MFA Interviews 2022: Tracking Fraudsters and Strengthening Financial Education

The new marketing practices of financial products and services were at the center of the AMF Interviews of 22 November 2022. The opportunity to study new models of access to the Stock Exchange and new forms of marketing linked to digitization to uncover the pitfalls and try to narrow down the regulatory stakes.

The Autorité des marchés financiers (AMF) traditionally meets players in the Paris market in November. These Interviews have allowed, this year, to get to know each other Marie-Anne Barbat-Layani, new president of the MFA, and his ambitions for the regulator and to pay close attention to new marketing practices, through two round tablesthe first dedicated to the Stock Exchange, the second to the new forms of marketing linked to digitalisation.

For several weeks, the MFA has been chaired by Marie-Anne Barbat-Layaniformer Secretary General of the Ministry of Economy and Finance and former Director General of the French Banking Federation (FBF).

In this position, he replaces Robert Ophèle, whose non-renewable mandate expired in July 2022.

The new models of access to the stock market

The speakers of this round table shared the double observation:

  • the rejuvenation of investors attested by various studies, including the AMF Savings Barometer 2021.
  • the diversification of access to shares with competition between the traditional scholarshipssuch as Euronext, where the price results from the comparison between supply and demand and where brokerage commissions e new platforms on which those who are called are practiced PFO extension (acronym of “payment for order flow” or “payment for order flow”). These platforms appear to be free (0 commissions) but in reality they are remunerated through commissions retroceded to them by the market makers (who in turn re-invoice them to the end customer by incorporating them in the sale price of the shares).

This PFOF model (pronounced PIFOF) is highly criticized by the AMF for its lack of transparency and for the possible conflicts of interest it generates, the choice of the market maker who places the orders can in fact be made by the platform according to personal considerations (for example example better remuneration) rather than in consideration of the customer’s interest.

Knowing that these new and young investors allocate only small sums – at least initially – to the purchase of shares, some platforms, including Trade Republic invited to participate in the panel, facilitate the purchase of securities traded abroad and the investment of very small amounts (€ 1 per scholarship proposal), and, together with the file of split the shares, with a view to diversification.

It is not possible to split a share. These platforms – regulated abroad, such as Trade Republic (Germany) – provide for the co-ownership of a securities account which in turn holds the shares. This raises many questions, particularly regarding the exercise of the right to vote.

Marketing and digitization, new challenges

This 2th round table focused on the new forms of advertising, closely linked to social networks and of which the young public is the victim. The practice of influencers, which is nothing more than a new advertising practice, particularly attracts the attention of the regulator who seeks to deconstruct their arguments (easy and fun money) on social networks using the same codes.

The very recent DSA European regulation (Digital Services Act) published on October 27, 2022 should in particular, according to Pierre Chambu, head of the consumer protection and market regulation department at the DGCCRF, oblige platforms to provide information on the interests behind the influencers and in some way behind any advertisement that does not say your name, with the penalty if they do not do it correctly to delete them.

Despite the differences on this or that point, all the rapporteurs of these discussions agreed to support more financial education as the new President of the MFA had done by introducing the debates.

The 1time table-roundgathered around Benoît de Juvigny, general secretary of the MFA, Delphine d’Amarzit, managing director of Euronext, Matthias Baccino, director of Trade Republic for France and Fabrizio Planta of the European Securities and Markets Authority (AEMF).

The 2th table-round gathered around Jérôme Reboul, deputy secretary general of the MFA in charge of regulation and international affairs, Claire Castanet, director of relations with savers and their protection, Thérèse Chambers of the British Financial Conduct Authority, Pierre Chambu of the DGCCRF and Monique Goyens of the BEUC (European Federation of Consumer Associations)

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