French fund industry to promote structural changes

16 recommendations put forward to improve the effectiveness of the French fund distribution model for domestic and international investors

Produced by Euroclear France, in collaboration with management consultancy Ailancy and members of the French financial services community, the report proposes developments to increase attractiveness
and competitiveness of the French fund distribution model.

This report reflects today’s context of new technology trends and increasing requirements in relation to transparency and Know Your Customer principles. It also builds on the dynamics of the FROG (French
Routes and Opportunities Garden) initiative undertaken in 2016.

The working group was composed of asset management companies, market infrastructures and transfer agents. The knowledge and experience of the group combined to identify opportunities for the funds markets, such as:
– Know your Customer (KYC) and direct distribution
– Transparency along the holding chain
– Development of cross-border distribution

The full report, considers how new technologies might play a role in making some processes more efficient, as well as exploring the opportunity of using fund shares for collateral management purposes.

The industry associations (AFG and AFTI) have both supported the initiative and took note of the working group recommendations as observers. Both associations will take all actions deemed necessary to support the implementation of the recommendations that they selected.

Commenting on the report, Brigitte Daurelle, CEO of Euroclear ESES CSDs said: “This new collaboration, that as a market infrastructure we wanted to have, aims at supporting the development of the asset management industry in France. This report is the first step of a process that will allow to further increase attractiveness of the French fund distribution model to meet the evolving needs of both issuers and investors.”

Eric Dérobert, chairman of AFTI, said: “The French fund industry has an ecosystem where AFTI members play a key role as custodians, depositaries, fund administrators, transfer agents and registrars. The mission of AFTI is to contribute to the discussions between all stakeholders and facilitate the implementation of projects of common interest.”

Eric Pinon, chairman of AFG said: “Blockchain, Big Data or artificial intelligence; the succession of technological innovations requires asset management players to review their development and organisation roadmaps at a much faster pace than in the past. As an industry association, AFG helps its members to face these challenges by ensuring a collaboration with all players of the ecosystem and by implementing relevant ideas to support the successful development of the asset management industry.”

Pierre Monteillard, associate at Ailancy added: “This marketplace reflection, facilitated by Ailancy, demonstrated that asset management players have a very strong interest for a drastic simplification of the currently existing fund distribution and subscription models and practices. We believe that the French market, which comprises major industry players and has engaged many promising initiatives, is able to provide solutions that will become a reference at global level. The report allows to define and detail the required industry, regulatory and technological initiatives to fulfil this strategic ambition.”