The mediator of France's Financial Markets Authority published a case note concluding that successive orders used to carry out a client “arbitrage” can be legally interdependent when they form a single overall transaction clearly expressed by the client. In the case reviewed, this led the account keeper to agree to unwind a sale order that had been executed after the related subscription opportunity had expired. An employee savings plan holder instructed his account keeper to sell units in a source fund (Fund A) with a EUR 24 limit price in order to reinvest an equivalent amount into new shares issued under a capital increase reserved for employees and former employees of a listed company, with the subscription period ending on 17 June 2024. The sale order, recorded on 12 June 2024 and treated as valid for three months under the fund rules, was executed on 25 July 2024 after the limit price was reached, when the client could no longer subscribe; the mediator applied Article 1186 of the French Civil Code on the lapse of interconnected contracts and considered the sale order should have become void once the subscription period ended, given the professional could not ignore the overall operation. The firm agreed to cancel the sale at its expense and reinvest the proceeds into Fund A.
France Autorite des marches financiers 2026-04-21
France's Financial Markets Authority mediator finds successive arbitrage orders are interdependent and prompts cancellation of an executed sale
The mediator of the French Financial Markets Authority held that successive orders used for a client “arbitrage” can be legally interdependent when they form a single overall transaction clearly expressed by the client. Applying Article 1186 of the French Civil Code, the mediator found that a sale order linked to a time‑limited subscription should have lapsed when the subscription period ended, requiring the account keeper to cancel the executed sale at its expense and reinvest the proceeds into the original fund.