General Regulation


Financial services providers & Crowdfunding Investment analysts

Financial analysts

Published on May 30, 2013

Financial analysts provide the service of investment research or financial analysis. Whether or not they work at an investment services provider (ISP), their job is the same and they are required to comply with the conduct of business rules and organisational rules set out in the AMF General Regulation.

A business that has been regulated since 2003

Investment research consists in taking the business and financial data of listed companies and interpreting this information to formulate and distribute, either publicly and/or to customers, analyses of the positions of these firms and opinions about likely future performance in the form of price targets and investment recommendations.
This business has been regulated in France since the 2003 Financial Security Act (FSA) was passed, through two sets of rules:

  1. rules to prevent market abuse (Articles 315-1 et seq. of the AMF General Regulation);
  2. rules to organise the provision of the ancillary financial service of investment research and financial analysis pursuant to MiFID (Articles 313-25 et seq. of the AMF General Regulation).

Financial analyst status

Work by analysts must satisfy three requirements:
1. it must be identified as “investment research” or “financial analysis” and be subject to dedicated provisions (Articles 313-26 and 313-27 of the AMF General Regulation): otherwise, disseminated recommendations will be considered to be promotional communications;
2. it must not be equivalent to the provision of investment advice, which involves making personalised recommendations; and,
3. it must comply with the conduct of business rules and organisational rules set out in the AMF General Regulation (Articles 313-25 to 313-28 and 315-1 to 315-14 for ISPs and Articles 327-1 to 327-18 for non-ISPs). These rules include, in particular, the obligation for analysts to prepare their analyses honestly, fairly and impartially. Analysts are also required to introduce specific procedures to prevent conflicts of interest.

Financial analysts are individuals or legal entities who carry on the business of investment research or financial analysis as defined in Article L. 544-1 of the Monetary and Financial Code: ““Investment research” or “financial analysis” shall mean research work or other information recommending or suggesting an investment strategy, explicitly or implicitly, concerning one or more financial instruments or issuers of financial instruments, including opinions given on the price or present or future value of said instruments, that is intended for distribution channels or the public”.

Financial analysts can operate:

  • within an investment services provider (ISP),
  • within a non-ISP.

Either way, they are supervised by the AMF.

A business that is supervised by the AMF

The AMF sets the conduct of business rules and organisational rules applicable to financial analysts and monitors compliance. It is empowered to conduct inspections and investigations that may lead to sanctions from the Enforcement Committee.

The conduct of business rules (notably Articles 313-9 to 313-12, 314-76, 315-1, 315-2 to 315-11, and 327-2 of the AMF General Regulation) cover, in particular:

  • the requirements placed on all financial analyses, particularly in terms of honesty, fairness, impartiality and presentation (including disclosure of the author’s identity, major sources, frequency of updates, interests and conflicts of interest),
  • the obligations applicable to the dissemination of financial analyses.

However, the organisational rules differ depending on the status of the financial analyst:

Reform of independent investment research
In 2007, the AMF introduced regulations for independent investment research by:
1. establishing rules of professional practice for financial analysts who do not work in an ISP;
2. introducing commission sharing arrangements (CSA) to promote transparency in the intermediation fees charged to portfolios managed by an investment management company (collective investment schemes and mandates): under the arrangements, payment for order execution services must be reported separately from payment for investment research within intermediation fees.

> If the financial analyst belongs to an ISP, he or she must comply with the organisational rules applicable to all ISPs (notably Articles 313-1 et seq. of the AMF General Regulation, and in particular Articles 313-25 to 313-28, and Articles 315-5 et seq.). These include the requirement to prepare and maintain adequate policies, procedures and measures to detect risks of a breach of professional obligations, the requirement to establish and maintain an effective and independently-managed compliance function, the requirement to establish and maintain an effective policy to manage conflicts of interest, and the requirement to make sure that individuals acting under the ISP’s authority or on its behalf have appropriate qualifications and skills and an adequate level of knowledge.

> If the financial analyst is not part of an ISP, he or she must comply with specific organisational rules (Articles 327-2-1 et seq. of the AMF General Regulation) established by the AMF in May 2007 to address the lack of rules of professional practice for financial analysts not belonging to an ISP. Among other things, these rules cover:

  • specific provisions to ensure the independent judgement of financial analysts and prevent conflicts of interest,
  • ethical obligations, including the obligation to have a charter of ethics setting out principles of integrity, independence, competence and organisation, as well as the methods used to prepare analyses, or, failing that, membership of an association representing the investment research industry and duly recognised by the AMF in accordance with the procedure set out in Articles 327-7 to 327-17 of the AMF General Regulation.

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Legal information
Head of publications: Florence Gaubert, Executive Director of AMF Communication Directorate.
Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02