FRANCE Law and Practice Contributed by: Hubert de Vauplane and Hugo Bordet, Morgan Lewis & Bockius LLP
France has not used the temporary exemp - tion from the payment for order flow prohibition under MiFIR to allow investment firms located in France to continue engaging in payment for order flow with French clients. 6.8 Market Integrity Principles The regulation of market abuse was the subject of major reform at the European level in 2014 with the creation of two instruments: the Market Abuse Directive (Directive 2014/57/EU on crimi - nal sanctions for market abuse) and the Market Abuse Regulation. The concept of market abuse covers any illicit behaviour on a financial market and, more pre - cisely, insider trading, unlawful disclosure of privileged information and market manipulation. The regulation of market abuse is built around sanction (with a dual administrative and criminal procedure) and prevention (with the implementa - tion of measures designed to enable the detec - tion of prohibited behaviour). For instance, the operators of multilateral trading systems have to declare any suspicious opera - tion to the AMF immediately. For this purpose, procedures and appropriate monitoring systems have been set up to prevent and detect market abuse or attempted market abuse. 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations ISPs must disclose the use of algorithmic trad - ing to the AMF and submit detailed information relating to negotiation parameters, as well as to the compliance monitoring set out, in order to ensure that their algorithmic trading systems are
resilient and subject to appropriate thresholds. The activities operated through the algorithmic trading systems must be stored for at least five years and made available upon request to the AMF. There are no specific rules relating to the underlying class of assets subject to algorithmic trading. 7.2 Requirement to Be Licensed or Otherwise Register as Market Makers When Functioning in a Principal Capacity The French Monetary and Financial Code pro - vides that entities negotiating for their own account which use algorithmic trading systems are required to be licensed by the AMF as invest - ment service providers for such purpose, even if they do not act on behalf of or for the account of clients. 7.3 Regulatory Distinction Between Funds and Dealers Since the management companies of invest - ment funds (AIFs and UCITS) are not considered as investment undertakings as a result of the transposition of MiFID II into French law, they are excluded from the scope of EU provisions relating to algorithmic trading. However, they are subject to French rules of good conduct in rela - tion to the best execution of orders. 7.4 Regulation of Programmers and Programming Programmers who develop and create trading algorithms or other electronic trading tools are not regulated as such.
8. Insurtech 8.1 Underwriting Processes
Whether they are operated in an office or on the internet, insurance underwriting processes
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