Discours de Benoît de Juvigny, secrétaire général de l'AMF - 7e conférence annuelle de l'AFME - 28 septembre 2023, Bruxelles (en anglais uniquement)

Seul le prononcé fait foi

Thank you very much for your invitation to participate in this 7th edition of AFME’s European Compliance and Legal conference. It is a real pleasure to be here in Brussels – particularly for me today as I will step down as Secretary General of the AMF in a few weeks – and to share with you the AMF’s perspective on some of the current regulatory issues and on the relationship between the EU markets and the global markets.

The year 2023 has been busy so far with many legislative dossiers impacting EU financial markets: some have already been agreed in Trilogues, such as the revision of MIFIR and CSDR, while others are well under way, as the Listing Act and EMIR, or at the beginning of a long legislative journey – as the Retail Investment Strategy. In one way or another, all these regulations aim at deepening the Capital Markets Union, a key objective for the EU. Of course these regulations are the result of compromises but, overall, these texts show that the Union is moving forward and strengthening the Single Market for financial services.

We can always see the CMU as a half full or a half empty glass. I prefer to see the half full glass when I see concrete figures like, according to ESMA, more than 380 passports granted within the EU in 2022.

Another important objective of the European Commission's current mandate a real gamechanger in the long run I think was to establish a more centralized access to information, transforming what was previously scattered into consolidated and easy-to-find data. In this respect I would particularly like to mention the ESAP regulation, which should make available prospectuses, financial statements and short selling data in 2026/2027 in the same location. I could also mention the introduction of a Consolidated Tape for bonds and equities/ETFs which, even if not perfect, is a first step towards enabling a comprehensive view of European financial markets. For that matter, we should never forget that the EU is also made up of small and medium-sized companies or investors that do not have the same access to information than the major international financial institutions – so the ability for them to get exhaustive information in one place is a tremendous progress. ESAP and the CT will definitively contribute to reinforce the Union’s autonomy and competitiveness.

The European landscape has drastically changed over the last years: Brexit, the Covid crisis, the Trump presidency, the war in Ukraine, the climate change... Therefore the EU needs to find a new balance between ensuring effective and strategic autonomy vis-à-vis of third countries’ entities and remaining an open economy.

In this environment, how should we understand the concept of « EU strategic autonomy» which was promoted by the French authorities for many years? This generally refers to the capacity for the EU to act autonomously – that is, without being dependent on other countries – when and where necessary.

In 2023, the EU Council highlighted the crucial importance to achieve also strategic autonomy of the European economic and financial sector, given the dramatic changes in the geopolitical context – whilst of course preserving an open economy. In its conclusions, the Council identified several areas of focus in this perspective.

• First, strengthening the international role of the euro is key of course ; in this field the possibility to put in place financial sanctions decided only at the EU level is of utmost importance;
• Second, the EU needs to develop a strong, competitive and resilient European financial sector servicing the real economy, “avoiding risks arising from excessive reliance on third-country financial institutions and infrastructures”;
• It also identified the need for the EU to shield and strengthen the resilience of financial-market infrastructures;
• And at the same time, develop cooperation with its partners.

Now, in practice, what does strategic autonomy mean for capital markets? When applied to the reality of EU financial markets, I tend to see « open strategic autonomy » as an attempt to achieve a careful balance between:

• On the one hand, avoiding market fragmentation, in particular tackling those rules that would deprive European financial market participants from access to trading with non-EU counterparts (remember the DTO debate for example) or non-EU expertise – that’s for the “open” in « open strategic autonomy »;
• And at the same time, retaining our ability at European level to set the rules. In particular, we need to safeguard our single market’s self-sufficiency and independence, for instance by ensuring we have enough intra-EU clearing capability, enough intra-EU provision of key resources like research or benchmarks.

Let me take these examples one by one to illustrate what is at stake in terms of « open strategic autonomy » in my opinion.

First, on investment research

I think we can all agree that the availability of quality research coupled with an adequate coverage of all issuers regardless of their size is a key aspect of any well-functioning capital market.

Unfortunately, we have witnessed a steady phenomenon of research attrition across the EU, and the changes introduced in the Level 2 of MiFID2 made the matter worse and accelerated the demise of the research ecosystem.

