Views on improving the integrity of global capital markets
28 March 2014

Debt and Equity Crowdfunding: CFA Institute Offers Regulatory Blueprint for Europe

Posted In: Uncategorized

To coincide with the European Commission’s communication on crowdfunding, CFA Institute has released a blueprint for the sound regulation of investment-geared crowdfunding in Europe.

In Sourcing Equity and Debt Funding from the Crowd: Developing a Regulatory Framework, CFA Institute analyzes regulatory structures in key jurisdictions in Europe, the Americas, and Asia Pacific, and covers six points necessary for a comprehensive regulatory framework:

  1. Integrity of platforms operations
  2. Transparency by issuers and platforms
  3. Investor access and appropriateness
  4. Due diligence and safeguards
  5. Small and medium-size enterprise (SME) access and focus
  6. Corporate governance protections

“Investment-geared crowdfunding is an opportunity to bridge the funding gap for small businesses and entrepreneurs, but it will not thrive without a regulatory framework providing sound protection to investors,” says Mirzha de Manuel Aramendia, director of capital markets policy at CFA Institute. “Our blueprint focuses on how to devise a framework which affords sufficient information and safeguards for investors, particularly retail investors.

He adds: Investor protection is essential if crowdfunding is to succeed. Without such protections, these risky investment opportunities have the potential to further erode investor trust, which in turn will damage the opportunities for SMEs to access capital in the future. France, Italy, the UK, and Spain have adopted or will soon adopt their own rules for crowdfunding. By identifying best practices from an investor viewpoint, we would like to contribute to an all-encompassing solution in Europe, and we will be liaising with regulatory authorities worldwide to promote a high level of investor protection and the convergence of regulatory standards.”

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About the Author(s)
Crystal Detamore

Crystal Detamore is a communications director at CFA Institute and a former columnist for Entrepreneur magazine.

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