Individualised portfolio management of loans, harmonised and non-harmonised PFPs

Individualised portfolio management of loans is a new service offered by crowdfunding platforms. This service consists of the platform allocating a pre-determined amount of an investor’s funds to one or more crowdfunding projects, in accordance with an individual mandate given by the investor and on a case-by-case basis.

This service offers a number of advantages for investors:

• Simplifies investment: The investor does not have to choose which projects to invest in; the platform does it for them, based on their preferences.
• Reduces risk: The platform uses algorithms to analyse projects and allocate them to the investor’s portfolio, which can help reduce investment risk.
• Optimise returns: The platform can use its knowledge and experience to optimise the investor’s portfolio returns.

To offer this service, crowdfunding platforms must comply with a number of requirements set out in the EU Regulation 2020/1503 on European providers of crowdfunding services for businesses. These requirements include:

• Investors must provide an individual mandate to the platform, specifying their investment preferences.
• The platform must use algorithms to analyse projects and allocate them to the investor’s portfolio.
• The platform should provide information to the investor on the composition of his portfolio and the risk associated with each project.

Individualised portfolio management of loans is a service that can be very attractive for investors seeking to simplify their investment, reduce risk and optimise returns.

In particular, this service can benefit the following types of investors:

• Early stage investors: This service can be particularly useful for novice investors, who have no experience in selecting crowdfunding projects.
• Investors looking to diversify their portfolio: This service can help investors diversify their portfolio by investing in a variety of equity projects.
• Investors seeking to reduce risk: This service can help investors reduce the risk of their investment by investing in projects with similar risk.

In the coming years, individualised portfolio management of loans is likely to become an increasingly popular service on crowdfunding platforms.

Harmonised and non-harmonised crowdfunding platforms

 Harmonised crowdfunding platforms

Harmonised crowdfunding platforms are those that comply with the requirements set by EU Regulation 2020/1503 on European providers of crowdfunding services for companies. This regulation establishes a harmonised regime for crowdfunding platforms in the European Union, with the aim of creating a safer and more transparent environment for investors and project promoters.

Differences with non-harmonised platforms

The main differences between harmonised and non-harmonised crowdfunding platforms are as follows:

• Scope of application: EU Regulation 2020/1503 applies to all crowdfunding platforms offering crowdfunding services for companies in the European Union. Non-harmonised platforms may offer crowdfunding services for companies, but are not subject to the requirements set out in the regulation.
• Regulation: Harmonised crowdfunding platforms are subject to stricter regulation than non-harmonised platforms. EU Regulation 2020/1503 sets out a number of requirements that harmonised crowdfunding platforms must comply with in terms of authorisation, supervision, transparency, investor protection and the processing of personal data.
• Authorisations: Harmonised crowdfunding platforms must obtain an authorisation from the competent authority of their home Member State. Non-harmonised platforms are not required to obtain an authorisation.

Regime for harmonised crowdfunding platforms

The regime for harmonised crowdfunding platforms is set out in EU Regulation 2020/1503. This regulation sets out a number of requirements that harmonised crowdfunding platforms must comply with in terms of authorisation, supervision, transparency, investor protection and the processing of personal data.

Conditions of access

In order to obtain an authorisation as a harmonised crowdfunding platform, entities must meet the following requirements:

• Be a legal person: The entity must be a legal person, incorporated in a Member State of the European Union.
• Have a minimum share capital: The entity must have a minimum share capital of 100,000 euros.
• Comply with fit and proper requirements: The entity’s directors and managers must comply with the fit and proper requirements set out in the regulation.

Authorisations required

Harmonised crowdfunding platforms must obtain an authorisation from the competent authority of their home Member State. Authorisation is granted for a period of five years and may be renewed.

Non-harmonised crowdfunding platforms

Non-harmonised crowdfunding platforms are those that do not comply with the requirements set by EU Regulation 2020/1503. These platforms can offer crowdfunding services for companies, but are not subject to the requirements set by the regulation.

Regulation

Non-harmonised crowdfunding platforms are subject to national regulation in the Member State in which they operate. National regulation may vary from one Member State to another.

Authorisations

Non-harmonised crowdfunding platforms are not obliged to obtain an authorisation. However, they may choose to obtain a voluntary authorisation.

Conditions of access

The conditions for access to non-harmonised crowdfunding platforms vary from platform to platform. In general, platforms require investors to meet the following requirements:

• Being of legal age: The investor must be of legal age.
• Have legal capacity: The investor must have legal capacity to enter into contracts.
• Have a basic understanding of the risks of equity finance: The investor should have a basic understanding of the risks of equity finance.

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