French AMF welcomes increased sanctions

French regulators have welcomed European regulations that harmonise market supervision and strengthen its firepower. Gérard Rameix, chairman of the Autorité des marchés financiers (AMF), said promoting a shared market supervision culture with the European Securities and Markets Authority (ESMA) would be a top priority for the AMF this year.

"Following the 2008 financial crisis, lawmakers set about reforming financial market rules to enhance stability and transparency. The AMF thinks it is important for these reforms to be implemented with a view to coherence and convergence. Europe needs to promote the emergence of a shared market supervision culture, with the help of ESMA," Rameix said at the launch of the publication of the 2015 annual report(available in French only). 

The European Regulation on Market Abuse (MAR) and the new Market Abuse Directive (MAD), which will come into effect on July 3, 2016, are among the initiatives that will result in substantial changes to the French law enforcement system.

Sophie Baranger, AMF deputy secretary general of the directorate for investigations and controls, said MAR would boost the arsenal of regulators.

"Reporting of suspicious transactions covers a wider area, encompassing, among other things, market abuse attempts. Such reports may relate to orders or suspicious transactions, whether completed or not. In terms of the tools to detect market abuse, the regulation provides for new indicators of price manipulation, taking account of technological developments in recent years (algorithmic trading or high frequency trading, for example) which can also help us," Baranger said in the report. 

Increased sanctions

One of the important new provisions contained in MAR relates to the administrative sanctions that regulators of EU member states can impose. MAR gives regulators the ability to impose monetary sanctions up to a maximum that cannot be less than three times the amount of benefit gained or the losses avoided as a result of the infringement and alternatively, an amount that cannot be less than 5 million euros for individuals and 15 million euros for legal persons, or 15 percent of their annual turnover. 

The regulation outlines seven criteria for determining the penalty, some of which are new to the AMF. Only the gravity of the infringement and the gains obtained are included in French law. 

Meanwhile, MAD (which relates to criminal sanctions) defines for the first time a floor for the maximum prison sentences that member states can impose. In France, the AMF said the new regulation would likely lead to heavier criminal fines, and would probably be up to a maximum of 100 million euros, in line with the administrative sanctions. 

With respect to the use of inside information, MAD will raise the maximum prison sentence to at least four years, while for the communication of privileged information it must be at least two years. At present, under French law these infringements carry maximum prison sentences of two years and one year respectively. 

These provisions will make a difference to the AMF's sanctions department. In 2015, it completed 33 inspections of regulated professionals and finalised 75 investigations, of which 48 involved assisting foreign authorities. The enforcement committee issued 22 decisions. It issued 65 fines totalling 21.325 million euros against 28 legal entities and 37 natural persons. 

It also issued four disciplinary sanctions against three natural persons and one legal entity. In addition, the committee approved 12 settlement agreements, an alternative to sanction proceedings.

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