New marketing practices for financial products and services were the focus of the November 22, 2022 AMF interviews. The opportunity to examine new models of access to the stock exchange and new forms of marketing related to digitization, in order to thwart their pitfalls and to rewrite the stakes in relation on the regulation.
The Autorité des marchés financiers (AMF) traditionally meets with stakeholders on the Paris market square in November. This year, these interviews made it possible to learn about Marie-Anne Barbat-Layani, the new President of the AMF, and her ambitions for the regulator, and to delve deeply into new marketing practices, within the framework of two round tables dedicated to the first the stock market, the second new forms of marketing related to digitization.
For several weeks now, the AMF has been chaired by Marie-Anne Barbat-Layanipreviously Secretary General of the Ministry of Economy and Finance and former Director General of the French Banking Federation (FBF).
In this position, she replaces Robert Ophèle, whose term of office – not renewable – ended in July 2022.
The new access models to the stock exchange
The speakers at this round table shared a double observation:
- the rejuvenation of investors evidenced by various studies, including the AMF Savings Barometer 2021.
- the diversification of access to shares with competition between the traditional scholarshipssuch as Euronext, where the price results from the comparison of supply and demand and where brokerage fees etc new platforms on which what is called is practiced PFOF (Acronym for “Payment for Order Flows” or “Payment for Order Flow”). These platforms appear to be free (0 commissions), but in reality they are remunerated by commissions paid back to them by the market makers (which they themselves charge to the end customer by including them in the selling price of the shares).
This model of PFOF (pronounced PIFOF) is heavily criticized by the AMF for its lack of transparency and the potential conflicts of interest it generates, the choice of the market maker placing the orders can in fact be made by the platform based on personal considerations (e.g. better remuneration) more than taking into account the interests of the customer.
Knowing that these new and young investors will only spend small sums of money to buy stocks, at least initially, certain platforms, including Trade Republic, which was invited to participate in the panel, make it easy to buy foreign-traded securities and very small investments to make amounts (1 € per stock market order) and, combined with the practice of shared shares, with a view to diversification.
It is not possible to split an action. These foreign-regulated platforms such as Trade Republic (Germany) offer co-ownership of a securities account that itself holds the shares. This raises many questions, especially with regard to the exercise of the right to vote.
Marketing and digitization, new challenges
this 2th The round table focused on new forms of advertising that are closely linked to social networks and to which young target groups are falling victim. The practice of influencers, which is nothing more than a new advertising practice, particularly attracts the attention of the regulator, which tries to deconstruct their arguments (easy and fun money) on social networks using the same codes.
The whole new European regulation DSA (Digital Services Act), published on October 27, 2022, according to Pierre Chambu, head of the department of consumer protection and market regulation at the DGCCRF, is intended to oblige platforms in particular to provide information about the interests behind the influencers and in certain ways behind any ad that doesn’t mention their name, with the penalty if they don’t get it right of delisting them.
Despite differences of opinion on this point or that, all the speakers in these discussions agreed to support more Financial Education as the new President of the AMF had done when opening the debates.
That 1time round tablegathered around Benoît de Juvigny, Secretary General of the AMF, Delphine d’Amarzit, CEO of Euronext, Matthias Baccino, France Director of Trade Republic, and Fabrizio Planta from the European Securities and Markets Authority (AEMF).
That 2th round table gathered around Jérôme Reboul, Deputy Secretary General of the AMF, responsible for Regulation and International Affairs, Claire Castanet, Director for Saver Relations and Protection, Thérèse Chambers from the UK Financial Conduct Authority, Pierre Chambu from the DGCCRF and Monique Goyens from BEUC ( European Confederation of Consumers Associations)