French investment banks are facing increasingly complex regulatory expectations from the Autorité des marchés financiers (AMF), exposing them to significant compliance risk and operational strain. Effectively managing conflicts of interest and tracking employee conduct, while adapting to evolving rules, has become critical to maintaining sustainable compliance, transparency and control.
The Importance of the AFEI-FBF Code in French Investment Banking
The AFEI-FBF Code functions as a cornerstone for managing conflicts of interest within French investment banks, credit institutions, and investment service providers. It provides clear standards for impartiality and integrity, ensuring that firms and their employees avoid behavior that could compromise the confidence and integrity needed in financial markets. Developed in alignment with the AMF's regulatory frameworks and EU directives, including MiFID II, the Code sets practical guidelines that cover both financial analysts and operational teams.
The Code mandates that investment banks and financial services firms embed robust governance frameworks to identify, document and control conflicts of interest across all business lines, particularly where research, trading, and distribution activities intersect. It requires formalized escalation procedures, comprehensive documentation of decisions that affect client interests, and active oversight by compliance and control functions. The Code also imposes a principle of proportionality, obliging firms to calibrate their conflict management frameworks to the scale and complexity of their operations rather than applying generic or superficial controls. Read more about Conflicts of Interest Management.
AMF supervisory priorities emphasize the continued scrutiny of inducements, transparency, and the management of conflicts of interest as key areas that require robust internal controls and cultural adherence.
The AMF Enforcement Committee has the authority to sanction firms and individuals who violate conflict of interest regulations. For compliance teams, the AFEI-FBF Code serves as both a regulatory baseline and an industry standard: failure to implement its principles effectively can trigger heightened AMF scrutiny, remediation demands or reputational consequences within the French banking sector.
How the CMF Intersects with AMF Rules
The French Monetary and Financial Code (Code monétaire et financier, CMF) requires investment service providers to identify, prevent, manage, and, where necessary, disclose conflicts of interest through robust organisational measures and written policies aligned with MiFID II and the AMF General Regulation. In practice, this means that banks must implement rules and procedures that safeguard client interests, avoid over-reliance on disclosure, and maintain effective, auditable systems that are proportionate to their size and activities.
The CMF establishes the statutory baseline for investment firms, while the AMF General Regulation operationalizes these duties with detailed provisions on conflicts, organizational rules, and staff conduct. Together with MiFID II, they define identification criteria, control expectations, and the hierarchy of measures (prevention/management, and disclosure). This combined framework obliges French investment banks to maintain conflict controls that are embedded in governance, processes, and technology, and to document their effectiveness for supervisory review.
Financial Analysts’ Personal Trading Obligations
French financial analysts face specific obligations regarding personal trading to ensure their private investment activity does not conflict with their professional responsibilities. These obligations include mandatory disclosure of relevant personal transactions, adherence to trading blackout periods, and avoiding trading on non-public or inside information. Read a white paper on trading compliance.
Key Elements of an Effective Conflict Management System Under the AMF, CMF and MiFID II
French Investment banks must maintain rigorous conflict of interest prevention and management systems to meet regulatory obligations. Compliance leaders are responsible for ensuring these frameworks effectively identify, mitigate, and disclose conflicts while sustaining transparent client relationships.
Core CMF Obligations for Banks
- Maintain a written conflicts of interest policy that is “effective” and tailored to the firm’s business, reviewed at least annually, and supported by corrective actions where deficiencies are found.
- Identify types of conflicts using minimum criteria derived from MiFID II, including risks from financial gains at clients’ expense, incentives to favor certain clients, receiving third‑party benefits, and interests in outcomes distinct from clients’ interests.
- Implement organisational rules and procedures to prevent conflicts from harming clients, including effective governance, segregation of duties, and robust internal control frameworks.
- Treat disclosure as a last resort: firms should first prevent or manage conflicts through controls; excessive reliance on disclosure is considered a deficiency by the AMF.
- Ensure transparency when residual conflicts remain, providing clear, specific disclosures that enable informed client decisions in line with AMF and MiFID II requirements.
Compliance Controls Expected of French Investment Banks
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Identification and Mapping: Regularly updated conflict of interest registers to capture actual and potential conflicts relevant to banking activities.
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Information Barriers (Chinese Walls): Implementation of physical, procedural, and IT controls—commonly known as Chinese walls—to restrict the flow of inside or sensitive information across business lines and prevent improper circulation and misuse of inside information within different business units.
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Inducement Controls: Policies covering monetary and non-monetary benefits to ensure they do not impair the duty to act honestly, fairly, and professionally in clients’ best interests; where permitted, such benefits must be disclosed, monitored, and managed.
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Personal Trading and Insider Information Protocols: Rules for personal account dealing, pre-clearance, and post-trade surveillance to prevent conflicts between employee interests and client interests, alongside robust procedures for handling insider information.
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Periodic Controls and Audits: Conflict registers, escalation procedures, and multi-level control systems—including frontline, compliance, and internal audit functions—that evidence effectiveness and support continuous improvement of conflict management processes.
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Transparency and Disclosure: Clear client communication regarding conflicts that cannot be sufficiently mitigated, enabling informed decisions on investment services.
Read a white paper on the importance of maintaining evidence of compliance.
MyComplianceOffice Enables French Investment Banks and Financial Services Firms to Effectively Manage Employee Compliance and Conflicts of Interest
The MyComplianceOffice platform provides firms with a comprehensive compliance framework to effectively operationalize AMF’s requirements, reducing costs and risks through disclosures, personal trading management, regulatory updates, workflows, and more, all on a single platform. Implementing MyComplianceOffice drives not only regulatory adherence but also strategic compliance, promoting a culture of accountability and transparency across the firm.
Ready to see how MCO’s single compliance platform can provide effective conflicts of interest management for your firm?
