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French bill seeks financial sector boost and regulatory reforms


France revitalize finance sector, financial news

The proposed French legislative bill, scheduled for parliamentary discussion next month, targets significant reforms in financial regulations and employment laws. Introduced by lawmaker Alexander Holroyd, a member of President Emmanuel Macron's party, this bill aims to enhance France's position as a global financial hub.


It seeks to achieve this by facilitating greater investment opportunities and creating a more flexible regulatory environment for financial institutions and investors.


One of the bill's primary objectives is to encourage more investments by private equity funds in French companies. It proposes raising the cap on market capitalization for eligible investments from 150 million euros to 500 million euros as reported by Reuters.



This modification would substantially increase the number of French companies accessible to private equity investments, potentially adding 88 more firms to their portfolios.


Regarding employment law, the bill introduces a notable deviation from France's typically strong labor protections, particularly concerning highly compensated traders in the financial sector.


The proposed legislation aims to reduce the financial burden on employers when terminating traders by limiting the cost of severance packages. This measure is especially relevant to Wall Street banks in France, where severance costs are higher compared to other international financial centers.


These proposed changes are part of France's strategy to enhance its appeal as a financial center, especially in the post-Brexit European landscape. Following Britain's vote to leave the European Union in 2017, France has actively sought to attract finance jobs from London.



The government has implemented various incentives, including tax breaks, to lure banks and financial institutions to Paris. This strategy has borne fruit, with significant banks such as Bank of America and JPMorgan establishing regional hubs in Paris, leading to the creation of thousands of new jobs in the finance sector.


Holroyd underscored the broader importance of these reforms, linking them to Europe's critical challenge of financing its economy. He believes that addressing this challenge effectively can make Europe, and particularly France, more attractive to investors. In line with this, the bill also seeks to ease the process of raising capital.


It proposes adjustments to make French laws more aligned with those in other European countries and the U.S., especially benefiting start-ups.



This includes giving company management more discretion in setting prices for capital raises, a move away from the current system that heavily favors existing shareholders.


Lastly, the bill plans to incorporate digital solutions into trade finance. By transposing a United Nations agreement into French law, the bill aims to digitalize the extensive paperwork involved in international trade finance.


This modernization is intended to simplify and streamline procedures for banks handling international shipping transactions, reducing administrative overhead and potentially enhancing the efficiency of cross-border trade financing.


11.03.2024



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