France: reform of the commercial paper and medium-term note market - readability, simplicity and attractiveness


Major changes

The major changes of the reform are the following:

  • unifying the legal regime for securities with maturities of up to one year (former certificates of deposit (certificats de dépôts) and commercial paper (billets de trésorerie)) into a new category called "titres négociables à court terme" (commercial paper);
  • changing the name for securities with maturities of more than one year from "bons à moyen terme négociables (BMTN)" to "titres négociables à moyen terme" (medium-term note);
  • new trade names for (i) securities with maturities of up to one year ("Negotiable European Commercial Paper" ("NEU CP", pronounced new CP)) and (ii) securities with maturities of more than one year ("Negotiable European Medium Term Note" ("NEU MTN", pronounced new MTN));
  • no requirement to translate the summary in French when the information memorandum is drafted in English, provided that (i) the relevant securities may only be subscribed or purchased for an amount of at least EUR 200,000 (or the equivalent in another currency) and (ii) a disclaimer in French is included in the information memorandum suggesting to investors to obtain a French translation of the information memorandum;
  • deletion of the disclosure to the Banque de France of (i) the annual interest yield upon the issuance and (ii), the indexation provisions on rates other that standard rates of the interbank market, before the issuance of the securities;
  • broadening the TCN market to issuers that establish their accounts according to accounting standards recognised as equivalent by the European Commission or according to local accounting standards of countries in the European Economic Area (in addition to French accounting standards or IFRS);
  • expanding the list of credit rating agencies authorised by the Banque de France to all the agencies registered with the European Securities and Markets Authority (ESMA) pursuant to the European regulation n°1060/2009 on credit rating agencies, provided that the relevant rating agencies have a methodology and statistical data that cover maturities and categories of issuers of the TCN market; and
  • new infrastructures providing an ISIN code in real time to market participants .

Transitional period

The new provisions in relation to TCNs came into force on 1 June 2016. Issuers who have updated their information memorandum before this date can keep on using their information memorandum until the next update. Such update should still be realised within 45 days following the general shareholders' meeting (or the meeting of the body acting in such a capacity) held to approve the financial statements for the previous financial year. However, as part of the first application of the reform, this deadline is extended to 90 days after the general shareholders' meeting (held to approve the financial statements for the previous financial year) for the issuers whose general meeting of shareholders approving the accounts of the last financial year takes place after 1st June 2016.

The reform does not change the current legal nature of TCNs, the market functioning and supervision nor the collateral eligibility rules for Eurosystem refinancing.