Opening a French Brokerage Account: Your Legal Rights as an Investor

Who Can Provide Investment Services in France

Only firms holding the status of prestataire de services d'investissement (PSI) may provide investment services professionally in France. Three types of entity qualify (C. mon. fin. Art. L 531-1): credit institutions (banks) that have received AMF authorisation to provide investment services alongside their banking activities; investment firms — legal entities authorised to provide investment services as their principal activity; and sociétés de gestion de portefeuille (SGP), which manage collective funds such as OPCVM and FIA.

Investment services covered by the PSI framework include receiving and transmitting orders, executing orders on behalf of clients, dealing on own account, discretionary portfolio management, investment advice, underwriting and placing securities, and operating multilateral or organised trading systems (C. mon. fin. Art. L 321-1). PSIs may choose to be authorised for some or all of these services.

Alongside PSIs, conseillers en investissements financiers (CIF) provide investment advice as a profession without being PSIs. Before giving any advice they must deliver a document stating whether their advice is independent or non-independent. Each advisory engagement must be formalised in a signed lettre de mission stating the nature of the service and the remuneration structure. Each piece of advice must be formalised in a written déclaration d'adéquation justifying the recommendations in light of the client's financial situation, experience, investment objectives, and sustainability preferences (C. mon. fin. Art. L 541-1; Régl. gén. AMF Art. 325-5, 325-6 and 325-17). CIFs may not hold client securities or deposits beyond what is needed to remunerate their service (C. mon. fin. Art. L 541-6).

All PSIs authorised in France (except SGPs, which have their own guarantee mechanism) and all intermediaries approved for custody and administration of financial instruments are members of the financial instruments guarantee fund within the fonds de garantie des dépôts et de résolution — an investor compensation mechanism that pays out in the event of unavailability of a client's instruments or cash deposits (C. mon. fin. Art. L 322-1).

Opening a Compte-Titres: What You Have the Right to Expect

A compte-titres (securities account) held with a bank, investment firm, or online broker is mandatory to carry out any stock exchange transaction. The account can be individual, joint, or undivided. There is no statutory minimum deposit requirement, though some brokers set their own entry minimums (C. mon. fin. Art. L 211-17).

The account comprises two linked sub-accounts: the compte-titres itself, which records the securities held and inscribes them in the holder's name — establishing their legal title — and an associated compte espèces (cash account), which records all cash movements connected to securities transactions: proceeds from sales, dividend and interest receipts, brokerage fees, custody charges, and subscription fees. The cash account cannot be used as a payment account and gives no access to payment instruments such as cheques or bank cards.

Securities inscribed to the credit of a compte-titres are presumed to belong to the account holder: the holder is a proprietor of the securities, not a creditor of the custodian institution.

Identity and capacity verification

Before opening an account for a natural person, the account keeper must verify the client's identity and ensure they have the legal capacity to carry out the transactions being entrusted to the intermediary (C. mon. fin. Art. D 533-5). The documents typically required are a valid official identity document, a proof of address, and if a third party is to operate the account, a power of attorney. For online account openings, photocopies of these documents are sent by post together with a bank account reference (RIB or cancelled cheque) and the completed account-opening dossier, which may be downloaded and signed electronically.

The account-opening convention and service agreement

A written convention must be concluded at account opening between the account keeper and the client — and, where the execution intermediary is a different entity from the custodian, with that execution intermediary as well (Régl. gén. AMF Art. 322-5). This convention must cover: the identity of the parties; the nature and categories of services and instruments; the fee schedule and remuneration arrangements; its duration; confidentiality obligations of the custodian; order characteristics and transmission methods; the procedure if an order cannot be transmitted; post-execution reporting and avis d'opéré conditions; and, where online dealing is available, the methods of proof used for internet-received orders and the alternative channels available in the event of a service interruption. The convention must confirm that the intermediary accepts responsibility for the proper execution of an order once it has sent the client a confirmation of receipt and the client has confirmed acceptance.

