Autorité des Marchés Financiers (AMF)
This article written by Akshit Gupta (ESSEC Business School, Master in Management, 2022) presents the structure and functioning of Autorité des Marchés Financiers (AMF).
The Autorité des Marchés Financiers (AMF) is an independent financial institution and administrative authority which possesses regulatory powers over the financial and banking industry in France. It was created under the Financial Security Act of 2003 with the primary purpose of ensuring protection of investors’ interests and smooth operations within the financial markets.
The authority has an independent legal identity and exercises authority, regulations, controls and sanctions over the players in the French financial system. In 2003, the AMF was formed as part of a merger between several financial regulators including Conseil de discipline de la gestion financière (CDGF), Conseil des marchés financiers (CMF) and Commission des Opérations de Bourse (COB).
The AMF is embodied with the primary objective of protecting the investors’ interests and savings in the financial markets along with monitoring and regulating the markets by issuing rules, guidelines, control measures and ensuring transparent flow of information. The authority is also responsible for issuing sanctions and penalties to market players in case any malpractices occur.
The Autorité des Marchés Financiers (AMF) primarily consists of 2 bodies namely, Le Collège and a Sanctions commission.
The Collège is headed by the President of the AMF, who is directly nominated by the President for the Republic of France for a non-renewable tenure of five years, along with a team of 16 people appointed directly by the public authorities. The operations and administrative work for the AMF is carried out by the Secretary General who is appointed by the President of the AMF and works under his supervision. The Collège has the powers to open sanctions and injunction proceedings against financial participants. The body is also responsible for defining the job framework, setting the budgets and staff remunerations for the AMF.
The Sanctions commission is an autonomous decision-making body that is responsible for exercising the sanctions on behalf of the AMF. The Commission consists of 12 people who are directly appointed by the public authorities.
The executive committee (Comité exécutif or Comex) is an additional body responsible for presenting proposals for the smooth execution of operational and strategic objectives for the AMF. The body is chaired by the President of the AMF and brings in an additional viewpoint to streamline the processes of the AMF.
Powers and responsibilities
The AMF is responsible for overseeing and regulating the activities in the French financial system and its players including listed companies, credit institutions, investment banks, investment firms and asset managers. It also looks after the financial products offered by the stated players in order to ensure the protection of investors’ interests and rights.
The AMF carries the above stated activities by means of enacting rules and regulations, authorizing products offered by financial players, issuing sanctions, implementing control measures and offering mediation system to ensure the smooth flow of market operations. It has the powers to investigate transactions carried out by any market participants to ensure the compliance of such transactions with the financial regulations of the French financial system.
Sanctions and penalties
The AMF is vested with the powers to issue sanctions and penalties to market professionals who act in contradiction to the rules and regulations of the financial system. The power to issue sanctions by AMF is split between the two primary bodies of the AMF that are the Collège and the Sanctions commission.
If any breach is found to have happened, the Collège is vested with the powers to decide upon the initiation of legal proceedings. If the Collège agrees upon initiating the legal proceedings, the Sanctions commission is responsible for deciding the quantum and degree of the sanctions to be inflicted upon the suspected individual/individuals.
The kind of malpractices that can take place in the financial system involves insider trading, stock price manipulations, circulation of false information, etc. which can affect the investors and possess a threat to their investments or financial safety.
The AMF can issue injunctions and individual sanctions to financial professionals (including individuals or firms) depending on the nature and magnitude of the breach that took place.
The Sanctions commission has the power to issue disciplinary sanctions which involve ban on practicing or reprimands and financial penalties amounting to 100 million euros or 10 times the amount of profits made by any individual or organization. The degree of such penalties depends upon the magnitude of the financial crimes involved and the advantages or benefits gained by the suspects.
More about the Sanctions commission
Relevance to the SimTrade Certificate
The activities of the AMF relate to many topics covered in the SimTrade certificate:
- The different players supervised by the AMF (listed companies which issued stocks then traded on an exchange, investment services providers such as brokers which provide access to the market, asset management companies which buy and sell securities on the market) are the participants to the market introduced in Period 1 of the SimTrade certificate.
- Insider trading and market manipulations are linked to the concept of market efficiency introduced in Period 2 of the SimTrade certificate. These illegal activities have an impact on market prices.
- Short selling is introduced in Period 3 of the SimTrade certificate. Short selling allows to speculate on the market by making a profit when the stock price decrease.
Article written by Akshit GUPTA (ESSEC Business School, Master in Management, 2022)