France: Towards The Global Securities Market, Particularly In Europe

Last Updated: 6 March 1996
The following is an outline of the various issues discussed at a conference on the globalization of securities markets held in Paris, on September 19, 1995 by the International Bar Association (Committee Q).



  • the issuers are attracted by markets other than that of country of origin:
  • expand access to capital
  • obtain capital at lower cost
  • diversify shareholder base
  • different approaches to evaluating the company
  • business access to new markets


COUNCIL DIRECTIVE 80/390/EEC of March 17, 1980 (as amended by directive 87/345/EEC of June 22, 1987 and Directive 90/211/EEC of April 23, 1990) of coordinating the requirements for the drawing up, scrutiny and distribution of the listing particulars to be published for the admission of securities to official stock exchange:

In order to benefit of the directive:

- the issuer must apply simultaneously or within a short interval for admission to listing of the same securities on two or more stock exchanges of different member states;

- the prospectus must be submitted to and approved by the home authority;

- the host authority must then recognize this prospectus; it may only require specific market information (including tax information) and translation of the prospectus;

- directive 94/18 EC of May 30, 1994 amending directive 80/390 EEC provides for new partial or complete exemptions to the obligation to publish listing particulars:

- securities which have already been listed in another member state for more than three years and for which a new listing application is made (some additional information must be published in the host state);

- securities which have already been traded for at least two years on a secondary market in the state where the application for admission to official listing is made;

COUNCIL DIRECTIVE 89/298 of April 17, 1987 coordinating the requirements for the drawing up, scrutiny and distribution of the prospectus to be published when transferable securities are offered to the public:

- mutual recognition is only mandatory for a public offer prospectus that has been approved by the home authority in accordance with Directive 80/390;

- when the prospectus includes less detailed information than required by Directive 80/390 and where an application for admission to listing is not made, the Directive 89/298 does not provide for mandatory recognition.

In 1995 the UK adopted new rules referred to as "Securities regulations 1995" which incorporated into UK law the provisions of the Council Directive 89/298 of April 17, 1987:

- contain provisions for the mutual recognition of a prospectus used for public offers in other member states, even if the issuer is incorporated outside the European economic area (EU + Norway + Iceland + Liechtenstein)

- contain important new exemptions which cover most private placements in the UK.

Europe as fortress?

The directives permit the member states to limit mutual recognition to listing particulars of issuers having their registered office within the EEA.

In France, the COB limits the mutual recognition to prospectuses of issuers having their registered office within the EEA.


Council directive 93/22 EEC of May 10, 1993 on investment services in the securities sector, which adds to the council directive 93/6 EEC of March 15, 1993 on the capital adequacy of investment firms and credit institutions

- authorizes an investment firm in any member state to carry out its activities throughout the EEA on the basis of a single authorization (European passport) issued by the home member state: home country control principle.

- harmonization of the conditions governing authorization and activities.

Concerning the authorization

- the investment firm must have its registered office and its head office in one member state;

- the investment firm must provide to its home regulatory authority the names and holdings of shareholders;

- the investment firm must be managed by at least two experienced persons;

- the investment firm must provide a description of anticipated investments;

- in addition, the council directive provides for minimum shareholders' equity requirements depending on the type of activity;

- an authorization or a refusal must be given by the home regulatory authority within six months of the request to the investment firm.

Concerning the activities

- compliance with the authorization requirements;

- compliance with capital adequacy rules;

- compliance with capital management rules laid down by the home member state.

- compliance with regulations concerning public policy and financial activities which the host member may have established

- organize cooperation between the authorities of the host member state and those of the home member state with regard to compliance by the investment firm with the rules of the host member state.


A. For the mutual recognition of prospectuses, cooperation between the regulatory authorities of the member states is provided:

- in order to carry out their respective duties;

- in order to exchange information whenever necessary.

B. For the supervision of the capital adequacy of investment firms and the authorization and supervision of investment firms in the securities sector.

C. Examples of bilateral cooperation:

- French COB and German Bundesaufsichtsamt fur den Wertpapierhandel : exchange of information

- Belgian regulator: Commission de la Bourse de Bruxelles has decided to acquire the french continuous trading system, known as the NSC (Nouveau Systeme de Cotation)


A. Unilateral opening to foreigners of a domestic market

Several examples:

- in order to facilitate the internationalization of the U.S. Domestic market, the U.S. Securities and exchange commission adopted new various rules know as regulation "s", rule 144 a and new rule 434

- French stock brokers opened their equity capital: today, a foreign interest is registered in more than 1/3 of french stockbrokers

- in Stockholm and Amsterdam stock exchanges, membership is open to intermediaries from other EU member states; in addition, foreign intermediaries have direct access to the market and need not create an affiliate

B. Cooperation between existing markets

Various examples:

- Paris Bourse and London Stock Exchange Agreement of July 27, 1994 which provides for a mutual recognition of Paris Bourse and London Stock Exchange

- DTB/MATIF/Agreement

This agreement provides for gradual cooperation between the two markets:

- first step: members of the MATIF are given access to the electronic quotation system of certain German interest rate contracts;

- second step: members of the DTB are given access to the negotiation of two french contracts which should be transferred on to the German electronic quotation system;

- third step: a standard clearing system and a single electronic quotation system could be set up.

