The AMF Will Apply ESMA’s Guidance on Advertising in Line with the EU’s Regulation on Cross-Border Distribution by Collective Investment Schemes
The AMF has stated that it was complying with European Securities and Markets Authority (ESMA) guidelines, which are to be applied from February 2, 2022, relating to advertising and issued in line with the EU Regulation on Cross-Border Distribution by Collective Investment Schemes. These guidelines aim to detail the application of EU Regulation 2019/1156’s requirements. They establish common principles of identification for advertisements; of their true, clear, and non-misleading nature; and of the description of risks and advantages tied to the purchase of stakes or shares from an alternative investment fund (AIF) or from Undertakings for Collective Investment in Transferable Securities (UCITS).
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AMF and ECB Sign Cooperation Agreement Relating to Supervision
On August 26, the AMF and the European Central Bank (ECB) signed a framework agreement on information exchange between the two institutions for the purposes of supervisory missions of organizations under their joint supervision. The agreement was signed following the adoption of EU Regulation 1024/2013, also known as the “Single Supervisory Mechanism” regulation, which requires the ECB to sign cooperation agreements with the relevant member state authorities in charge of financial markets.
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Decision of September 16, 2021, Certifying Modifications to the AMF General Regulation
October 4
On September 16, 2021, the AMF modified its general regulation to provide details regarding government order (Ordonnance) 2017-1674 (known as “Blockchain”), facilitate the activities of clearing members of a clearing house, and increase the rights of crypto-asset custodians.
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New Economic Classification of SCPIs and OPCIs
October 14
The French Association of Real Estate Investment Companies (ASPIM) has defined a segmentation of consumer real estate investment companies (SCPI) and real estate collective investment undertakings (OPCI). This segmentation’s purpose is to consider the new type of assets that are growing and facilitate a better comparison between investment funds and their strategy. Funds will be able to classify themselves as diversified only if the fund targets more than three asset types, with no asset type representing more than 50% in value of the total allocation.
The seven types of asset prevalence are offices, businesses, residential (managed or not), logistics and business premises, health and education, hospitality, and alternative (any other type that does not fit the previous types). Asset management companies defined their own classification based on a fund’s assets or investment strategy.
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Market Data : The AMF Applies ESMA’s Guidance
October 18
The AMF stated that it would apply ESMA’s 19 points of guidance on obligations of publishing market data held by negotiation platforms, systematic internalisers, publishing systems, and consolidated tape providers. These points of guidance, which were published in line with EU Regulation MiFIR and EU Director MiFID, require that this data be published on a commercially reasonable basis or at no cost.
In particular, ESMA’s guidance provides details regarding access to market data, supply of the data in a non-discriminatory manner and on a costs basis, user cost and data unbundling obligations, transparency of pricing policies, and market data being made available at no cost.
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Protection of investors: The AMF Publishes Summary of Lessons Following SPOT Controls on Governance of Financial Instruments
October 19
Following EU Directive MIF2 and the reinforcement of requirements in terms of governance of financial instruments, the AMF carried out a series of SPOT controls to assess the implementation of these requirements at five investment services companies belonging to groups. The AMF took note of a good integration of the regulatory requirements in the controlled companies’ advertising processes of their financial instruments.
In terms of governance of financial instruments, the bad practices the AMF noted include the lack of participation of the controlled companies’ representatives in group committees and the lack of operationality of due diligence methods. The AMF also mentioned the lack of an identified target market for each financial instrument, failure to account for the risk report of certain instruments, and failure to consider client demands when monitoring the target market. The controlled companies also displayed shortcomings in the implementation of “negative” target markets and a lack of critical scrutiny of their patient company’s distribution strategy.
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ESMA Proposes New Rules for Taxonomy Regulation–Related Product Disclosure
October 22
The EBA, the European Insurance and Occupational Pensions Authority (EIOPA), and ESMA presented draft Regulatory Technical Standards (RTSs) to the European Commission. The RTSs relate to financial products that make sustainable investments that contribute to environmental objectives. These draft RTSs aim to ensure end investors’ access to comparable information so that they can make informed investment decisions and establish a unique, single rulebook for sustainability disclosures under EU Regulation 2019/2088 (also known as the Sustainable Finance Disclosure Regulation [SFDR]) and EU Regulation 2020/852 (also known as the Taxonomy Regulation).
Regarding products mentioned in articles 5 and 6 of the Taxonomy Regulation, the regulators’ report proposed pre-contractual and periodic disclosures that identify the environmental objectives that the product contributes to as well as the extent to which the product’s investments align with the Taxonomy Regulation. The report also proposes the inclusion of these pre-contractual and periodic disclosures in annexes of mandatory templates for financial products that are sustainable as defined by the SFDR. The Commission will decide whether to endorse the report in the 3 months after its publication.
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Loan Grant: The AMF Publishes Lessons from Its Controls of Six Asset Management Companies
October 27
Following the November 2016 authorization to asset management companies to grant loans, the AMF has carried out controls of six such companies, including five SPOT controls and a standard control. The AMF focused on the companies’ operations in terms of loan grants, related procedures, the conditions of the loans’ structuration, the financial management of the relevant AIFs, and the control mechanism.
The controlled asset management companies had generally established procedures, tools and processes for the loan grants that gave them an adapted level of compliance. The areas of improvement the AMF mentioned relate to a lack of detail for some procedures concerning credit analysis, the management of the financial security and recovery of debts, some due diligence to be implemented in these fields, and the need to wholly include this activity in the control mechanism.
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ESMA Publishes Statement on Investment Recommendations Made on Social Media
October 28
ESMA has clarified the definition of investment recommendations, their conditions of publication on social media, and possible consequences of breaches of EU Regulation 596-2014 regarding market abuse. ESMA stated that any recommendation should be produced and disseminated in an objective and transparent manner so that investors can distinguish between fact and opinion before an investment decision. It is also essential that an investor be able to easily identify the source of information and any conflicts of interest of those making recommendations.
ESMA specified that false or misleading information can violate EU Regulation 596-2014 and thus lead to fines and a referral to European public prosecutors for market manipulation.
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Extra-financial Reporting 2021: The AMF Encourages Listed Companies to Implement ESMA’s Recommendations
October 29
In the context of extra-financial reporting, ESMA has established supervisory priorities and recommendations to issuers before their annual financial report for the upcoming year. The AMF encouraged listed companies that make annual statements of their extra-financial performance to implement ESMA’s recommendations. In terms of this reporting, ESMA underlined three main supervisory priorities:
The impact of COVID-19, particularly on the growth of company activities, their action plans, and their fulfilment of their sustainability objectives in the context of the pandemic
The stakes related to climate change (political, identification and management of risks, indicators and objectives)
Required disclosures per Article 8 of the Taxonomy Regulation regarding the publication of sustainability indicators so that the EU can identify economic activities considered sustainable (The primary reporting requirements related to the Taxonomy Regulation will be applicable as of January 1, 2022.)
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