FESE response to the Commission consultation on crowdfunding, in summary:
- We agree with the benefits and opportunities of crowdfunding (securities type) as presented in the consultation document. However, crowdfunding cannot play a significant role in closing the financing gap faced by enterprises in Europe, especially in the absence of other significant actions targeted at reviving IPOs. Many of the benefits of an IPO are unique and will not be realised if IPOs continue to go down.
- In our response, we describe the major trends in IPOs and the risks faced by Europe in terms of growth and sustainable development if IPOs are not revived. We provide charts based on FESE and other public sources.
- We then answer the specific questions about crowdfunding. Among the risks, we stress the risk of loss of investor confidence in markets in general (including public markets) if crowdfunding is allowed to grow without addressing the risk of fraud.
- In terms of regulation, we support applying the same core principles of EU financial markets to crowdfunding, and recommend that gaps that allow divergent national treatment of platforms be closed through new, targeted, calibrated EU legislation.
- In terms of disclosure to investors, we express support for changing the Prospectus Directive and the linked legislation to ensure that crowdfunding platforms are subject to the same treatment – which should be appropriately light-touch – in every Member State in which they operate, and that they enjoy a passport. These rules, while adapted to crowdfunding, should be underpinned by the same principles that are the core of the FSAP.
- Regarding the rules governing the platform, we stress that MiFID already provides a sufficiently flexible framework for venues of all types and should therefore also apply to crowdfunding. It would be useful to clarify when the operation of a securities crowdfunding platform should be done under a RM/MTF license. Various issues will have to be considered, such as the differences between platforms that are operated by a 3rd party vs a beneficiary of the capital raising. The main principle that should undermine this clarification is a level playing field. All operators operating a primary or trading venue should be regulated in the same way.