What is a portfolio management company?
A portfolio management company, or “PMC”, offers collective management services through “UCITS” or “Undertakings for Collective Investment in Transferable Securities”.
These collective investments include open-end investment companies (sociétés d'investissement à capital variable - SICAVs) and mutual funds (fonds commun de placement - FCPs).
Each SICAV or FCP fulfils a specific investment mandate: managers' SICAVs or FCPs consist of securities, shares or bonds, for example CAC 40 shares in France, or international securities targeted by region or business sector.
What is the guarantee of asset management services?
The guarantee of asset management services covers financial instruments, in particular UCITS units, as well as associated cash held or managed by these portfolio management companies on behalf of their customers, up to a maximum of EUR 20,000 per customer, securities and cash combined.
The guarantee of asset management services covers the inability of an asset management company to repay or return financial instruments and cash to investors, up to EUR 20,000 per customer per asset management company.
The guarantee of asset management services mechanism has been operational since 5 August 2022. Its management was entrusted to the Fonds de Garantie des Dépôts et de Résolution, the FGDR. All asset management companies operating in France are members of this fourth FGDR guarantee scheme.
Products covered by the guarantee of asset management services
The guarantee of asset management services covers the inability of an asset management company to repay or return financial instruments and cash to investors:
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Units or shares in UCIs (undertakings for collective investment) managed by the asset management company that no longer appear in its books;
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Financial instruments managed by the asset management company on behalf of investors as part of a “discretionary" management activity;
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Financial instruments and cash held by the asset management company on behalf of investors in breach of the ban on receiving them.
The guarantee of asset management services works in a similar way to the investor compensation scheme
As with investor compensation, the guarantee of asset management services covers all customers, including private individuals and legal entities, i.e.:
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All persons to whom the asset management company provides an investment service under a contract; or
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For which the units or shares of undertakings for collective investment belonging to them and managed by the asset management company are in registered form.
Guarantee of asset management services member institutions
All portfolio management companies that have their registered office on French territory must be members of the guarantee of asset management services created in 2022.
These are companies that provide investment services or register the units or shares of undertakings for collective investment that they manage on behalf of their customers in registered form.
At the end of 2022, 650 asset management companies had joined the FGDR as members.
Activation of the guarantee of asset management services
The Financial Markets Authority (AMF) is the sole authority responsible for activating the guarantee of asset management services for the FGDR.
This guarantee is only activated in case of the unavailability of securities, UCITS units or cash that have disappeared from the asset management company’s books (destruction of computer systems or fraud).
Guarantee of asset management services compensation terms
Customers are compensated within two months from the date on which the Fonds de Garantie des Dépôts et de Résolution determines the eligibility and amount of the claim.
The covered amount is EUR 20,000 per customer per institution
The amount covered by the guarantee of asset management services is EUR 20,000 for all financial instruments and cash held or managed for the customer, regardless of the number of contractual relationships between the customer and the asset management company.
Remarque : la plaquette actuelle du FGDR décrit les trois mécanismes de garantie des dépôts, garantie des titres et garantie des cautions. La garantie des services de gestion sera présentée dans une prochaine version, en préparation actuellement.