On Tuesday, Alexandre Holroyd, a member of the Renaissance party, brought forth a legislative proposal before the French National Assembly, aiming to substantially boost France’s digital trade and elevate the financial sector’s attractiveness.

This proposal emerges as France attempts to position itself as a key player in the global financial landscape by expanding business financing avenues, fostering international growth, and updating French legal frameworks.

Legislative proposal: France’s financial flag in the sand

Holroyd’s proposal is set against the backdrop of France’s ambitious efforts to attract financial players post-Brexit, with Paris overtaking rivals to emerge as Europe’s leading market in terms of stock market capitalisation.

This legislative proposal, which will also be submitted to the Senate aims to further these gains by enhancing financing capacities for businesses through financial markets, a crucial move considering the tepid activity in IPOs on Euronext Paris in 2023.

A notable aspect of the proposal is the introduction of multi-voting shares in listed companies, aimed at retaining entrepreneurial control and preventing companies’ offshoring due to fears of losing control. 

This move, while contentious among asset managers and voting advisory agencies, reflects a broader shift towards increasing market attractiveness without compromising governance standards.

Alignment with MLETR

The proposal also highlights the digitalisation of trade finance activities, a move poised to revolutionise international trade by transitioning from paper-based processes to digital systems.

In line with the UNCITRAL Model Law on Electronic Transferable Records (MLETR), the proposal is indicative of France’s commitment to adopting international standards for digital trade documentation. 

The proposal, which contains 5 articles, defines a transferable record and provides a list of instruments within the scope: 

  • bills of exchange;
  • promissory notes; 
  • maritime and river bills of lading; 
  • daily certificates; 
  • bearer and order insurance policies; 
  • and warrant receipts. 

It also outlines the conditions for establishing the legal recognition of the electronic form of the transferable record, as well as the specifications regarding the concepts of integrity, delivery, control, and transfer of an electronic record.

This alignment signifies a substantial step towards streamlining trade processes, reducing operational costs, and enhancing France’s competitive edge in the global market.

The proposal addresses the critical digital divide in international trade, where less than 0.1% of new trade documents were digitalised in 2022.

Recommendations and future direction

The journey from UNCITRAL recommendations to French law enactment, thanks to Paris Europlace and ICC France’s robust technical work and advocacy campaign, involves a structured legislative process, encompassing drafting, reviews, parliamentary debates, and final approvals that the adoption of a decree by the Council of State will complete.

The decree will define reliable methods that encompass the identification of actors, traceability of these, and the preservation of the integrity of the record.

The Paris Europlace / ICC France MLETR report, released to the French government on 29 June 2023, is an important document in this legislative project.

Furthermore, the proposal is linked with ongoing European digitalisation efforts, including eFTI and eIDAS regulations, which aim to digitalise business, administration, and government interactions across the EU.

The report outlines nine key recommendations aimed at fostering the TradeTech ecosystem, promoting regulatory frameworks for paperless trade, and establishing digital corridors with major trading partners and fostering market adoption through awareness-raising and training sessions for stakeholders.

These recommendations are designed to ensure the effective use of digital tools in trade finance, improve institutional representation, and leverage digitalisation to enhance the attractiveness of the trade finance industry.

Philippe Henry, senior advisor to Paris Europlace and co-rapporteur of the working group, told TFG, “The legislative proposal presented by Alexandre Holroyd marks a pivotal moment for France’s financial sector and its approach to trade digitalisation.”

Emmanuelle Butaud-Stubbs, Secretary general of ICC France, and a member of the DSI Legal Reform Advisory Board told TFG, ”This legislative proposal is an important milestone in the digital transformation of the French trade finance ecosystem, opening up interesting opportunities for domestic and international transactions.” 

The financial sector, including bankers, corporates, asset managers, and institutional investors, has expressed keen interest in the measures proposed by Holroyd. 

However, there are concerns about whether the proposal will sufficiently address the need for directing savings towards listed companies and promoting quality research on SMEs, especially in light of challenges posed by directives like MiFID2. 

Some more work has also to be done on supporting exporters: SMEs account for a large part of global cross-border trade volumes but are much less supported on trade financing than large corporates. 

The new law passed in France in the coming weeks could help open new financing tools and reduce the $2.5 trillion trade finance gap.

By addressing key challenges, embracing digital transformation, and aligning with international standards, France is poised to enhance its financial attractiveness and competitiveness on the global stage. 

As the proposal moves through the legislative process, its potential to reshape France’s financial landscape and its impact on the broader European market will be closely watched.