The Suitability and Appropriateness Tests: Knowing Your Client

Before opening any account, the intermediary has an obligation to gather information about the client's investment knowledge and experience, even where it has no mandate to manage the portfolio (C. mon. fin. Art. L 533-13, II). The intermediary must ask each new client about: the types of services, transactions, and instruments they are familiar with; the nature, volume, and frequency of past securities transactions and the period over which they occurred; their level of knowledge and professional background or, where relevant, their professional experience (Régl. UE 2017/565 du 25-4-2016 Art. 55).

Based on this information, every client who is not a bank counterparty must be classified into one of two categories:

• Professional client — a client with the experience, knowledge and competence to make their own investment decisions and correctly assess the associated risks (C. mon. fin. Art. L 533-16). Professional clients receive a reduced information set and a lighter suitability framework.
• Non-professional client — anyone who does not meet the professional client criteria. In practice this means all private individuals and small companies. Non-professional clients receive the highest level of protection and information.

Where the client is making their own order decisions on non-complex instruments — listed shares on a regulated market, plain bonds, non-structured OPCVM units — on their own initiative, and the service is simply the execution of those orders, the intermediary is not required to carry out an appropriateness assessment (C. mon. fin. Art. L 533-13, III). For all other situations, if the client does not provide the information necessary for the appropriateness assessment, the intermediary must send them a warning that it cannot determine whether the service or instrument is suitable for them. The intermediary's information obligation covers the risks inherent in the product even where the probability of those risks materialising is unpredictable (Cass. com. 11-2-2014 n° 12-26.083).

Information the intermediary must give a non-professional client

Before a non-professional client opens a compte-titres, the intermediary must provide — on a durable medium, which may be electronic if the client expressly agrees — information covering (C. mon. fin. Art. L 533-12):

• A description of the services offered
• A description of the financial instruments that may be held, the proposed investment strategies, and the risks those instruments and strategies carry — including appropriate warnings on risk of loss, leverage effects, price volatility, and similar factors
• The execution systems used and the intermediary's best execution policy
• All fees and costs relating to account management and their payment method

This information must be sufficient to allow the client to understand the nature of the services and instruments proposed and their associated risks, so that they can make an informed investment decision.

What the Account Keeper Must Do: Ongoing Obligations

Once the account is open, the account keeper must record all securities transactions exclusively on instruction from the client, their representative, or an authorised third party. The account management service includes: collecting income on securities in the portfolio; administrative and accounting follow-up on all buy and sell transactions; prompt notification of corporate events requiring a client response (capital increases, takeover bids); providing the tax information needed for income declarations; notifying the client of events that modify their rights over held instruments when the keeper believes the client may be unaware; and sending avis d'opéré (trade confirmations) and periodic account and cash statements.

Custody charges — droits de garde — vary between intermediaries and may take the form of a proportion of the portfolio value, a fixed annual or semi-annual fee per securities line, or both. The account management service is generally included in custody charges, but certain specific services can give rise to separate charges: account transfers to another institution, account closure, the issuance of specific fiscal attestations.

How Trading Works: Settlement, SRD, and Order Filtering

Cash settlement: the standard

All securities listed on Euronext Paris are traded on a cash basis by default. Buyer and seller are irrevocably committed from the moment an order is executed. Ownership is transferred by the inscription of the securities to the buyer's compte-titres at the settlement date, which is no later than two trading days after execution (J+2) (C. mon. fin. Art. L 211-17). Cash trading carries no specific additional commission.

Selling short — giving a sell order without already owning the securities — is prohibited unless a third party has given the seller the assurance that the securities can be delivered by the settlement date (C. mon. fin. Art. L 211-17-1). For online orders, the broker must have an automated system that blocks any order for which the account does not hold sufficient securities or cash. If no such system is in place and a client's account becomes overdrawn through execution of an uncovered order, the broker bears responsibility (Cass. com. 13-9-2011 n° 10-19.907; Cass. com. 24-6-2014 n° 13-17.772). More generally, the broker must filter orders for unusual size or prices that would provoke excessive price movement, and must seek clarification from the client before presenting such orders to the market.

