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FinTechs belonging to this category operate trading platforms or online marketplaces for investment opportunities or certain financial contracts – e.g. securities, factoring etc. and sometimes furthermore provide contact to financial experts and tools for the decision-making.
FinTech-signalling and social trading platforms provide users with the opportunity to exchange opinions on financial investments and offer signal providers and traders the possibility to make their securities portfolio publicly visible. This way the portfolios can be linked to and followed by other traders via the platform automatically, so that the trading and investment strategy of the followed traders can be copied.
The platform often cooperates with a financial services provider or a credit institution where both the trader and the follower hold their securities accounts, and which execute the orders both of the trader and the follower and to which the platform passes on the trading decisions.
Introduction
Attitude of the country towards trading, social trading or signalling platforms
Broadly speaking, one (1) of the main obstacles to the development and fostering of such services in Italy is the lack of a proper financial education. As noted by CONSOB in its Annual Report, the financial skills of Italian consumers are particularly low. In this light, CONSOB, along with other competent authorities (the Bank of Italy, Government etc.), has launched specific programs aimed at increasing the financial skills of Italian consumers to render more attractive financial services and to allow consumers to make informed investment decisions.
Legal affairs
Obligations and requirements to provide trading, social trading or signalling platforms described above
Although a specific statutory or regulatory framework governing FinTech services is currently absent, the described services may fall under the definition of investment services/activities provided by Section 1, paragraph 5, of the TUF when they are related to such services and activities and are provided on a professional basis to the public. For instance, trading platforms could fall under the category of portfolio management service when they transmit mirror trading signals to third party brokers that execute these orders automatically. Additionally, management of trading platforms could be considered as operation of Multilateral Trading Facilities (MTFs) or of Organised Trading Facilities (OTFs). In particular, the latter was recently introduced by Legislative Decree no. 129/2017 which implemented in Italy Directive 2014/65/UE on markets in financial instruments (MiFID II).
Only authorised entities may provide investment services/activities to the public, that are banks, investment companies and other intermediaries that may be authorized to provide specific investment services/activities. The relevant authorisation is issued by either the Bank of Italy, if banks are concerned, or the CONSOB for investment companies and intermediaries. Requirements regarding financial reserves apply depending on the regulated subject providing the services and on the type of provided service (for instance, if MTFs or OTFs are concerned, the internal trading venue regulation shall normally be filed with and approved by CONSOB). Ancillary services and connected/instrumental activities may be generally provided without the need of ad hoc authorisation by authorised entities.
Additional comments regarding the legal situation for trading, social trading or signalling platforms or what FinTech’s must be aware of in this business area
Companies established in another EU Member State may provide investment services/activities (including trading platform and similar services) in Italy under the European passpor