The work of the European Working Group (EWG) bringing together a panel of financial players in Europe, including AMAFI, resumed in early 2018. After several months’ use of the standardised European MiFID Template (EMT) developed in 2017 for the exchange of information between manufacturers and distributors, the EWG aims to pinpoint useful changes to the template and its accompanying Q&A document. It will also be working on a set of standardised exchanges for sales outside the target market, which distributors must report to manufacturers. AMAFI continues to actively contribute to these efforts so as to facilitate convergence with its own recommendations (AMAFI / 17-87).
In response to a request made by several of its members, AMAFI organised a working meeting in early February on the implementation of the “best selection” mechanism following the entry into force of MiFID II. Discussions were subsequently held between AMAFI and the AMF, notably to clarify the application of obligations in respect of Delegated Regulation 2017/576 (RTS 28). The discussions notably focused on mandatory reporting on best execution venues to be published by entities subject to the best selection system. Some of the points addressed at this meeting may be included in a new upcoming version of ESMA’s Q&A.
SFAF, AFG, AMAFI, Euronext and Paris Europlace recently launched the MiFIDVision platform. AMAFI has been working together with other players from the Paris financial centre for a number of months on the consequences of the new rules governing the acquisition of financial analyses by management companies. And unfortunately, the initial findings show that the regularly voiced concerns are entirely founded, with research budgets having already been cut substantially. The direct and logical consequence is a reduction in the number of assets monitored. This mainly affects SMEs and mid-tier companies with their traditionally fragile business models for financial analysis. Meanwhile, the OFEM corporate capital market observatory recently published a study led by several researchers on the “role of analysts in the attractiveness and liquidity of SMEs and mid-tier companies”. The study confirms the positive role played by the financial analysis of securities in drawing the attention of investors, based on the reduction of spreads and volatility as well as increases in liquidity.
The MiFIDVision initiative addresses this issue. The aim, with the assistance of the EDHEC Risk Institute, is to publish a barometer not simply reflecting the trend in the financial analysis market following the entry into force of MiFID II but also identifying, in respect of the attractiveness of the Paris financial centre, solutions likely to develop the production of financial analyses.
In early February, AMAFI published a document on key points to watch in relations with customers under new French regulations arising from MiFID II of 15 May 2014 and its implementing measures (AMAFI / 18-08). The document is an update similar to that published by the association in 2007 following the application of MiFID I. It assesses the new mechanism introduced by MiFID II, characterised by substantial changes and an increase in legal sources. Divided into ten topics, the document surveys discussions led on the basis of MiFID II texts applicable in French law by a special working group, rounded out by wide-ranging assessments from several AMAFI Committees and Groups.
The AMF and AMAFI have agreed to make regular quarterly reviews of issues relating to the organisation of markets under MiFID II. With the new system set to generate considerable changes to the market structure, some of them already largely under way, discussing these matters is vital. The main issue is providing essentially operational input to inform the work in which the AMF is involved as part of ESMA.
As such, the Market Structure Committee met with the AMF in late March. The Committee presented AMAFI’s study on the consequences of the new system of tick sizes on the micro-structure of the market (AMAFI / 18-16). More technical questions were also discussed, including best execution reports, transaction reporting and trading obligations.
AMAFI has resumed its work on issues in the implementation of obligations relative to algorithmic trading and direct electronic access (DEA) set out notably in DR 2017/589. The aim is to identify the obligations applying to the market players in question, where they are DEA customers, DEA suppliers, users or algorithm designers. The findings of these discussions will be published at a later date in an AMAFI Q&A.