On the occasion of the publication of its annual report, France's Autorité des Marchés Financiers has announced its intention to do more to encourage shareholding among private individuals, promote better collective investment schemes and help the European Union achieve a Capital Markets Union.
Shareholders in the spotlight
In 2020, the number of people who held shares surged in many countries including France, where the AMF spotted some 60 million stock market transactions by individuals, compared with 25 million in previous years. In the AMF's view, this increase can only be sustainable if there is no excessive risk-taking, either through debt-ridden products or through seemingly attractive pricing. All advice must be of good quality. Last year, with this in mind, the AMF carried out a series of short thematic inspections to see whether products recommended to clients were suitable for them. It published a summary of these inspections last month.
During 2020 the AMF analysed the reporting of the ten French financial firms with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in mind, drew up its first report ever on the monitoring and evaluation of the climate commitments made by French financial institutions in conjunction with the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and published its third report on non-financial approaches in collective investment schemes. These efforts will continue as new European texts (of the Sustainable Finance Disclosure Regulation and the Taxonomy Regulation) come into force this year.
2020 was a year of very mixed results for the asset management sector, with people still creating 43 new companies and bringing their number up to 680 in France. There was also an upsurge in risks that pertained to liquidity and valuation. The AMF stepped up its monitoring system to collect daily data on the activation of liquidity management IT and on subscription and redemption flows. Difficulties in the valuation of certain unlisted assets led to the suspension of some funds, prompting EU policy makers to think again about the adequacy of regulation in this area and more prudential regulation to limit pro-cyclical behaviour. The AMF published its own recommendations for the next revision of the Alternative Investment Fund Managers (AIFM) Directive last month.
'Financial sovereignty' for the European Union?
Nearly five years after the announcement of the UK's exit from the European Union, the EU's drive towards a so-called Capital Markets Union has made little progress. The European Commission, however, presented a very concrete action plan in September last year with the aim of giving companies greater access to market financing in the form of shares, promoting European savers' access to secure long-term products, and integrating the EU's 27 national markets more closely. The AMF calls this an 'action plan' and says that the EU ought to "strengthen its independence in financial matters." This could be a veiled reference to the fact that the City of London is so dominant in European financial affairs that the EU cannot offer its citizens even half of all the different types of financial service that exist in the world, now that the UK has departed from its clutches.
The AMF employs 475 people. Last year it received 15,362 requests for information, of which 80% came from retail investors. It processed 1,327 cases, leading the ombudsman to issue 505 opinions. There were 11,486 funds at the end of 2020, representing €1,788 billion in AuM. There were 5,617 financial investment advisors, 65 crowdfunding advisors and 7 digital asset service providers (DASPs).
The regulator completed 50 investigations, of which 29 involved international co-operation and 8 led to "notifications of grievances," whatever they are. Meanwhile, the Enforcement Committee approved 13 settlements and published 13 decisions. They concerned 28 persons, of which 13 were legal entities. The regulator imposed 23 financial penalties with a total of €29.65 million and ordered 12 disciplinary sanctions (2 warnings, 3 reprimands, 7 temporary bans on conducting at least one business activity).