Failure to comply with the obligation to cover stock market transactions

Lack of responsibility for the intermediary in the event of failure to inform an informed investor about the risks inherent in transactions on the futures markets and following failure to call for hedging. The lowdown from Crefovi, banking and finance law firm, on the failure to comply with the obligation to cover stock market transactions.

Failure to comply with the obligation to cover

This judgment of the commercial chamber of the ‟Cour de cassation” dated 8 July 2003 reaffirms the classic case law relating to the involvement of the liability of the intermediary account holder, in the event of non-fulfillment of an obligation to inform the donor. order on the risks incurred in transactions on the stock markets and in the event of failure to provide the cover required by regulations on the futures markets. Our point on the failure to comply with the obligation to cover stock market transactions.

However, is it not time to make the intermediaries face up to their responsibility? The argument according to which the only sanction against intermediaries not fulfilling their obligation to require the contribution to cover would be of a disciplinary nature, is it not outdated, in particular in view of the current precarious situation of many financial markets?

The risks that have become much greater in the bear market era should encourage intermediaries, financial professionals, to scrupulously respect the hedging requirements, especially on the markets for financial futures on which derivative products are traded. complex mechanism generates enormous loss potential.

By imposing greater severity on account-keeping intermediaries, the judge can only promote market security since these investment service providers will be very keen to transmit and execute orders only if clients have provided sufficient coverage.

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