Public statements Archives: 2016-2018

A European framework for FinTech companies with hybrid offerings

Published on July 26, 2017

If the European Commission plans to encourage the development of FinTech companies and alternative forms of financing within the EU, at a time when financial centres outside of Europe are clearly taking this tack, the EU27 countries need to jointly consider the possibility of creating a European framework that encourages these platforms to develop across borders. Editorial extracted from the No. 24 of the AMF Financial Regulation Newsletter.

A European framework for FinTech companies with hybrid offerings

Editorial Franck Guiader, Head of FinTech, Innovation and Competitiveness

At this point, FinTech companies have not ventured into activities that require a fundamental re-examination of current European rules. Those rules generally apply to FinTech companies in the same way they apply to incumbent players. However, we are starting to see the development of digital platforms that offer a variety of financial services to both professional and retail investors. To do so, they need to operate in a number of categories, often covered by separate sets of EU rules and requiring separate authorisations at the local level. Furthermore, these platforms often aim at carrying out their activities outside of their home markets, targeting a single European market from the outset. A European passport covering the full range of these companies’ business activities would facilitate processes and allow them to expand their prospective client base on the short term.

Among the potential solutions warranting further study, one may be a single umbrella status covering a variety of financial service activities that draws on existing regulatory regimes. Depending upon the types of activities a company carries out, this could allow it to apply for a passport instead of requesting multiple local authorisations within the European Economic Area.

The aim is not to call into question the current European regulatory regimes that apply to each business activity, but to make them complementary and easier for FinTech companies to understand and implement as they develop. Obviously, the first thing to do would be to conduct a preliminary review of the regulatory concepts used in the various European texts and assess to what extent the various frameworks fit together.

But at a time when new companies are emerging with global marketing ambitions – companies that are at the forefront of technology – this regulatory step forward could help the European FinTech industry blossom in a way that enhances European cooperation and makes the European economic area more competitive with the rest of the world.

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