Crowdfunding

The European Securities and Markets Authority (ESMA), the EU securities markets regulator, has today launched a consultation on draft technical standards on crowdfunding under the European crowdfunding service providers regulation (ECSPR).

The new Regulation on crowdfunding regulates for the first time at EU level lending-based and equity-based crowdfunding services. It  introduces a single set of requirements applicable to CSPs across the EU, including strict rules to protect investors.

The ECSPR requires ESMA to develop 12 technical standards – 8 regulatory technical standards (RTS) and 4 implementing technical standards (ITS) – on a variety of important topics.

This consultation paper seeks input on the draft technical standards developed by ESMA, on the following issues:

  • Complaint handling;
  • Conflicts of interest;
  • Business continuity plan;
  • Application for authorisation;
  • Information to client on default rate of projects;
  • Entry knowledge test and simulation of the ability to bear loss;
  • Key investment information sheet;
  • Reporting by crowdfunding service providers to NCAs (and NCAs to ESMA); and
  • Publication of national provisions concerning marketing requirements.

Next steps

ESMA will consider the responses to this consultation when developing the draft technical standards for the European Commission. The closing date for responses from stakeholders is 28 May 2021.

The majority of these technical standards are to be submitted to the European Commission for adoption before 10 November 2021. The remaining ESMA technical standards are to be delivered by 10 May 2022.

Consultation on draft technical standards under the ECSP Regulation

ESMA invites responses to the questions set out throughout this Consultation Paper and summarised in Annex II. Responses are most helpful if they:

  • respond to the question stated and indicate the specific question to which they relate;
  • contain a clear rationale; and
  • describe any alternatives ESMA should consider.

ESMA will consider all comments received by Friday 28th May 2021.

The European Securities and Markets Authority (ESMA), the EU securities markets regulator, has published a Questions and Answers (Q&A) regarding the understanding of Special Purpose Vehicle (SPV) aspects under the Regulation on European crowdfunding service providers for business.

The purpose of this Q&A document is to promote a convergent application of the provisions of Regulation (EU) 2020/1503 on European crowdfunding service providers for business (ECSPR) and to  provide responses to possible questions posed by the general public, market participants and competent authorities.

This first set of Q&As provides clarifications on the use of SPV under the ECSPR. It addresses the following topics:

  • The circumstances and conditions in which a SPV can be created for the provision of crowdfunding services;
  • The types of instruments that can be offered to investors via a SPV;
  • Whether a SPV can give exposure to more than one underlying asset;
  • The type of underlying asset a SPV can give exposure to; and
  • When an asset should be deemed to be illiquid or indivisible within the meaning of the ECSPR.

Next steps

ESMA will continue to develop its Q&A on crowdfunding topics under the ECSPR in the coming months, both adding questions and answers to the topics mentioned above and introducing new sections for other areas covered by the ECSPR not yet addressed in this Q&A.