FRANCE Trends and Developments Contributed by: Hugues Bouchetemble and Sophie Perus, Kramer Levin Naftalis & Frankel
Conclusion The year 2024, and those immediately preceding it, will thus see a profound upheaval in the mar - ket for unlisted products in France. This move - ment will result in a pendulum swing between, on the one hand, unlisted transactions that fall within the strict framework provided by French law, notably through insurance products, and, on the other hand, those that do not fall within this framework and which come up against a very large number of constraints, as is over - whelmingly the case when these transactions are distributed by financial advisers. In addition to these developments, the French market is seeing a consolidation of players, who are coming together to pool their resources in order to comply with the regulatory obligations applicable to them. These mergers are resulting in institutional players acquiring direct stakes in distribution networks, which raises conflicts of interest issues and is a topical subject for the French regulator. This consolidation effect is also contractual, through the growth of distribu - tor groups, which are increasingly numerous and whose purpose is to offer their members a range of services enabling them to comply with the regulations, in terms of product governance, the fight against money laundering and the strength - ening of the duty to advise. The fall in interest rates and the revival of lending activities should attenuate the boom in unlisted products which offered high yields, and make more traditional investment products more attractive.
unlisted products, they must be mandated by an authorised investment service provider to carry out the placing service or must distribute products classified as “other AIFs” and therefore authorised to be marketed by the regulator. The Rise of Structured Products The French market continues to be marked by the growing importance of structured products, which are reserved for professional or retail clients; in particular, small businesses as part of their cash management or individual clients for wealth planning purposes. This growth is constant insofar as, for the moment, no major default has affected these products, which has led the regulator to take no interest in them for the time being. The growth of these structured products has also contributed to the emergence of a new activity in the market, that of structured product broker - age, which consists of listing structured prod - ucts with major banks in order to give financial investment advisers access to these products. These professionals operate structured product platforms that play a major role in the distribu - tion system between banks and distributors. This new activity raises a number of legal issues, particularly in terms of product governance, cus - tomer identification and the duty to advise.
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