AMAFI responded to the European Commission’s consultation on the review of the MiFID II framework (AMAFI / 20-32). Repeating many of the proposals included in the memo that it released in early 2020 (AMAFI / 20-03), AMAFI pinpointed the issues where adjustments to the framework are felt to be needed. The goals are to ensure that European markets have the capacity to contribute sufficiently to financing the European economy, to introduce greater proportionality and to better reflect the specific features of the wholesale market, for which the challenges of building an integrated EU market are both real and immediate.
Investor protection
In terms of issues involving product governance and cost and charge disclosures, AMAFI stressed the need to simplify the framework as much as possible and introduce more proportionality by type of financial instrument and customer category, particularly to accommodate the requirements of the wholesale segment. While rejecting the option of introducing a new intermediate category for customer classification, given the difficulties that this would raise in terms of adjusting systems that were extensively modified only recently, AMAFI put forward two major proposals. First, it proposed that retail customers should be permitted to access all products – French and foreign – reserved for professional customers if they conduct a transaction worth over €100,000. The other proposal was to review the MiFID II opt-in procedure, which allows retail customers to be treated as professional customers, by enabling the procedure to be offered by a financial institution and by making the implementation criteria more operational.
AMAFI also expressed major reserves over proposals to set up an EU-wide product database and introduce an outright ban on inducements, which could disrupt the marketing of financial products in Europe.
Paying for research
AMAFI stressed the need to reform the inducements regime for the financing of research. In particular, it recommended introducing proportionality for SMEs and mid-tier firms, revising the procedures for trial periods and allowing issuer-sponsored research to be treated as investment research under MiFID II subject to certain requirements. Conversely, AMAFI said that it does not consider that sustainable and appropriate business models, consisting in having research fully or partially funded by third parties, market operators or public money, can be implemented. The economic balance must be struck between stakeholders with an interest in developing financial research: investors on one side, issuers on the others.
Market structure
AMAFI voiced support for introducing a European consolidated tape (CT), which could provide useful services to some market participants. The goal would be to phase in real-time pre- and post-trade transparency for equities and post-trade transparency for ETFs and bonds. The CT operator could be financed through a reasonable contribution from investment firms and management companies, which would be offset by the savings generated by the new mechanism. However, AMAFI emphasised that the establishment of such a system should not call into question fundamental MiFID II-MiFIR principles such as best execution or market transparency. In addition, the introduction of a CT should not be seen as a way to solve the question of the cost of market data, which needs to be addressed specifically, as this is the only way to provide an effective response to an increasingly crucial issue for market participants.
AMAFI also underlined the need to properly apply the provisions on non-discriminatory access to trading venues and central counterparties in order to lower transaction costs
Pour une réforme de l’Union des Marchés de Capitaux
Le Mardi 30 juin 2020
Débat organisé en partenariat avec CEPS-ECMI.
*CEPS-ECMI a fourni les données et analyses à partir desquelles l’AMAFI s’est appuyée pour élaborer ses propositions de recommandations. CEPS-ECMI ne souscrit pas nécessairement aux propositions de réformes figurant dans ce rapport.
PROGRAMME :
Introduction
Interventions
Débat & Questions - Réponses
Conclusion
The AMF’s Corporate Finance Division has begun work to convert Position 2013-13 into a guide to marketing materials for structured debt securities, in order to comply with directly applicable European legislation, including MiFID II and PR3. AMAFI was consulted on the project and argued in favour of the guide, which will provide the industry with guidance on the AMF’s expectations for commercial documentation, while preventing the AMF from gold-plating European legal and regulatory requirements (AMAFI / 20-54).
AMAFI suggested a number of modifications, notably to clarify some of the terms and concepts. It proposed adding a Q&A to address any industry questions as comprehensively as possible. For example, it recommended incorporating useful information from Position 2013-13 and providing clarification on the respective responsibilities of issuers and distributors. Several conversations have been held with AMF representatives on these proposals.
Webinar and presentation of AMAFI’s CMU report
AMAFI teamed up with the Centre for European Policy Studies (CEPS-ECMI) to stage a webinar on 30 June, the release date for the association’s report (AMAFI / 20-40) on completing capital markets union (CMU). Stéphanie Yon-Courtin, Vice-President of the European Parliament’s ECON Committee, Andrea Beltramello, from the private office of European Commission Executive Vice-President Valdis Dombrovskis, Fabrice Demarigny, Chairman of the Next CMU High-Level Group, and AMAFI Chairman Stéphane Giordano all spoke during a discussion moderated by Karel Lannoo, CEO of CEPS-ECMI. Over 80 participants from all sectors took part in the event.
Agreement crystalised during discussion of a number of reforms needed to reinvigorate the CMU initiative, including steps to establish a proper European securitisation market and strengthen supervisory convergence so that EU-27 markets can play their role in financing the economy to the full.
A delegation led by Stéphane Giordano presented AMAFI’s report to French authorities, including the Treasury and the private office of the Minister for the Economy and Finance, the European Commission (DG FISMA) and several member states’ permanent representations. These meetings were an opportunity to highlight AMAFI’s proposals on relaunching the European securitisation market, tailoring Basel III transposition to safeguard market making, facilitating retail participation in financial markets and mitigating the impact of a hard Brexit (access to UK central counterparties and scope of STO/DTO).
Commission action plan
Following adoption by the European Parliament’s ECON Committee of the CMU own-initiative report, which espouses a number of priorities proposed by AMAFI (AMAFI / 20-50), the European Commission published its action plan on 24 September. Given the current economic situation, and with Brexit just three months away, the eagerly awaited plan is of critical importance because it is designed to boost CMU.
The plan is organised around 16 sets of actions, including several that AMAFI is especially gratified to see, such as measures to relaunch the securitisation market, preserve the competitiveness of European market makers, create a single access point to the financial and CSR data of EU businesses, assess current practices in supervisory convergence in order to identify needs in terms of harmonising European legislation, and improve access to financial markets for retail investors.
EFAMA and EFSA welcome the publication of Market Infrastructure Partners' Study on the Creation of an EU Consolidated Tape
