing any other investment service in France other than the service mentioned in article L. 321-1 [ie own account dealing], transactions on financial instruments or on units mentioned in article L. 229-7 of the French Environment Code while in one of the following situations:

1° The transactions are entered into with an entity acting on own account and that is a credit institution authorised pursuant to article L. 511-10, an investment firm authorised pursuant to article L. 532-1, or an institution mentioned in article L. 518-1 or 1° of article L. 531-2 [i.e. very specific public entities mentioned above], outside of a regulated market, multilateral trading system or organised trading system;

2° The transactions are entered into on a regulated market, a multilateral trading system or an organised trading system mentioned in articles L. 421-1, L. 424-1 and L. 425-1.”

The French notification accompanying the Decree clarifies that the purpose of 2° above is to allow a third country investment service provider to be a member of a French stock exchange. Please note that we are currently liaising with Euronext Paris regarding the ability of third country firms to become market members of a French stock exchange.

Please feel free to reach out to Ian Rogers and Emilien Bernard-Alzias should you have any further queries in relation to this development.

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.