The European sovereign debt crisis worsened in 2011, underscoring the key trends identified during the last mapping exercise in May 2011. This was true of markets, with severe pressures on fixed income activities and banks, sluggish equity performance and persistent weakness in securitisation. It was also true of the behaviour of retail investors, who last year showed a marked preference for bank deposits over higher risk investments.
The 2012 edition highlights various risks, including:
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persistently high levels of macro-financial risk, which depends on a consolidation of the situation in the euro area and banks’ ability to withstand a potential deterioration in economic and financial conditions in Europe or worldwide;
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difficulties for companies, especially small and mid-sized firms, in accessing markets at a time of high risk aversion;
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risks of fragmentation and lower transparency on equity markets, only partially addressed in the review of the Markets in Financial Instruments Directive (MiFID);
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the consequences of increased collateral requirements, which raise questions about the transparency of policies on collateral management, transfer of risk between market participants and valuation of “safe” assets;
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the degree of concentration and transparency on the CDS market;
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the risk of mis-selling of financial products, resulting both from a search for higher returns and the coexistence of a variety of legal wrappers, which creates confusion about the degree of protection associated with a given product;
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the impact of the crisis on the allocation of household savings over the long term.
Action taken by the AMF
In this environment, the AMF stepped up its vigilance on market transparency and investor protection. It published two recommendations in 2011 calling on listed companies to pay particular attention to the quality and clarity of their disclosures on risk and asset valuation. It also pursued its proactive policy on complex products marketed to retail customers. Specific controls are also being carried out on some of the risks that have been identified. In addition, the AMF has maintained its international involvement in all the major regulatory projects now underway, including the MiFID review, the preparation of technical standards for EMIR and recently initiated work on shadow banking.
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