The AMF and ACPR Joint Unit publishes its analysis of the French structured product market

In 2024, the ACPR and the AMF set up a working group to map the structured products market, which experienced rapid growth between 2021 and 2023.

A structured product is an investment (investment fund, debt security, etc.) whose value depends on the performance of an underlying financial asset (share, stock market index). Its calculation formula is defined at the time of subscription, and the performance conditions are set in advance. Consequently, these can be explained to the client before the contract is signed. Because of their complexity, these products may be misunderstood by retail investors and are therefore the subject of particular vigilance by the two authorities[1], who adopted a policy for their supervision in 2010[2].

The aim of this mapping exercise is to identify those structured products that are sold to retail investors, both as life insurance and as securities accounts. It aims to precisely quantify trends in annual inflows, and to identify the main marketing channels, as well as the main characteristics of these products (level of risk, performance and the underlier in particular). The structured products covered by the study are debt securities and structured funds marketed on the French market between 2021 and 2023. The mapping was based on data collected from 10 banks representing the majority of the structured products marketed in France to retail customers.

This mapping exercise brought a number of lessons to light:

• the sale of structured products to retail clients in France is growing very fast (from around €23bn in gross inflows in 2021 to almost €42bn in 2023). Life insurance accounted for the bulk of inflows (80% vs 20% for public offerings/securities accounts). While these products are indeed marketed to retail investors, almost half of the products marketed between 2021 and 2023 were aimed exclusively at informed retail investors, rather than the general public;
• the vast majority of these products have, at this stage, posted positive performance in a bullish market climate: less than 1% of products redeemed over the period 2021-2023 have incurred a capital loss, and the median annual return distributed (gross, excluding the impact of fees – which are difficult to identify for these products – and tax) falls with the 6 to 7% range for the same period. However, this performance, observed over a specific period, is no guarantee of the future performance of these products, and the risk of capital loss could be greater in a less favourable market environment. The ACPR and AMF state that their client relations departments have not received any complaints in relation to these products in recent years;
• the proportion of products offering full capital protection at maturity has been rising steadily since 2021. However, 2/3 of the products marketed over the period have a risk of capital loss in the event of unfavourable market movements;
• the structured products marketed over the period comply with the rules set out in the national policy on complex products[2]. The majority of the products examined that are subject to a risk of capital loss are considered to be of low to moderate complexity, although they may still be difficult to understand for an uninformed investor. Most products are indexed to fairly standard underliers (share indices or shares). Similarly, no products involving alternative underliers, such as commodities or crypto-assets, have been identified. The use of environmental, social and governance (ESG) criteria in structured products declined significantly over the period.

The ACPR-AMF Joint Unit will continue its work on the marketing and performance of structured products in order to ensure that retail investors are protected.


About the AMF
The AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected and that investors are provided with adequate information. The AMF also supervises the orderly operations of markets.Visit our website https://www.amf-france.org/en 
About the ACPR
About the ACPRThe Autorité de Contrôle Prudentiel et de Résolution is the administrative authority operationally attached to the Banque de France that supervises the banking and insurance sectors and ensures financial stability. The ACPR is also responsible for protecting the customers of the supervised institutions and ensuring the fight against money laundering and the financing of terrorism. It also has resolution powers. The ACPR’s operational departments come under its General Secretariat. Visit our website at https://acpr.banque-france.fr/