ESMA and crowdfunding

Crowdfunding: Untapping its potential, reducing the risksWorkshop, 3 June 2013

Laurent DegabrielHead of Investment and Reporting Division

ESMA/2013/641

ESMA initial work on crowdfunding

• December 2012: 1st survey on crowdfunding; two objectives:– Understand the developments of crowdfunding in Europe.– Examine how each jurisdiction is dealing with it at national level.

• February 2013: setting up of a specific task force together with some market participants to answer two questions:

– Is the perceived lack of consumer s’ regulatory framework in Europe leading to investor detriment?

– Is this perceived lack creating obstacles to the growth of crowdfunding in Europe?

• Last May: initial discussion at the latest Board of Supervisors

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Main results of the survey: site of the phenomenon

• Difficult to get robust and consistent data across the various Member States:– Early days; – Not all platforms are registered;– Differences between crowdfunding business models.

• Some sample sizes as of December 2012 (based on information collected through the survey):

– France: around 68 platforms operating;– Italy: 16 platforms active; 13 million € volume; 2,500 projects completed;– Netherlands: 1 platform authorised; 2.5 million € volume (including other active platforms);– UK: 1 crowdfunding platform authorised (2 applications for authorisation under

consideration).

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Main results of the survey: different regulatory approaches

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Regulation and controls

Belgium • CF initiatives often involve the provision of:• Banking services• Collective management • Investment services• Public offerings of securities.

• July 2012: the FSMA published a communication to clarify the regulatory framework. France • CF is regulated for those making a public offering and/or provide investment services.

• May 2013: joint statement published by AMF and ACP to clarify the regulatory framework.

Germany • The framework regulates services provided they fall within the scope of German Security Legislation:• German Prospectus Legislation. • MiFID Directive.

• September 2012: statement published by Bafin to provide greater clarity as to the regulatory framework of CF.

Netherlands • AFM is undertaking joint work with the Central Bank and the Ministry of Finance to determine when the Dutch Financial Supervisory Act is applicable:

• Banking services.• Investment services.• Prospectus directive.

• Current regulatory framework may apply differently depending on the model used:- Banking regulation; Prospectus directive; MiFID.

• Exempted activities can be treated differently at national level - Article 3 of MiFID; article 1.2 and article 3.2 of the Prospectus directive.

Key issues for regulators

• Diversity of crowdfunding platforms and offerings

• Innovation that cuts across different regulatory sectors

• Strong appetite from investors/lenders but potential risks exists

• No consistent pan-European regulation of crowdfunding

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Way forward for ESMA?

• Further analysis needed to better understand crowdfunding business models in Europe

• Improve the exchange of information on the topic of crowdfunding across Member States

• Identify similarities and differences in the regulatory treatment of crowdfunding across Europe with the aim of possibly publishing on best practices

• Continue to follow global regulatory developments

• Maintain a strong dialogue with the EC to determine how best ESMA may contribute

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Questions?

laurent.degabriel@esma.europa.eu