The French Financial Markets Authority (“AMF”) has published its action and supervisory priorities for 2021, which fit into broader strategic orientations defined in a five-year plan, currently the strategic plan for 2022 called #Supervision2022[i].
Among its implemented actions in 2020, despite a financial environment impacted by the Covid-19 crisis, the AMF deployed educational campaigns and supported European initiatives on Capital Markets Union – an economic policy plan designed by the European Commission to build a single market for capital, benefiting consumers, investors, and companies regardless of their location[ii] – and digital finance. It also began modernising its information systems as part of its digital transformation[iii]. AMF’s action priorities for 2021 now mainly focus on:
- Dealing with the Covid-19 crisis: The AMF emphasizes the importance of assisting issuers in their financial operations, especially distressed companies that have taken on massive amounts of debt to cope with the economic crisis[iv]. This involves supporting issuers in their transactions and financial disclosure to ensure proper information of investors and high-quality shareholder dialogue. The AMF also intends to contribute to regulatory developments to be made following the market crisis, notably to implement the European Recovery Prospectus[v], which was developed to prevent future economic upheavals[vi]. Furthermore, the AMF aims to work jointly with various economic regulators on liquidity risk management, for example with the European Securities and Markets Authority (“ESMA”)[vii].
- Participating in financial regulatory reforms: The AMF will continue to contribute to the Capital Markets Union plan and to the legislative review with the aim to protect investors and the economy and to ensure European competitiveness in the context of Brexit[viii]. The AMF will closely monitor the actors of the financial markets to support them in developing new organisational schemes, which will depend largely on regulatory developments in the UK[ix]. The AMF will also keep promoting innovative European markets in digital finance[x]. In 2021, based on the European Commission’s Digital Finance Package, it will adopt regulatory tools for the introduction of a single market for crypto assets in order to reinforce the fight against money laundering and terrorist financing[xi].
- Moving towards sustainable finance: The AMF will support the Paris financial center in the implementation of the regulatory framework while facilitating innovative approaches and ensuring a high-quality non-financial disclosure[xii]. This includes training customer-facing professionals on sustainability issues and on the importance of customers’ environmental, social and governance preferences, as well as promoting financial innovation by taking the environment into account, while maintaining a high standard of investor protection[xiii].
In conjunction with these priorities for action, the AMF’s goal is to highlight areas of risk and to make certain market participants aware of their professional obligations[xiv]. The AMF’s supervisory priorities for 2021 are the following:
- Supervision of asset management companies in the implementation of their obligations of best selection and best execution under the Markets in Financial Instruments Directive (“MiFID II”)[xv]. The AMF will also supervise such companies in the establishment of a system for the prevention of market abuse, in ensuring the transparency of costs and fees in collective investment management as well as the valuation and liquidity of real estate funds. The AMF will also supervise the monitoring and control of these companies by depositaries.[xvi] In this regard, the AMF will monitor related internal controls to prevent market abuse, including undue possession of insider information[xvii].
- Promotion of the security of market infrastructure information systems and the implementation of post-trade transparency requirements on bonds for market intermediaries and infrastructures[xviii]. It will also supervise the implementation of product government systems by financial instrument producers and plan to encourage these entities to apply European regulations, notably the so-called “STS” Regulation[xix] so as to ensure a simpler, transparent and standardized securitisation. The AMF also intends to emphasize the importance for financial entities to deploy protection strategies against cybercrime, which has escalated with the crisis[xx].
- Supervision of Marketing and advisory services actors including financial investment advisors and investment services providers. The AMF will ensure that they comply with the MiFID II rules on marketing and selling financial instruments[xxi]. The AMF is therefore to publish a document identifying good and bad practices and outlining the rules applicable to investment services providers on this matter. The objective of the AMF is to ensure that investment service providers strictly apply such rules with a reinforcement of the controls and sanctions that could be imposed on those who have failed to meet their obligations[xxii].
- At the same time, internally, the AMF will act on improving its effectiveness by reducing the response time of its enforcement branch and strengthening its monitoring and supervisory roles through greater use of data[xxiii]. It will also join forces with the Prudential Control and Resolution Authority (“ACPR”) to prevent scams and supervise the information disclosed to clients, especially when products are described as sustainable[xxiv].