In our latest monthly wrap up we highlight some of the key regulatory papers published by the Autorité Des Marchés Financiers (AMF) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR) during the period 20 September to 2 November 2022.

Marie-Anne Barbat-Layani appointed Chair of the AMF

By decree of the President of the Republic dated 26 October 2022, Marie-Anne Barbat-Layani has been appointed Chair of the AMF.

AMF and the ACPR third report on the monitoring and assessment of the climate commitments of Paris financial centre actors

The AMF and the ACPR (the Authorities) have published their third report on the monitoring and evaluation of the climate commitments of Paris financial centre stakeholders. The work focused on the analysis of the governance of these commitments, the evaluation of the implementation of sectoral policies governing the financing and investment in fossil fuels and estimates of the exposure of actors to these sectors.

Overall, it was found that the approaches of firms toward climate commitments remained disparate and that the operational implementation of them was insufficient. Many of the recommendations made in the two previous reports had been little followed and remained relevant, the Authorities said.

To comply with the reporting requirements of the Sustainable Finance Disclosure Regulation (SFDR) and Article 29 of the French Energy and Climate Law, but also in view of future legislation, the Authorities encourage financial institutions to strengthen their work in order to provide more robust, transparent and consistent reporting on their fossil fuel exposure, and to quickly close the gap between the transparency currently observed in the implementation of voluntary commitments and the requirements arising from these regulations.

Speech by Benoît de Juvigny, AMF Secretary General – AFME’s 6th Annual European Compliance and Legal Conference

The AMF’s Secretary General, Benoît de Juvigny, delivers a speech at AFME’s 6^th Annual European Compliance and Legal Conference.

Mr de Juvigny refers to the UK Financial Services and Markets Bill and notes that Europe will be keeping an eye on developments. He also adds that the  AMF is open to consider simplifying certain requirements in MiFID II and MiFIR and discusses these.

He also points to a notable achievement in France with the adoption of the Best Practice Charter for sponsored research which was published last summer by French trade associations. The goal of the charter is to establish a framework applicable in France to research that is entirely or partially paid for by issuers.

AMF study on the share price performance of companies using dilutive financing in the form of OCABSAs or equity lines

The AMF has conducted a study on issuers using financing in the form of equity lines or OCABSA (bonds convertible into shares with warrants).

In light of the study the AMF has reiterated its warnings to various market participants and retail investors and:

• urges issuers and their directors and corporate officers to be particularly vigilant before resorting to this type of financing and draws their attention to their responsibility in choosing and implementing these instruments;

• reminds issuers, with regard to their market disclosure obligations, that the characteristics of such financing and its attendant risks, in particular its potentially highly dilutive nature, must be clearly set out in their financial communication and provide a balanced presentation of their operational and financial situation;

• reminds shareholders that these types of financing are generally set up pursuant to delegations of authority granted by the general meeting of shareholders to the Board of Directors.

• warns investors about the specific risks associated with investing in companies that use this type of financing, especially the particularly high risk of losing the capital invested.

AMF updates its policy on management fees for CIUs

The AMF has updated its rules on the presentation, content and charging of administrative fees external to the management companies of UCITS and some alternative investment funds.

AMF calls on investment fund depositaries to strengthen their arrangements for the onboarding and monitoring of asset management companies

In accordance with the supervision priorities of the AMF, a series of “SPOT” short thematic inspections concerning the obligations incumbent on the depositaries of collective investments when entering into a relationship with and monitoring their client asset management companies were carried out in the period from January to April 2022. The investigations covered a sample group of five investment service providers and covered the period from 18 March 2018 to 31 December 2021. These inspections covered the functions of depositary both of undertakings for collective investment in transferable securities and of alternative investment funds.

The AMF has published a summary of its observations from the SPOT inspections, highlighting both good and bad practices, to encourage fund depositaries to strengthen their systems.

AMF updates its doctrine to facilitate the adoption of liquidity management tools

The AMF has followed up on an earlier consultation by publishing enhanced requirements for liquidity management tools in collective investment undertakings.

The enhanced requirements relate to:

• incentives for introducing a redemption capping mechanism (gates);
• swing pricing and anti-dilution levies;
• streamlining of the gates’ policy; and
• discontinuing some of the reports that AIF management companies send to the AMF each year for statistical purposes.

ACPR speech – Between mounting risks and financial innovation: the fintech ecosystem at a crossroads

The ACPR has published a speech given by Denis Beau (First Deputy Governor of the Banque de France) in which he briefly discusses the mounting risks to France’s innovation ecosystem, before highlighting how the Banque de France and ACPR can help to tackle them. In particular, Mr Beau touches on open finance and decentralised finance.