General presentation of the FinTech, Innovation & Competitiveness (FIC) Division of the AMF « Fintech in France, a dynamic and simplified ecosystem” London – September 15th, 2016 Franck Guiader Head of the FIC Division
“ The accelerated pace of digital transition in financial services is bringing deep-seated changes to our frame of reference. As regulator, we can see many benefits for traceability and transparency . We want to aid innovators by enabling them to set up shop in a secure environment that can support their growth while also delivering effective protection for retail investors, who need to be confident in the new products and services on offer ” Gérard Rameix Chair of the French AMF Launch of the ACPR-AMF FinTech Forum – 18 July 2016 2
Composition and interactions of the FIC Division Regulation Policy and International Affairs Directorate FinTech, Innovation & Competitiveness Division (FIC) 5 people max 1 Director 1 Policy & Strategy advisor Common actions Management of internal 1 Technology & Quant advisor transversal projects with the ACPR 1 Assistant 1 Intern AMF FinTech Task Force – 25 people Digital experts within the Digital experts within the Asset Management Directorate Corporate Finance Directorate Digital experts within the Digital experts within the Steering Ctee of Markets Directorate Retail investors relations Directorate the AMF’s FinTech Task Force - Digital experts within the Digital experts within the chaired by the FIC Legal affairs Directorate Information Technology Directorate Launched on June 2016 1 meeting per month Digital experts within the Digital experts within the Communications Directorate Human Resources Directorate 3
Missions of the FIC (1/3) “ FinTech ” axis of the FIC Division Objective: support the development of new businesses during the pre-authorisation, authorisation and post-authorisation phases Examples of issues to be addressed: • How could the AMF accompany FinTech companies before authorisation? • How could the AMF specifically deal with their authorisation requests? • Is their a need for a change in terms of regulation of innovative models? • How could the AMF collaborate with the ACPR on common topics/requests? Internal actions: • FinTech Task force composed of AMF experts: working groups assessing new risks and opportunities of specific innovations + proposals for modifications in our regulatory set of rules External actions: • ACPR-AMF “ Fintech forum” at least twice a year 4
Missions of the FIC (2/3) “Innovation” axis of the FIC Division Objective : identify new models, new financial techniques and technologies that may call into question existing behaviors (customers) and practices (players). Risk assessment associated with new practices will also be scrutinised by the division. Examples of issues to be addressed: • Which innovations could have an impact on AMF’ s missions: impact on market practices and on investors’ behavior? • How could the AMF address issues stemming from RegTech companies/models? Internal actions: • In connection with the « Risk, Strategy and Research Unit » and « Retail investor relations Directorate » of the AMF, and also the « AMF-ACPR Investors’ Joint Unit » • Meetings with RegTech specialised in risk management, liquidity management, KYC processes, Blockchain technologies, … External actions: • Ad hoc working groups, consultations and hearings 5
Missions of the FIC (3/3) “Competitiveness” axis of the FIC Division Objective : develop AMF’s actions aiming at increasing the capacity of companies under its supervision to develop their activities at the Int’l level (example: current “FROG*” working group). Examples of issues to be addressed: • What is the AMF’s offer to foreign companies willing to grant an authorisation? • Are there rooms for improvement to increase the development of entities under AMF’s supervision? • How to prepare the evolution of regulatory requirements regarding innovation and new models? Internal actions: • Assessment of French specificities (when existing) v/s int’l standards/practices • Preparation of positions and participation to EU and Int’l working groups preparing the evolution of financial services (80 people at the AMF involved in int’l workstreams) External actions: • Support Programme – public announcement before September-end • E.g. FROG Working Group for the development of French asset management abroad 6 *FROG means French [Routes & Opportunities] Garden
Interactions with the Unit An innovative approach between authorities Excellent feedback from the market – Dozens of common meetings – Coordinated responses to FinTech companies – Identification of priorities – Reinforcement of cross-knowledge between the AMF and the ACPR ACPR-AMF “ FinTech Forum” : a point of entry for a constructive dialogue and the acceleration of drivers for the digital transformation - Balance between start-ups and innovative activities of traditional companies > interactions between start ups on one’s hand and feeders (in terms of customers) on the other hand > experience of traditional players and creativity of start ups = key-success driver for the digital transformation > presence of relevant French authorities (Ministers + institutions + authorities) enabling potential changes and quick wins - Coordination of the interests of a wide community of players - Ad-hoc working group stemming from general discussions 7
Main topics identified on the AMF’s side First topics related to innovation and technology on which the AMF has been working since 2015: Automated advice Social Media & digital communications Blockchain techies Customer experience / KYC processes Big data Crowdfunding and evolution of CF models ZOOM on… Crowdfunding 8
Regulatory answer to innovation: the example of Crowdfunding France: status of pioneer in crowdfunding regulation – The French regime came into force on October 1 st 2014 – France became the first country to adopt a comprehensive regime for the crowdfunding industry (loan / equity / donation) – A regime both protective (investment advisory service and website of progressive access) and adapted to the development of this emerging sector A growing sector – 68 platforms for loans & 33 equity platforms authorised by French authorities – 2nd European market: 300 million € (december , 31 st 2015) An evolutive legislative and regulatory model – Capacity of the French Government and French authorities to meet expectations and adapt to the change : • Increase of the previous thresholds (for loans with interest [ € 1,000 € to € 2,000] and without interest [ € 4,000 to € 5,000] • Possibility for platforms to offer "mini-bons" (non-financial instruments) • The “CIP” can provide instruments other than plain vanilla products. 9 CIP > (in French) crowdfunding investment advisor
The French AMF’s offer to innovative players: A Regulatory SoundBox (1/4) Our service offering dedicated to companies willing to grant an authorisation combines: An access to the EU single market and passports A set of granular and adapted status And a support programme for new entrants Totally free of charge , the pre-authorisation process between companies and the AMF provides them with a unique upfront legal certainty No mandatory legal intermediation between companies and the AMF Guidance available on our website in French and English 10
The French AMF’s offer to innovative players: A Regulatory SoundBox (2/4) An access to the EU single market and passports French implementation of EU rules: no goldplating and proportionality French AMF’s positioning at ESMA: – Strong involvement in EU working groups at ESMA – Active participation to convergence programs at ESMA (AMF chairs the sub- group # 1, EU convergence included in our strategic plans) – Excellent assessment in peer reviews (eg: in the realm of asset management) Consequence: proper functioning of the EU passport and excellent recognition of French regulation throughout the EU…and beyond Sound rules offers a greater access to the EU single market and to the EU passport Applying sound rules provide players with a facilitated acceptance in foreign jurisdiction for their int’l development 11
The French AMF’s offer to innovative players: A Regulatory SoundBox (3/4) A set of granular and adapted status A question of agility : the French regulatory framework offers a range of status corresponding to different levels of requirements and permitted activities Eg: so- called “CIF”, “CIP”, “IFP”, “SGP”, “PSI” In case of a lack of status: the AMF has proved its capacity to innovate to meet int’l standards when needed > Recent example: creation of the “SLP” – “ Société de libre partenariat ” / eq. to LPs). In case of a lack of reg. framework : creation of a legal field on which players can easikly and properly develop their business > Recent example: creation of the Crowdfunding regulatory framework RegTech companies are mainly not regulated by the AMF but the AMF’s “FIC Division” & “ FinTech Task Force” offer the opportunity to meet with project holders and engage in a constructive dialogue with them, concerning the compliance of their proposal. 12
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