The SRD: deferred settlement for eligible securities

The service de règlement différé (SRD) is a paid optional service that allows investors to defer the settlement of their transactions to the end of the stock exchange month. It is only available for continuously-traded securities on Euronext Paris that meet specific capitalisation and daily liquidity thresholds — a list maintained and regularly updated by Euronext.

When the client places an order avec SRD, the intermediary advances the funds (for a purchase) or the securities (for a sale) and the order is executed immediately at the market price. Settlement — actual transfer of ownership and payment — takes place on the last trading day of the month (liquidation mensuelle, three trading days before the last day the market is open in the calendar month). During the intervening period, the securities belong to the intermediary, not the client. Multiple buy and sell transactions on the same stock within the same month can be netted against each other — only the net position is settled.

A specific event affects SRD positions when a dividend is detached between the trading date and the settlement date. Because the SRD buyer does not yet own the share at the detachment date, they cannot receive the dividend. The intermediary is required to credit the buyer with an equivalent compensating payment on the last business day of the month. Conversely, the SRD seller owes a compensating payment to their counterparty. An order's validity also expires automatically when a subscription or attribution right is detached from the underlying share — all pending orders on that security must be renewed after the detachment.

Short-selling transparency

Any holder of a net short position in shares traded on Euronext Paris or Euronext Growth must declare that position to the AMF within one trading day when it reaches or crosses (up or down) any of the disclosure thresholds: 0.1%, 0.2%, 0.3%, 0.4%, or 0.5% of the company's capital. Positions at or above 0.5% — and at each 0.1% increment above that — are publicly published.

Order Types: Choosing How Your Order Is Executed

Every order placed must specify at minimum: the direction (buy or sell); the security by name and ISIN code; the quantity; a validity period; the pricing conditions; and whether settlement is to be cash or with SRD. Euronext's harmonised market rules establish the following principal order types (Euronext Harmonised Market Rules Art. 4203):

Order at a price limit (à cours limité): the most basic and predictable order type. Specifies a maximum purchase price or minimum sale price. Will execute only at the specified limit or better. Protects against price movement but carries the risk of non-execution if no counterparty accepts the limit. For orders placed before opening: executed in full at the opening price if that price is more favourable than the limit; at the limit price for those priced exactly at opening.

Best-limit order (à la meilleure limite): no price specified; executes at the best available price in the order book at the time of presentation. Converts to a price-limit order at the best available price and may remain partially filled. Carries a risk of partial execution on illiquid stocks.

Market order (au marché): no price limit; immediate execution at successive price levels to fill the full quantity. Guaranteed execution in full but no control over the price achieved. Receives priority in the order book over price-limited orders.

Stop orders (stop loss and stop limit): activated when the last traded price reaches a specified trigger level. A stop loss converts to a market order on activation — full execution guaranteed but at an uncontrolled price. A stop limit converts to a price-limit order with a second price boundary — protects the maximum execution price but may not execute at all if the market moves through the band. Useful for protecting positions against a trend reversal but requires careful management.

Indexed order (indexé): a price-limit order that continuously tracks the best bid or offer in the central order book. Each automatic price update resets the order's time priority. Can be set with an execution limit beyond which indexation is suspended.

Validity of orders

If no validity period is specified, an order is valid for the trading day only and is automatically cancelled at the end of the session if not executed. Orders can be given a specific expiry time within a session, a fixed duration, or a à révocation status valid for 365 calendar days. Orders with a specified date remain on the market until that date. Increasing the quantity on a pending order or changing its price limit forfeits the order's time priority in the book. Any order inscribed in the order book for a continuously-traded security can be cancelled or modified at any time before execution, but cancellation is not guaranteed if part of the order has already been filled.

Best Execution: What the Intermediary Owes You

Any intermediary receiving orders — whether it executes them itself or transmits them to another entity — has an obligation of meilleure exécution (best execution). It must take all sufficient measures to obtain the best possible result for the client, taking into account price, cost, speed, probability of execution and settlement, order size and nature, and any other relevant execution considerations (C. mon. fin. Art. L 533-18).

