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ESMA And EBA Publish Technical Standards on Crowdfunding With Regard to ECSP

by Oliver Gajda on 10.11.2021

10 November 2021. On the day ECSPR is finally entering into force across 27 EU Member States, the European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published their Final Report on technical standards (RTS and ITS) under ECSPR. The report covers all of ESMA’s 12 mandates in this area, including 4 with a legal deadline of May 2022. ESMA decided to deliver on all its technical mandates simultaneously in order to provide indicative guidance to competent authorities and stakeholders.

EUROCROWD welcomes the input by ESMA which will allow our members and other CSPs to speed up their application processes for a license under ECSPR with their national conduct authority. EUROCROWD welcomes the adjustments made by ESMA to a number of the standards in order to better accommodate existing market practice. The publication concludes an intense process in developing a professional regulation for pan-European crowdfunding. We are excited to see the market take up the new rules and create a thriving and innovative financial services sector to finance small and medium sized business across Europe.

The European Banking Authorities (EBA) also published its Final Report on draft Regulatory Technical Standards (RTS) specifying the information that crowdfunding service providers offering individual portfolio management of loans shall provide to investors in relation to the method to assess credit risk, and on each individual portfolio. The draft RTS also specify the policies, procedures and organisational arrangements that crowdfunding service providers shall have in place in relation to any contingency fund they may offer to investors. These RTS are the first of two mandates assigned to EBA with a view to contributing to a sound prudential and disclosure framework for crowdfunding service providers. EUROCROWD believes the RTS be sufficient for a professional implementation of individual portfolio management.

We are running our 10th Crowdfunding Convention on 18th November 2021 on the implementation of ECSPR. Check out the programme here and pre-register today to gain access. The event is not public and will not be recorded or live streamed. It is targeted largely at CSPs, NCAs and policymakers.

The draft technical standards have been amended and improved based on the feedback received by stakeholders, including EUROCROWD and its members, during the consultation. The draft technical standards have in the meantime been submitted to the European Commission for the official endorsement process. ESMA is set to continue its supervisory convergence work, notably through the issuance of Q&As, to further assist competent authorities and stakeholders in the first months of application of the ECSPR.

EUROCROWD will continue to engage on behalf of the crowdfunding sector with the relevant stakeholders.