#2013-672Law on Banking Activity Separation and Regulation
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This law aims to increase financial stability by separating certain trading activities from core banking operations. Banks in France must set up separate subsidiaries for proprietary trading activities if they exceed specific thresholds. It also imposes stricter transparency and reporting requirements on financial institutions.
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Key Changes
- Banks must create separate subsidiaries for trading activities that exceed certain thresholds.
- Improved financial transparency and reporting obligations are imposed.
- Restrictions on certain types of speculative financial trades are introduced.
Obligations
What this law requires
Submit a report to Parliament by December 31, 2014 detailing the law's impact on competitiveness of French banking sector compared to American and European credit institutions, and consequences on the size and nature of subsidiary operations, high-frequency trading volumes, and agricultural commodity speculation.
Banks, financial companies, and mixed financial holding companies whose financial instrument trading activities exceed thresholds defined by decree must conduct proprietary trading operations only through dedicated subsidiaries.
Market makers must regularly provide indicators to the Prudential Supervision and Resolution Authority (ACPR) and the Financial Markets Authority (AMF) regarding market presence, minimum market activity, bid-ask spreads, and internal risk limit rules.
Credit institutions must transmit information to the ACPR regarding commitments to leveraged collective investment schemes or similar investment vehicles, according to modalities defined by the ACPR.
Proprietary trading activities are prohibited unless conducted through dedicated subsidiaries, except for specific exempted activities including client investment services, financial instrument compensation, risk hedging, market making, treasury management, and group investment operations.