For a non-professional client, the best possible result is assessed by reference to the total cost of the order — the purchase or sale price plus all costs directly linked to execution, including venue fees, clearing and settlement costs, and any third-party fees incurred in the execution chain.

Every intermediary must establish and implement a written execution policy specifying, for each category of financial instrument: the possible execution venues; a ranked list of venues that typically deliver the best result; and the factors that influence venue selection (C. mon. fin. Art. L 533-18, III). This policy must be communicated to clients and their consent obtained before proceeding. Where the policy provides for execution outside a trading venue, the client's explicit consent is required for each such execution or under a general advance agreement.

The intermediary must publish, once a year for each instrument category, a ranked list of the five venues where it executed the greatest volume of client orders in the previous year, along with a summary of execution quality obtained (C. mon. fin. Art. L 533-18-1). A client may give a specific execution instruction overriding the standard policy — for example, requiring execution only on Euronext Paris. The intermediary must follow that instruction but must warn the client that it may prevent the application of its standard execution measures.

Execution on Euronext follows two automatic priority rules: price priority (buy orders at higher limits execute first; sell orders at lower limits execute first) then time priority (same-price orders execute in order of arrival). Orders without price limits are always executed in priority. All transaction records must be retained by the intermediary for a minimum of five years and must be detailed enough to reconstruct every key step of each transaction's processing.

Trade Confirmations and Your Right to Contest

Every buy or sell transaction affecting a client's account generates an avis d'opéré (trade confirmation) that must be transmitted to the client on a durable medium. For a non-professional client, this confirmation must be sent as soon as possible and no later than the end of the first business day following execution, or the first business day following receipt of the confirmation from the executing intermediary if that intermediary is different from the account keeper (Régl. UE 2017/565 du 25-4-2016 Art. 59). The confirmation may be sent by email if this is provided for in the convention de services, but may not simply be posted on a website.

Where a non-professional client's account shows an open uncovered position in a transaction involving contingent obligations, the account keeper must notify the client of any loss exceeding a pre-agreed threshold no later than the end of the business day on which the threshold was crossed, or the end of the first business day following.

On receipt of the avis d'opéré, the client has a contest period specified in the convention de services (typically 48 hours) to challenge the conditions of execution. After that period, the absence of contestation is treated as acceptance of the transaction. However, under a discretionary portfolio management mandate, the client's silence on receipt of trade confirmations is not treated as tacit ratification of the manager's decisions and cannot be used against the client in any dispute about improper mandate execution (Cass. com. 13-5-1997 n° 1228 P). Formal disputes about execution must be submitted in writing — in practice by registered letter — to the account keeper, which must acknowledge and respond within a maximum of two months through a clear and transparent complaints procedure.

Costs: Custody Fees and Brokerage Commissions

Every transaction on Euronext generates brokerage fees (frais de courtage). These can be structured as a flat fee for lower-value orders and/or a percentage of the transaction amount — often with a decreasing rate as the order size increases — plus a fixed minimum commission. For SRD orders, an additional commission applies, as does a separate commission for any end-of-month rollover (prorogation). The full fee schedule must appear in the convention de services and in the pre-opening information provided to non-professional clients.

Custody fees (droits de garde) cover the ongoing administration of the account and are typically charged as a proportion of the portfolio value and/or a fixed amount per securities line per period. Most standard account services — periodic statements, trade confirmations — are bundled within custody fees, but specific services such as account transfers, closures, and certain fiscal attestations can attract additional point-of-service charges.

This article is provided for general information and educational purposes only. It does not constitute legal or investment advice. The rules described here derive from the Code monétaire et financier, the AMF's Règlement général, and EU Regulation 2017/565. Their application to a specific investor relationship depends on the account type, the instruments involved, the client's classification, and the terms of the convention de services. Investors with disputes about order execution or account management should seek advice from a qualified French lawyer (avocat) or contact the AMF's mediation service. References are correct to the best of the author's knowledge as of the date of publication.