Five years later, we are left with a landscape where SMEs struggle to get a proper research coverage, to the detriment of their visibility amongst investors and the only option for most of them is to pay for their own research. On top of that, the market share in EU equity research of non EU international banks is very significant.

The Commission started to make amendments in 2021, through the Recovery Package, by unwinding the research unbundling rule for issuers with a market cap below 1bn€; and also through the Listing Act (currently under negotiation) by lifting the threshold even higher (10bn€) and proposing a clear framework for sponsored research. It seems that the Council would be even bolder, and may revert to a full rebundling, which would reverse this damaging trend.

However, as much as I welcome what seems to be the beginning of a collective acknowledgment that the EU made a mistake a decade ago on research, I am also realistic about the limited chances of success of these changes…

In any case, the MiFID2 episode on research provides a typical case of the EU taking self-harming legislation that damages its own ecosystem. In this context, the need for strategic autonomy imposes urgent measures to spur a revival of a damaged profession, even if that means rolling back and reneging of past reforms.

Second key subject, clearing

Another example is in the area of clearing services, where there is currently a legislative debate at European level to set requirements for EU market participants to use EU-based clearing infrastructures. Indeed concerns have been expressed repeatedly about the risks to EU financial stability resulting from the concentration of clearing in UK CCPs, especially for interest rates derivatives. But we should also pay attention to the impact of such a requirement on our markets and carefully assess its potential costs/benefits, as to make sure that EU-based market participants can still serve their clients and offer services in a competitive manner. If there is a consensus on the need to promote clearing in EU CCPs, there are diverging views on whether the approach should be qualitative (through the implementation of a so-called operational active account) or quantitative (by defining a minimum percentage of activity to be cleared in the active account at an EU CCP).

In addition to this proposal, the EU Commission also intends to reinforce the competitiveness of the EU CCPs by streamlining the supervisory procedures applying to them in order to provide them more flexibility as regards the change of models or the provision of new services. 

Third, ESG benchmarks and the ESG Ratings

Another striking example is offered by the Benchmarks Regulation and more precisely the labelled ESG Benchmarks. Indeed, in 2020, a Commission Delegated Act was adopted to allow the creation of Paris-Aligned Benchmarks and Climate Transition Benchmarks (better known as PABs and CTBs). These two categories of benchmarks have a major impact on other financial activities. For example, in the case of asset management, passive funds tracking a PAB or a CTB automatically qualify as Article 9 funds according to SFDR.

Despite this, as of today, about 90% of all PABs and CTBs are offered by administrators not supervised in the EU. What would be the meaning (or the interest) of a supervisory convergence exercise among European administrators, if a large majority of PABs and CTBs administrators are located outside the Union. This situation is clearly suboptimal. Issues with ESG rating providers of which a large part are located outside the EU: there again, we cannot accept a situation where a third country provider could not be properly supervised by European authorities. As an example, we consider that the current endorsement process envisaged in the ESG ratings legislative proposal is by far not sufficient as it would not allow a proper and coherent supervision and would incentivize ESG rating providers to remain outside the Union. We have similar views regarding PAB/CTP indices.

All these examples illustrate how important it is for the EU legislators and regulators, going forward, to think in terms of strategic autonomy in a pragmatic manner to deal with the various issues and challenges ahead for EU financial markets.

This is key and a matter of competitiveness of the Union at the global level.

And it must be positively noted that politicians at the higher level have recently put an emphasis on the importance of European competitiveness, notably with the President of the European Commission, Ursula van der Leyen, announcing a competitiveness check conducted by an independent board on every new piece of legislation.

The finance ministers of France and Germany have also communicated jointly to highlight the need to step up efforts “to deliver a deeper, better-functioning capital market (that) will strengthen our strategic autonomy, as a major, fundamentally open, economic bloc”. They added that “we must make our market framework more agile and no longer treat competitiveness as a mere afterthought”.

At our level, as stated in our new strategic plan designed by our new Chair, Marie-Anne Barbat Layani, the AMF has set as a priority going forward to remain a demanding regulator of a leading financial center, applying strict supervision to ensure orderly market functioning, combined with the promotion of the marketplace's competitiveness.

Thank you very much for your attention.