Name
Global FinTech Guide
Country _ Name
Hungary
SectionTitle
Trading platforms / social trading platforms / signal following
Body
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

The social and political climate towards trading, social trading or signalling platforms is neutral.

Legal affairs

Obligations and requirements to provide trading, social trading or signalling platforms described above

Operating an MTF or an OTF (as defined under MiFID II and the Investment Services Act) qualifies as investment service and is subject to licensing/passporting requirements.

In the case of FinTech signalling and social trading platforms, the activities of the operator of the platform and the trader/front runner vis-á-vis the followers shall be examined separately. Depending on the specific circumstances, the provision of the following investment and ancillary investment services may apply:

On the side of the platform operator:

  • Portfolio management, if the elements of the definition (see Annex I) are met and in this case, it is irrelevant that the “predetermined investment criteria” are not defined by the operator but by the front runner; or
  • Reception and transmission of orders in relation to one (1) or more financial instruments (if the following of the transactions of the front runner is not automatic but shall be confirmed on a transaction-by-transaction basis by the follower).

On the side of the front runner:

  • Investment advice, if the front runner is formulating its investment policy personally, with respect to the individual circumstances of the followers or groups of followers; or
  • Investment recommendation, if the transactions/securities portfolio/financial investments of the front runner are available to a wide range of a heterogenic group of the followers publicly.
 

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

N/A.

Economic conditions

Market size for trading, social trading or signalling platforms and biggest companies in this business area

Since the overwhelming majority of the players on this market are mostly foreign based companies, there is no official estimate as to the size of the market. There is no official data regarding the revenues, brokered investments or customers in this field.

Additional comments regarding the economic situation for trading, social trading or signalling platforms or what FinTech’s must be aware of in this business area

N/A.
 

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