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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
Traditional securities trading platforms are regulated in the Philippines.
The Securities Regulation Code (Republic Act No. 8799) (SRC) and its implementing regulations set out the requirements for registering exchanges, including self-regulatory organisations.
The SEC has also promulgated rules on registration of “alternative trading system” which refers to any organisation, association, person, or group of persons, or system, that constitutes, operates, maintains, or provides an electronic marketplace or facility for bringing together, among others, primary market issuers of innovative registered securities of any kind of SEC-registered enterprise and secondary market sellers and buyers of those securities.
There are also SEC regulations governing the making, creation, or operation of an over-the-counter market for securities. Under the said regulations, a broker, dealer, salesman, or associated person of broker or dealer should have the appropriate registration with the SEC if such person is (i) buying, selling or publishing or submitting for publication a quotation to a quotation system, for a security, or (ii) searching for a counterparty to a buy or sell order that is left with him by another person for his disposal or holds himself before the public that he is ready or he is perceived that he is ready to search for a counterparty to a buy or sell order that is left with him for his disposal, either by direct search or participation in a quotation system, for any security, or (iii) representing himself as an agent or salesman of or affiliated with a dealer or broker and who buys, sells or publishes or submits for publication a quotation, for and on behalf of the principal or customer account of such dealer or broker, for any security, other than in an exchange or an alternative trading system.
The BSP has likewise issued regulations governing virtual currency exchanges and such type of services are covered by the regulatory framework applicable to virtual asset service providers (please see below for the relevant discussion on this).
There are currently no regulations covering FinTech-signalling and social trading platforms.
Legal affairs
Obligations and requirements to provide trading, social trading or signalling platforms described above
There are various requirements and obligations depending on whether the registration is for an exchange or an alternative trading system, or an over-the-counter market. A requirement for registration as an alternative trading system is that the application should be made by a broker-dealer in accordance with the SRC and its implementing regulations and should be accompanied by rules, procedures, and conventions of a self