- Switzerland, Spain and the Netherlands have announced their interest in joining this project.

- Agreement between BELFOX and MATIF

- The LIFFE has entered into various bilateral agreements with other regulated futures markets in order to trade the same contract in several locations, the clearing procedures used in one market recognized by other markets (in particular, agreement between LIFFE and MATIF to enable them to offer their products in their respective country).

- Nordquote agreement between four Scandinavian stock exchanges which provides for a data exchange system

- Installation of automated screen trading in France within the GLOBEX System. The COB limits the offering and sale to french residents of commodities contracts traded on the Chicago Mercantile Exchange (CME) to those made by members of the CME registered with the commodity futures trading commission (mutual recognition agreement executed in 1990).

C. Creation of a European stock exchange?

Various projects:


- Project of the federation of European stock exchanges

- Pan-European listing for securities of the leading European companies (forecast: about 250 companies)

- Purpose : listing on at least five official markets other than the domestic market within the European union

- Requirements to be met by the issuer:

  • minimum equity market capitalization: ECU 1 billion
  • minimum annual trading volume: ECU 250 million
  • international trading of the securities

- Adoption of directive 94/18/EC of May 30, 1994, previously mentioned, which provides for partial or complete exemptions from the obligation to publish listing particulars, facilitates the Eurolist project


- Project of the European securities dealers association based on the U.S. Nasdaq model

- European stock exchange: single quotation and negotiation system

- Stock market for young and fast-growing high technology companies

- The market would be managed by the EASDAQ, a Belgian limited liability company, incorporated in early 1995

c) New "internationally oriented" domestic markets

- Creation of a specific market for trading in non domestic securities: SEAQ international in London

- London Stock Exchange launched its new alternative investment market (AIM) for small and growing companies on June 19, 1995

- Paris Bourse unveiled the details of the "Nouveau Marche" on September 1995. Trading on this new market which aims at providing financing to small and high growth companies would begin in early 1996

- Frankfurt, Milan and Brussels stock exchanges are engaged in similar projects

D. Offshore markets

- The combined use of computers and telecom networks has enabled specialized firms (market information, market order collecting etc.) To develop and integrate multiple functions and thus create non regulated markets.

- 95% of worldwide institutional trading involves the largest one hundred institutional investors, all of which are members of at least one of the seven international institutional investor networks.

- Euromarket is the most developed of these offshore markets.

- In the U.S., 6 to 8% by volume of securities transactions are carried out in proprietary trading systems.


- Cross-border investment flows in securities doubled between 1975 and 1980. In 1994, they amounted to $ 150 billion, and an increase is expected in the coming years;

- In France, the participation of non residents in market capitalization increased from 16% in 1988 to 30% in 1994

- Foreign investors involved in approximately 50% of the daily trading volume in France

a. Solicitation

- No proposal currently exists for the coordination and harmonization of rules governing securities solicitation within the European Union except in directive 85/611/EEC of 20, 1985 on mutual funds

- European union actually deals with a large range of situations from a very strict regulation in France to a lack of specific regulation in Germany:

- in France, specific regulations governing securities solicitation are provided by the law of March 28, 1885 and law of January 3, 1972

- in Germany, securities solicitation is regulated as such

- in Luxembourg, the law of July 16, 1987 regulates offerings and solicitation in connection with any public offering of securities

- in UK, the 1986 financial services act deals with cold calling and unsolicited calls

- The international organization of securities commission is currently working on the requirements to be contained in any securities solicitation regulations to prevent improper investor solicitations (such as high-pressure sales in speculative securities)

b. Indemnification

- No minimum protection for depositories within EU

- Basle committee working on a global approach to regulating the liquidation of the international banks

- Directive on investment services does not require member states to provide for an indemnification system in order to protect investors

- Proposal of directive 93/321/11 of October 22, 1993 provides for a minimum guarantee of ECU 20,000 per investor

c. Insider trading

- Strict regulation of insider trading is a way to protect investors

- Current trend : stricter rules even in countries such as Germany, Japan or Spain where no regulation of insider trading existed until recently

- Directive 89/592/EEC of November 13, 1989 coordinates regulations on insider dealing



- Certain domestic delivery/settlement systems as inter settle in Zurich, AKV in Germany and Saturne and Relit in France tend to be internationally oriented

- Two main international clearing and delivery/settlement systems:

- Cedel (Luxembourg)
- Euroclear (Brussels)

which offer four main services:

- clearing and delivery/settlement for transactions in securities on international markets

- custody

- management of cash accounts

- securities loans and advances


- Global custodian activity has been developed together with the internationalization of the securities market

- Global custodian is liable for the custody of the securities of its clients on a worldwide basis, either directly or through branches or affiliates as well as through local correspondents (sub-custodians)

- Providing a high quality of custody services is one means to develop a domestic market.

The contents of this article are intended as a general guide. Specialist advice should be sought for your specific circumstances.

For further information contact please contact Daniel Hurstel, Aline Cardin, Herve Letreguilly on +33 1 44 71 17 17, or enter a text search 'Shearman and Sterling' and 'Business Monitor'.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions