The 7th ECN Crowdfunding Convention: Defining the future of European Crowdfunding Service Providers
18 October 2018
Crowdfunding is an established form of alternative finance for start-ups, small and medium enterprises (SMEs), real estate and renewable energy. It represents intermediation through a digital platform matching fundraisers with prospective investors, irrespective of whether that funding leads to a loan agreement, equity stake or to another transferable security-based stake. However, absence of a unified European-wide regulatory framework for Crowdfunding Services Providers for business complicates the further development of crowdfunding as one of the most innovative alternative financing schemes.
After five years since the launch of ECN, the European Commission has now proposed regulation "European Crowdfunding Service Providers (ECSP) for business" covering both, lending-based crowdfunding and investment-based crowdfunding. The proposal is designed to ensure transparency, customer protection and platform operations and if successful, will boost capital formation and investment opportunity across Europe.
The 7th ECN Crowdfunding Convention will take an honest view at the proposal, framed by the realities of the political discourse and options in the EU policy process. We will seek open discourse on the proposal and its possible adaption. The Convention will be organized as an adjoint event to FECIF's Conference taking place on the 17 October 2018.
WHY SHOULD YOU ATTEND?
1. Join the discussion on how to shape the European Crowdfunding Service Provider Regulation online investments in Europe
2. Get to grip of how crowdfunding and online lending will change online access to finance under new rules
3. Take advantage of 3+ networking hours across the two days and make your mark on 100 attendees
4. Meet pan-European industry peers, policymakers and stakeholders and contribute shaping the future of alternative finance
WHAT WILL YOU LEARN?
1. Why crowdfunding will enable investing in securities, debt and loans as well as real estate and renewable energy beyond 2020
2. How the regulatory framework for crowdfunding and crowdlending is moving forward in Europe
3. The latest opinions and activities of EU policymakers on online access to finance under the Capital Market Union and the Fintech Action Plan
4. Insights and opportunities for future investing in crowdfunding, alternative finance and digital assets
8:30 WELCOME COFFEE & REGISTRATION
9:00 OPENING AND WELCOME
9:30 PANEL 1: DIFFERENCES BETWEEN INVESTMENT AND LOANS
The characteristics, risk profiles and target segments of loan and investment instruments in crowdfunding clearly show profound differences. The market comprises aspects of both the capital market and banking sectors. Yet, the EC ECSP proposal takes a fundamental and structuring premise that “loan based crowdfunding (“loans”) and investment based crowdfunding (“investment”) are comparable business funding alternatives.” This panel will highlight the differences between the two types of crowdfunding and the provide insides as to why future EU-level measures should be adapted.
10:30 COFFEE BREAK
11:00 DISCUSSION: CONFLICTS OF INTEREST AND INDUCEMENTS
This Discussion will set out to clarify existing and potential measures to avoid conflict of interests and inducements. Although such measures are, in general, fully in line with the promotion of transparency in the industry and represent a necessary pillar for the harmonious development of crowdfunding in Europe, there is room for improvement in both areas in the current policy discussion.
11:30 INSIGHT: SECONDARY TRADING
Secondary trading is a key aspect to provide liquidity to investors in unlisted SMEs and projects. Already today some platforms operate bulletin boards for secondary trading to encourage investors. This session will explore details of trading loan agreements or transferable securities, how secondary markets can be developed and whether the reference price should be set by platforms or not.
11:45 INSIGHT: SPVS AND DISCRETION
It is essential for investment-based crowdfunding to be able to exercise certain types of discretion on behalf of investors – and to use an SPV or similar structure to do so. The session will outline how issues of regulatory arbitrage, negligible risks and the scope of regulated activities and discretion under the current EC proposal text.
12:00 DISCUSSION: PAYMENT SERVICES
The role of crowdfunding platforms in facilitating payment flows has and can be subject to misinterpretation. This Discussion will clarify which role crowdfunding platforms and payment service providers play during this process and how to address this within regulatory frameworks.
12:30 LUNCH BREAK
13:45 INSIGHT: DISCUSSION: KEY INVESTMENT INFORMATION SHEET IN LENDING
This session will explore and assess which information project owners should be required to provide, both with regard to loans and investment, and how this process can be facilitated by platforms. A second objective will be to explore whether and why key financial figures and ratios which have been used as the base for the platform to perform its analysis should permitted in lieu of full accounts.
14:15 INSIGHT: PLATFORM OVERSIGHT BY CONDUCT AUTHORITIES
Crowdfunding platforms today are either regulated by bespoke member state rules regarding crowdfunding, existing European rules, such as MiFID, or operate under the good will of their local conduct authorities. In any case, they maintain relationships with regulatory authorities within their markets of operation. A European market with 28 regulators is unlikely to be a commercially feasible anytime soon. But can ESMA fill the role of ensuring adequate conduct by crowdfunding platforms across the EU and how will this align with co-existing national rules and regulators´ roles?
14:30 PANEL 2: AN ADEQUATE THRESHOLD FOR OFFERINGS PER 12 MONTHS
The limitation of the proposed ECSP regime to offerings of a maximum of €1 million per 12 months is highly problematic to fundraising SMEs and projects as well as to the crowdfunding industry. There is overall understanding by involved policy makers that the threshold needs to be adapted. The objective of the Panel will be to provide pro- and cons to an increased threshold, which could be in line with the €8 million limit set out in the Prospectus Directive, and possibilities of its implementation.
15:15 COFFEE BREAK
16:00 INSIGHT: CROWDFUNDING FOR REAL ESTATE
Crowdfunding is not only for startups and SMEs part 1. This session will showcase how real estate crowdfunding is contributing to European economic and social goals. This fast-growing segment of the crowdfunding industry has turned a main driver that clearly point towards a defined inclusion of this sector within any forthcoming regulation.
16:15 INSIGHT: CROWDFUNDING FOR RENEWABLE ENERGY
Crowdfunding is not only for startups and SMEs part 2. This session will showcase how renewable energy crowdfunding is contributing to European economic and social goals. This fast-growing segment of the crowdfunding industry has turned a main driver that clearly point towards a defined inclusion of this sector within any forthcoming regulation.
16:30 DISCUSSION: MARKETING RESTRICTIONS
The EC suggests that marketing communications cannot “comprise marketing of individual planned or pending crowdfunding projects or offers”, as to avoid biased treatment of projects offered on the platform. The objective of the discussion is to foster a debate on how marketing works with crowdfunding, both toward the general public and toward registered users, as to ensure adequate and equal treatment of projects by platforms while allowing project owners to raise funds.
17:00 PANEL: GDPR FOR CROWDFUNDING PLATFORMS
The recent entry into force of the General Data Protection Regulation (GDPR) will have significant impacts and repercussions on how crowdfunding platforms store and manage data. The aim of the Panel will be to identify common issues arising from the interaction with this set of rules and existing or potential solutions that can be implemented by crowdfunding platforms.
18:00 NETWORKING DRINKS
The European Crowdfunding Network AISBL (ECN), founded in 2011 as an interest group and formally established in 2013, is a professional network promoting adequate transparency, (self) regulation and governance while offering a combined voice in policy discussion and public opinion building.
ECN executes initiatives aimed at innovating, representing, promoting and protecting the European crowdfunding industry as a key aspect of innovation within alternative finance and financial technology.