Draft RTS and ITS on disclosure of information to investors under the European crowdfunding service providers regulation

Luxembourg

On 9 November 2021, the European Banking Authority released draft regulatory technical standards (the “RTS”) on individual portfolio management of loans offered by crowdfunding service providers under Regulation (EU) 2020/1503 on European crowdfunding service providers for business and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (the “ECSPR”).

They are intended to specify information that crowdfunding service providers must provide to investors to ensure they are appropriately informed about the risks they are exposed to when they invest in individual portfolio management of loans.

Accordingly, the RTS set out rules on information to be provided regarding (i) the measurement techniques used for risk assessments, (ii) key characteristics of each individual portfolio and (iii) policies, procedures and governance arrangements on contingency funds that crowdfunding platform must have in place.

On the next day, the European Securities and Market Authority published draft technical standards under ECSPR.

These RTS and the implementing technical standards (the “ITS”), which aim at enhancing the protection of investor, provide for provisions and templates on (i) complaints handling, (ii) conflicts of interest, (iii) business continuity plan, (iv) authorisation as a crowdfunding service provider, (v) information on default rates offered on a crowdfunding platform, (vi) entry knowledge test and simulation of the ability to bear loss for prospective non-sophisticated investors, (vii) key investment information sheet,  (viii) data standards and formats, templates and procedures for reporting information on projects funded through crowdfunding platforms (ix) notification to ESMA of national provisions concerning marketing requirements by national competent authorities, (x) cooperation between competent authorities, and (xi) cooperation between competent authorities and ESMA.

The draft RTS and ITS will be submitted to the European Commission.

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